Is Best Buy A Sustainable Competitive Advantage At Present?

A company's business model sets forth how its strategy and operating approaches will create value for customers, while at the same time generating ample revenues to cover costs and realizing a profit. The two elements of a company's business model are its customer value proposition and it's profit formula (Gamble, Thompson, & Peteraf, 2016). Best Buy's business model takes on a customer-centric standpoint by looking from the outside-in rather than the inside-out. The customer-centric approach not only results in more demands for the company, but also secures a position in the business. Best Buy has two goals set for the strategy of the company, to offer customers the widest range of products and to expand into new international industries.

Does it have a sustainable competitive advantage at present? Best Buy does not have any direct competition. Especially now that the consumer electronic retailer, circuit city, was forced into liquidation in March 2009. There are plenty of rivals that compete with Best Buy's product categories. The company's revenue comes from these six categories: consumer electronics, mobile phones, entertainment, appliances, services and other (fitness devices, smart watches, etc.) Rival companies like online retailer Amazon, office supply store Staples and Office Depot, unspecialized discount retailers Walmart and Target challenge Best Buy to stay at the top of the list of consumer electronics retail market. Manufacturers like Apple and Microsoft and wireless carriers like AT&T and Verizon Wireless also represent emergent sources of competition as they further develop their own retail channels (Best Buy Co., Inc. SWOT Analysis,

He started with a price matching guarantee policy, both in the store and online. Also, lowering prices to become even more competitive with online and discount retailers. The concept of show rooming was also nixed. Show rooming is where customers could try out products in the store, then go purchase the products online at a cheaper price. To improve the financial position of the company, Best Buy launched a plan called "Renew Blue" to strengthen business by cutting costs and increasing the supply chain. Since the launch, the company has stabilized comparable sales, increased the non-GAAP operating income rate 110 basis points from 3.4% in fiscal 2013 to 4.5%* in fiscal 2017 and grew the non-GAAP EPS from $2.54 in fiscal 2013 to $3.56* in fiscal 2017, at an average rate of 9% per year. In addition, they have increased the non-GAAP return on invested capital (ROIC) 810 basis points from 10.8% to 18.9%*(2017 Regular Meeting of Shareholders, n.d.). Best Buy’s exclusive brands, Insignia, Dynex, Init, Platinum and Rocketfish, give the company an edge over competitors by increasing differentiation and margins. A global sourcing office in China designs, develops, tests and purchases its own line of brands, manufactured under contract by vendors based in southeastern Asia. Best Buy intends to drive the sales of exclusive brands so that their contribution to total sales