Introduction
Best Buy as an all electronics consumers cooperation is faced with an alarming competition from other companies such as apple stores and online virtual retailers such as Amazon. Not so long ago, the company was considered the most admired cooperate by the Fortune magazine and the company of the year by Forbes magazine in 2004. However, this success has shifted over the years and currently the company is losing consumers and market share that it once dominated across the globe. This paper seeks to deliberate some of the challenges that Best Buy is faced with and how they could be reversed for the company’s benefit.
Current Situation
Currently the company is facing hurdles trying to capture consumers in Turkey, China and the UK. Brand marketing in these countries are a major problem that the company currently faces. In the UK, the company lost $2.6 billion in the fourth quarter of 2012 financial year due to closure. In addition to this, the company is preparing to open 100 small mobile stores in order to maximise profits. This is a shift from its 50 “big box” stores that are prepared to be closed in the United States. The Company also plans to save $250 and $800 million in subsequent coming financial years of 2013 and 2015.
Potential Causes of the Problem
Best buy is experiencing poor revenue collection and consumer dissatisfaction due a different number of reasons. Consumers of the company’s merchandise complain of poor service from staff and an unwelcoming environment when purchasing goods. This reduces consumer satisfaction thus rendering them to shift their attention to much more welcoming stores such as those of Apple Inc. The company also relies too much on dwindling innovation such as television, audio systems and computers (Everard, & Burrow, 2008). These are equipment’s, which require consumers to personally hear and see how they function in order to purchase them. When you combine this together with the company’s poor virtual marketing and staff-consumer relations, the company stands to lose more revenue in the coming years.
Reasons for the Problems
Internal Factors
- Strategy
Best Buy’s plan to promote a competitive edge over their opponents such as Apple store is not satisfying thus contributing to the company’s downfall. The Company has not fully outlined a strategy on how they can increase market share and consumers. This can be seen with over dependence on vendors to supply their goods to the company for them to sell. This creates a huge barrier since electronic companies have started to open their own retail stores thus averting from traditional methods of marketing. Dealing with customer demand is another reason for Best Buy’s challenges (Eurominator International, 2012). The company does not have a home delivery strategy for consumers who purchase their goods. This reduces consumer loyalty to wards the company.
Strong leadership is important for the performance of a company. Best Buy lacks a strong managerial leader to drive the company forward by making crucial decisions. Poor consumer-staff relationship is one example, which shows how the company’s top management staffs are not performing well. Other electronic companies have increased their profits by ensuring a healthy relationship within the hierarchy of the staff members and consumers. Job insecurity also plays a big role towards the downfall of the company (Eurominator International, 2012). Staff members are insecure of retaining their jobs because of the regular downsizing of employees taking place within the company.
- Skills
Best Buy has shown many weaknesses on how they apply their skills in attracting new market investors, adapting to shifting electronic environment and increasing their market share even higher. The company’s employees show a lack of commitment and innovation. This has reduced the company’s stock by nearly 8%. Investors want staff members who are dynamic and can come up with innovative smart ideas, which can improve the company’s overall performance (The Associated Press, 2013).
External Factors
- Industry competitiveness
The electronic industry is a huge contributor to any country’s economy. Many companies have shifted their interest in processing electronic devices, which are seen as a step to the future (Global data, 2012). This has seen traditional retailers losing their market due to the ever-dynamic technological innovation.
- Increasing Labour Wages
Globalization has increased wages demand in almost all sectors of the economy. This has seen struggling companies such as Best Buy in this case struggle even more. The company has a huge employee base of nearly 18,000 who put the company at risk due to the high minimum wage prices that have been set by the United States Government. Labour strikes are a common phenomenon in such a scenario.
Conclusion
Best Buy is a tradition electronic consumer cooperation, which is having a hard time to adapt to the trends of globalisation. This has seen it lose investors, market share and even consumers to other modern innovative companies that are the consumer’s favourites due to their innovative electronic gadgets. Introducing smart strategies such as retailing of smart technology is a good direction towards stability. With a good organization structure and consumer relations the company could open new doors and start gaining audience with their consumers.
References
Eurominator International. (2012). BEST BUY CO INC IN RETAILING (WORLD).. Passport 1, 1(1), 1-36.
Everard, K. E., & Burrow, J. (2008). Business principles & management (12th ed.). Cincinnati: South-Western Pub. Co..
Global data. (2012). Best Buy Co, Inc. - Financial and Strategic Analysis Review. Best Buy Co, Inc., 1(1), 1-4.
The Associated Press. (2013, February 26). Best Buy Company Inc. News - Company Information - The New York Times. Times Topics - The New York Times. Retrieved February 27, 2013, from http://topics.nytimes.com/top/news/business/companies/best_buy_company/index.html
