...Characterization of Best Buy’s competitive strategy When I ask men to name their favorite store, the answer is almost always Home Depot, Lowes, or Best Buy. Companies that are so beloved usually have strong competitive advantages. The term “usually” is emphasized because it is not always the case—Borders was a beloved store by book readers and is now out of business. Home Depot and Lowes have strong competitive advantages, while Best Buy’s are eroding in a remarkably similar way to Borders. Home Depot and Lowes are often the largest home improvement stores in their city and carry the largest selection, which gives them the advantage of scale. Similarly, Best Buy has the advantage of being the largest brick and mortar source for electronics in most cities. Borders also had the advantage of being as big as or bigger than all of its competitor’s stores. The other advantage Home Depot, Lowes, and Best Buy share is locality. If you have a Home Depot five minutes away, you are unlikely to drive a half hour away to another store. And if Best Buy is the closest place to pick up a new television, computer, or Ipad, they will likely get your business. However, Borders was also the nearest bookstore for many people before it went bankrupt. In other words, scale and locality can be very weak competitive advantages. Online Sales The main difference between being a large home improvement retailer and a large electronics retailer is online sales. Most people are very...
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...Our Investors), and explore Best Buy’s latest annual reports and 10-K (SEC) filings to see if you can identify the key elements of Bust Buy’s strategy. Provide an overview of Best Buy and use the framework provided in Figure 1.1 to help identify the key elements of Best Buy's strategy. One of the key element of Best Buy’s success is its competitive advantage. Competitive advantage as stated by Thompson et al. (2012) is the “ability to meet customers needs more effectively, with products or services that customers value more highly, or more efficiently, at lower cost; (p. 6). Best Buy has always taken an innovative approach to retailing. The company is aware of the types of customers that it drew, by creating their Customer Centricity model. The model consisted of five customer groups, each was given a name of its own. The company’s employees were given extensive training and was taught how to specifically handle each different customer segment, while merchandise, promotions and even entire stores were changed to target each market segment. Address what approach toward winning a competitive advantage does Best Buy seem to be pursuing? One of the biggest challenge Best Buy is facing is the stiff competition from online retailers. Customers are able to buy the same quality product at a lower price from online retailers such as Amazon.com and Walmart.com. Facing the loss of retail sales to lower price offers from these retailers, Best Buy has adopted an aggressive...
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...Innovation is a money and time saver that will help an organization achieve a competitive advantage to grow and adapt in the marketplace. Innovation refers to implementing new ideas, creating dynamic products, and improving existing services. Businesses that innovate create more efficient work processes and have better productivity and performance. Innovation is the key to competitive advantage for a successful organization. Best Buy’s New Division and Product Innovation requires new ideas. Best Buy is constantly thinking of ways to keep its customers happy. Best Buy is now reaching out to the customers who want to give back to their community. Best Buy is creating a new division called Best Giving. This division's focus will be on helping others in local communities. The mission statement of Best Giving is “To give peace, hope, and help to local communities through the generosity of our loyal customers”. As part of Best Buy’s undefined mission statement “… a growth company focused on better solving the unmet needs of our customers…” (Strategic Management Insight, 2013), Best Giving is meeting customer needs by altering the rewards card program. The card will now allow customers to give back their earned rewards to a charity of their choice. Customers can choose what percentage (up to all 5%) of their rewards they would like to donate and to whom. Customer Needs and Competitive Advantage Best Giving focuses on the customers who want to help others. There are very few companies...
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...Quest for Competitive Advantage Chapter Summary Chapter One explores the concepts surrounding organizational strategy. It begins with an explanation of the term strategy and offers a basis for how to identify a company’s particular strategy. Next, it explores the importance of striving for competitive advantage in the marketplace and examines the role strategy plays in achieving this advantage. The chapter then explores the idea that strategy is partly proactive and partly reactive. This is followed by a close look at the relationship between a company’s strategy and its business model. The chapter proceeds forward with a look at what makes strategy a winner and then presents reasons for why crafting and executing strategy are important. The chapter concludes with thoughts on the equation: good strategy + good strategy execution = good management. Lecture Outline I. The Importance of Managing Strategically 1. Three questions must be answered by managers of all types of organizations: a. Where are we now? b. Where do we want to go? c. How are we going to get there? 2. “Where we are now?” prompts managers to evaluate industry conditions and competitive pressures, the company’s current performance and market standing, its resource strength and capabilities and its competitive weaknesses. 3. “Where do we want to go?” this lies within managements vision of the company’s future direction. It pushes managers to make choices about the direction the company should be headed—what new or...
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...To Build or Buy: Making decisions about Infrastructure and Applications Table of Contents Title Page1 Table of Contents2 Executive Summary3 The Asset Management Lifecycle and the Five Decisions4 Asset Lifecycle Management4 The Five Decisions4 Building versus Buying5 Building Software6 Building Pros & Cons6 Buying Software6 Buying Pros & Cons6 Making Decisions7 Ranking and Conclusion8 References10 Executive Summary While rapid advances in technology have opened an almost infinite number of possibilities for today’s businesses, organizations are typically challenged to exploit the latest trends to drive growth and market share. Our study found an important link between effective software development and the ability to successfully capitalize on today’s emerging technologies for competitive advantage. Advances in technology are growing rapidly and organizations are constantly trying to find ways stay ahead in the market and make profits. Organizations are now challenged to either buy off-the-shelf software or build customized software for their company in order to achieve a competitive advantage. Each choice yields its own pros and cons so there is no automatically correct decision. The choice that fits best lies in the goals of the company. In order to decide what is best for your company, the CIO needs to understand what it means to buy and what it means to build. Buying software ensures that the product has been tested and used by others. Therefore...
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...University Bylund, Anders. “Best Buy: To Boldly Go Where Circuit City Went Before.” Daily Finance. 09 July 2012. Anders Bylund’s recent article, “Best Buy: To Boldly Go Where Circuit City Went Before,” touches on some of the problems that America’s largest consumer electronics retailer is experiencing this year. In an attempt to improve the bottom line, Bylund points out that Best Buy plans to cut 2,400 jobs, including 600 of its technical Geek Squad employees, and replace them with minimum wage hires. Bylund compares the lay-offs to a move a former rival made several years earlier. According to the article, Best Buy’s chief rival, Circuit City, laid-off a sizeable portion of its managerial staff and technical workforce in a last-ditch effort to stave off closure. Unfortunately, those lay-offs led to bankruptcy, which eventually led to the liquidation of America’s second largest electronics retailer. Bylund goes on to propose that, unlike Circuit City, Best Buy doesn't have an easily identifiable adversary at this time, ready to absorb the electronic giant’s fleeing customers. However, the article suggests that there are several big-box discount giants and an online retail behemoth lurking in the electronic fringes, ready to strike a lethal blow. The brick-and-mortar retail stores are having trouble, Bylund contends, keeping up with online retailers like Amazon, and it's starting to show more and more as brick-and-mortar company’s like Best Buy continue cutting jobs. Bylund’s...
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...explicitly acknowledged to be otherwise. I assert that the preparation of this work has been completed in accordance with ethical standards appropriate to students of UNSW@ADFA and is a true representation of my current capabilities in this course. What factor or factors would give a firm market power as a purchaser? How might a firm possessing market power use procurement to build and sustain competitive advantage derived from (end) product innovation? In being able to determine any single or set of contributing factors that may give a firm market power as a purchaser, it is best to first agree a definition for market power and how it applies to purchasing. In its broadest definition market power can be defined as the ability of a firm to be able to influence or control terms and or conditions on which goods are bought and sold. There are also numerous schools of thought as to what precisely constitutes market or buyer power. The traditional sense is to define it in terms as an inverse of a monopoly, whereby the buyer can set prices profitably below competitive levels, in what some label a monopsony where there is either only one or a concentrated number of buyers within a competitive selling market (Mellsop and Counsell 2009). However a more holistic approach to buyer power is rather than forcing lower prices, being able to negotiate more favourable terms. However, market power through pure monopsony and according to a review by Chen...
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...SCHOOL OF MANAGEMENT TO DR. FRANCIS PIROH Explain The Differences Between A Standardized And Localized Strategy. Which Are The Advantages And The Disadvantages Of Each One? Explain The Differences Between A Corporation With An Ethnocentric, Polycentric, And Geocentric Orientations. How The Concept Of Competitive Advantage Can Be Applied In International Marketing? This paper is submitted in the partial fulfilment of Marketing Management course By FRANCES GRACEY DADZIE March 2013 SCHOOL OF MANAGEMENT TO DR. FRANCIS PIROH Explain The Differences Between A Standardized And Localized Strategy. Which Are The Advantages And The Disadvantages Of Each One? Explain The Differences Between A Corporation With An Ethnocentric, Polycentric, And Geocentric Orientations. How The Concept Of Competitive Advantage Can Be Applied In International Marketing? This paper is submitted in the partial fulfilment of Marketing Management course By FRANCES GRACEY DADZIE March 2013 Standardization marketing strategy is typically applied to discussion of global businesses and a means to market a solution with uniform consistency throughout the marketing mix. This is an opposite approach to a localized strategy, under which multinational companies differentiate their product and adapt it to fit the unique needs of countries.Localization as defined by the business dictionary is where by a business operates in a number of countries, adjusts its products and practices...
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...Best Buy Fights Against Electronic Waste 1. Why do you think Best Buy has been able to gain competitive advantages in the retail electronics department while also driving many initiative to support sustainability? I think that Best Buy has been able to gain a competitive advantage in the retail electronics department while also driving many initiative to support sustainability because they are doing things that get the attention of their customers. They offer the recycling of your old electronic devices, also the Geek Squad is a great attribute to the company, it gives you added support to not have to worry if something goes wrong with your electronic there is someone there to walk you through how to use it or to fix it for you. Best buy is a customer-centered organization that aims to achieve better customer relations, continual engagement in customer dialogue, and better understanding of customer needs and preferences. They utilize Facebook, Twitter, blogs, and bestbuy.com, to gather customer feedback. 2. Do you think the resources that Best Buy is dedicating to help consumers recycle their old electronic devices represent a good investment for Best Buy? Yes, I do think that this is a great investment for Best Buy. The issue of e-waste has increased in importance among consumers. In 2007 the company made their first CSR so that consumers could know what Best Buy is doing in sustainability. When you think about it, what do people usually do with their old cell phones...
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...it has become a trend-setter in the video game retail industry, resulting in other industry giants emulating its business strategies. One of the key components of differentiation that garners the company a competitive advantage in the marketplace is GameStop’s buy, sell, and trade program. Through the program, the company sells used games that are purchased from customers at a discount in exchange for store credit or currency. The program creates value for customers by offering them a low-cost alternative to purchasing new games while GameStop receives a substantial profit from reselling used copies of games at a higher price than they were purchased from customers, thereby cutting purchase and transportation costs involved in acquiring inventory from publishers and developers. This service differentiation gives GameStop a competitive advantage in the video game retail industry by allowing it to receive higher profits than its competitors who traditionally purchase inventory at higher costs directly from publishers. Additionally, the program increases sales to customers because GameStop is the only retailer that allows customers to trade-in their video games for discounts on new games. GameStop is the pioneer of this program and its success hasn’t gone unnoticed as Best Buy has initiated a similar program in its stores as of 2012. Another...
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...market”. Competitive Edge through Core Competencies Today's business climate has rapidly changed and has become more competitive as ever in nature. Businesses now not only need to operate at a lower cost to compete, it must also develop its own core competencies to distinguish itself from competitors and stand out in the market. In creating the competitive edge, companies need to divert its resources to focus on what they do best and outsource the process and task that is not important to the overall objective of the company. Supply chain management has allowed company to rethink their entire operation and restructure it so that they can focus on its core competencies and outsource processes that are not within the core competencies of the company. Due to the current competitive market, it is the only way for a company to survive. The strategy on applying SCM will not only impact their market positioning but also strategic decision on choosing the right partners, resources and manpower. By focusing on core competencies also will allow the company to create niches and specialization of core areas. As stated in the Blue Ocean Strategy outlined by Chan Kim, in order to create a niche for competitive advantage, companies must look at the big picture of the whole process, and figuring out which process can be reduce, eliminate, raise and create. Value Advantage SCM has allowed business nowadays to not just have productivity advantage alone but also on value advantage. 'Productivity...
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...independent, more competitive, and start growing towards the future in technology, specifically e-commerce, purchasing becomes a strategy. Purchasing became “strategic sourcing.” Strategic sourcing has become a huge responsibility for the supply manager. There are a few activities that strategic sourcing accomplishes for the manager. It allows the manager to strategize the spending habits of the company, it forces the manager to strategically look in to the supply market for any changes, trends, and what other firms are offering, and it provides a method to develop a sourcing strategy that fits the company’s strategy to lower costs and risk, while bringing in a profit. Profit is produced through mastering or at least competently managing the five M’s; machines, manpower, materials, money, and management. Part of that strategy is where and how to source these 5 M’s that will meet the cost strategy of the company. This brings up the most strategic question a firm can ask of a supply manager; to make or buy? To meet the company’s needs that will consequently meet the current demand, should the company in-source or outsource? What should the company outsource? What are the functional areas of supply management that can be outsourced and what are the advantages and disadvantages of outsourcing? Strategic Sourcing in Supply Management We are in the information and technology age of business. This requires a business to consider the area of sourcing as a competitive strategy to...
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...method by which an organization can use to measure their performance and internal processes. By comparing themselves with organizations that in excel in best business practices, top management can use benchmarking as a tool for driving continuous improvement throughout the organization and to gain advantage over competitors such as reducing costs, increasing productivity and better aligning product (Fleisher amd Bensoussan, 2007). Benchmarking began in the late 1950s as a natural development of early Japanese practices focusing on a clear desire to improve. Then, Xeros Corportation in America adopted a similar vigorous approach in 1979 which start the term “Benchmarking” by investigating the practices of Fuji Xerox in Japan. The improvement opportunities that were identified and put into place resulted in Xerox’s benefits and let to Best Practice Benchmarking (Bendell et al., 1993). Table: Advantages and disadvantages of benchmarking ADVANTAGES | DISADVANTAGES | Powerful Competitive Analysis Tool | Copycat syndrome | Objective stretch goal setting & performance measurement | High rate of failure | Flexibility | What works well in one organization might not work in another | Removal of blind spots | Benchmarking is resource intensive | Improves cost efficiencies & quality | No firm does everything the best | Not reinventing the wheel but redesigning it | Low-performing firms have a disadvantage | Media recognition | Some high-performing companies may...
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...Diversification Strategies: Best Buy vs. Circuit City BUS 508 Contemporary Business 25 April 2011 Diversification Strategies: Best Buy vs. Circuit City Diversify, diversify, and diversify! It’s something repetitively said to high-schoolers seeking pre-college extra-curricular memberships, employees seeking investment options, as well as businesses seeking to remain viable. But what is diversification? Diversification as it relates to business is defined as a “business development strategy allowing a company to current products, services, and markets” ("What is diversification?" 2011). This strategy enables a corporation several key benefits such as enhanced shareholder value, distribution of risks across several related or unrelated businesses, as well as the ability to offer lower prices than their competitors. Additionally, the company can benefit from entry into new markets. Although these are very great benefits, diversification requires very extensive research and market analysis in order to be successful. If not implemented correctly, the company could face brand confusion, loss of sales due to customer alienation, as well as lack of establishment of a loyal market following. Here we will explore both the diversification strategy and outcomes of consumer electronics retailers Best Buy and Circuit City. We will also explore possible decisions that led to the drastically different outcomes as well as alternative strategies that could have been employed in...
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...Latifah Turney Professor Kulviwat MKT 175 February 11th, 2014 Case # 1- Chevrolet: 100 years Product Innovation 1. Evaluate the diversity of vehicle types and the sizes that are sold under the Chevrolet brand name. What strength ands and weaknesses are evident in Chevy’s product mix? Chevrolet has a broad portfolio of products, which include large trucks, delivery vans, full-size, mid-size, compact, and sub-compact automobiles; sports cars; and even racecars. Chevy’s strengths include as I previously mentioned a broad portfolio, strong brand equity, strong brand loyalty, competitive advantage over many other brands, diversified product mix, and they are innovative (new model each year). The company had many successes but they also had failures two of their vehicles; the Chevy Corvair popular in 1962 failed after it was deemed unsafe due to safety issues with its steering, and the Chevy Vega which failed because of poor quality and product recalls which created negative publicity. 2. How has Chevrolet strategically managed its branding and reputation over the last years? What opportunities and threats will affect Chevy’s branding and reputation in the future? Chevrolet’s brand evolved throughout the years but it maintains many of the same themes that it began with: “a quality vehicle with deep roots in America’s past.” They try to maintain their brand as a key part of American culture, to maintain this brand image they do a number of things such...
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