Abstract
Best Buy is an American firm, retailing principally electronic items in the United States, Canada and Mexico. Founded in 1966, the capitalization was about 17 billion dollars in 2018 and the turnover about 40 billion dollars the same year.
We will first present the analysis of the Porter's five forces of Best Buy and in a second time the solutions to perpetuate and give impulsion to the firm.
Extract
[...] The main customers of Best Buy are individuals and do not have a lot of power of negotiation. Of course, there are some limitations, the firm must adapt to the competitors to not overvalue the price of the items, because in this case the clients would find other solutions, even if there are not plenty of possibilities. This few competitors are another reason that makes you think that the power of buyers is low. Even if the customers want to have the best offerings while paying the less, the few companies that provide this kind of product make the power of buyers low. [...]
[...] That makes Best Buy the reference, the specialist in electronic items. The fact that electronics retailing industry is the core competency of Best Buy is a really important competitive advantage for the future of the company. Moreover, Best Buy has also an online platform to buy electronic items, and they offer a real expertise and a strong service. This platform, launched in 2005, is now more efficient than the Wall Mart one on the electronic retailing sector but less important than Amazon, which is the first platform in the world. [...]
[...] Another benefit would be to have less competition on the price and to increase the margins of the companies. Best Buy can also work with smaller companies to contain the potential new entrants. Novatize, a consulting firm, offer to small companies to work for them on micro-sectors that Best Buy, Wall Mart or Amazon can't cover alone. [...]
[...] It can create a strong cost leadership and this competitive advantage is what Best Buy is actually looking for. As it was identified in the Porter's Five Forces analysis, the bargaining power of the suppliers is moderate and can be a potential threat. So first, Best Buy can diversify his suppliers, but another strategy would be to make the suppliers depend upon Best Buy. Like this, the threat would be lowered and so would be the risk to decrease the margin. [...]
[...] Electronics retail industry, Best Buy sector, is a difficult environment for new entrants. First, a major capital fund is needed to purchase items, which are easy to find but expensive. Computers, cell phones, televisions, connected accessories are expensive but also need a strong supply chain, including logistics to have the items, but also an efficient after sales, which is an obligation in this sector. This sector requires a sophisticated supply chain to guarantee the quality to the potential clients. Even if the Chinese platform, Ali Baba, introduce the United States market a few years ago, it is not a real new entrant since it was a huge Asian platform. [...]
