Best Buy Co., Inc.
Best Buy Co., Inc.
Best Buy Co., Inc. is performing fairly well in terms of critical success factors. The factors of consideration in this case are cost and efficiency, timelines, quality, and innovation. Ideally, for electronic markets, these factors are mandatory and missing them could be fatal. Best Buy sufficiently shows evidence of success in this front. For instance, through its online system, the company meets the ever growing requirement of timeliness. Customers all over the globe easily access their products and make their orders online. This element enables timeliness in that clients do not have to mid about the ferrying of the commodities to their doorsteps. Best Buy has strategically located its branches all over the target markets (the European, American and Chinese markets). The online platform equally facilitates accessibility without having to physically visit sites for shopping purposes. Indeed, as the company indicates that the 145000 employees concentrated worldwide are keen to meet client expectation at the right time. This in effect equally shows an element of quality. That Best Buy has a clean bill of health from the Securities Exchanges Commission where it quarterly submits its statutory returns such as the Form K, is an indicator that it meets the requirement of quality. This is because the mandate of the SEC extends to matters of product quality.
The operations system of Best Buy in itself satisfies the essential component of efficiency and costs. Best Buy has adopted a strategic policy where stores are located within the key market regions. Stores such as Car phone Warehouse and the Phone House are located within key markets such as Europe, China and Canada and in the United States. This spread of stores enables accessibility to consumers thereby creating efficiency in transactions. In addition, the online platform effectively enables transactions with near absolute efficiency.
Types of Costs
Best Buy Co., Inc. incurs all costs typical of a retail company. It is essential to appreciate that the company does not incur direct manufacturing costs as it does not produce its own products. Rather, its core business entails distribution of products which it purchases from manufacturers for sale. Different costs it incurs are the subject of discussion in this section. The variable costs relate to those costs that vary depending on the volume of activities. In this case, volume of sales is the determining factor. Variable costs incurred by Best Buy can be seen in its operating costs. Operating costs refer to the total costs incurred on operations. Operations relate to activities that go into facilitating sales in a direct manner. They include distribution, transportation, warehousing, and packaging, among others. In Best Buy, operating costs account for the highest outflows incurred in the business. Fixed costs relate to those costs whose value is often static for a long period of time. They do depend on any variable such as sales. A typical fixed cost that Best Buy incurs is management remuneration. The remuneration of the chief executive is a combination of essential and one that is computed based on performance. The amount of remuneration that is considered essential and hence does not change over a long period of time is a fixed cost. Product costs are costs incurred in relation to a given product or line of product which in the absence of that product, the entity would not have to incur such cost. In Best Buy’s case, a product cost could be seen in advertisement costs in relation to particular items such as the laptops they retail. In the event it ceases selling a particular brand of a laptop, it consequently stops advertising. Period costs occur only in a given period. In Best Buy, for the year 2012, it reported a restructuring cost incurred in the restructuring of its business units. Such a cost is periodic and is not expected to be incurred again any soon. Direct costs are those costs that can be traced to the final product while indirect costs are those costs that are generally incurred and cannot be traced to the actual final product. An example of a direct cost is warehousing costs incurred in warehousing products in a particular market area say the London retail outlet while an indirect cost is reflected in the costs incurred on insurance in general.
Constraints
The most pressing constraint Best Buy faces perhaps is the market willingness and ability to buy its products. As it deals with electronics which are relatively expensive, it is constrained in its operations by the demand in the market. Sufficient evidence can be seen in the choice of its markets. It only majors in America, Canada, China and Europe. Interestingly, in all its markets the economic capacity of the populations is generally suitable. Therefore, in the context of the theory of constraints, suffice it to say that demand for products constrains Best Buy Co., Inc.
Balanced scorecard
Indeed the evidence available suggests an incorporated approach that takes the quadruple character of finance, customers, internal business process and learning and growth. One appreciates this from the operational layout which assumes an aggressive tract. For instance, the customer is served efficiently through the online applications and the elaborate customer care system. On the other hand, Best Buy comes out as one of the performing businesses hence attains the financial objective. The internal business process examined from the managerial-employee relations show a relationship that jells well within the western managerial culture and the general character of generation Y.
Cost of quality report
The cost of quality essentially refers to costs incurred when the product produced is not of the right quality. While quality remains a significant score for Best Buy Co., Inc. it would, nonetheless, be essential to consider a number of factors in designing the cost of quality. In terms of prevention and appraisal costs, it is of equal significance to consider the external auditing, inspection and supervision costs. On the other, in terms of the internal and external costs, it would be essential to consider external analysis costs, market research costs for research intended to obtain market disappointments, among others. Some of the line items to be included in the report are the Best Buy Mobile stand-alone outlet and the Car phone outlets. These two types of stores need to be included so as to ensure that phones availed to the consumers meet the market expectation especially in light of the high rate of obsolescence.
References
Best Buy Co., Inc. (2012). Best Buy Co., Inc. Annual Report . New York: Best Buy Co., Inc.
Best Buy Co., Inc. (2013, September 13). Investor Relations. Retrieved September 19, 2013, from Best Buy Co., Inc.: http://phx.corporate-ir.net/phoenix.zhtml?c=83192&p=IROL-IRhome
