Introduction
Best Buy, a 47 year old business, has faced countless challenges over the years. While Best Buy’s reputation has fluctuated, the company has presented several strategies to deal with these problems by creating plans to stabilize and promote growth. Through an in-depth analysis, the following areas were studied performance, environment, and organization. The analysis will assist in examining Best Buy’s strategies and core competences. The objective of this study is an understanding of the challenges and to figure out what makes the organization successful.
The company was founded by Richard Schulze in 1966 in St. Paul, Minnesota and was originally called Sound of Music. In 1970 the $1 million mark was hit in annual revenues. Later in 1983, the name was changed to Best Buy. The company adopted the yellow tag logo in 1989. In 1999, Best Buy partners with Microsoft to increase sales. In 2009, a goal was created to reduce carbon. This was called "20 by 20," a 20% reduction in our absolute carbon emissions in North America by the year 2020. In 2012 there was a $1.7 billion quarterly loss. Currently, Best Buy is a multinational retailer of consumer electronics, computing and mobile phone products, entertainment products, appliances and related services. The Company operates retail stores and call centers, and conducts online retail operations under a range of brand names. With these brands, the company has had almost $50 billion in annual revenue in 2013 that employs over 145,000 people. There are 1,400 stores and locations in the United States alone. The online shopping sector has about 1 billion visitors shoppers annually. With that stated, BestBuy.com is in the top 10 retail websites in the United Sta...
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Marcus , A. A. (2009). Winning moves: Cases in strategic management . (2nd ed.). Lombard, IL: Marsh Publications.
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This case study will examine the key management practices that make Trader Joe’s successful. Sound management practices have been a catalyst for the long-term financial success of Trader Joe’s. The literature review examines Trader Joe’s approach to management practices. The research will analyze the: employee job satisfaction, management practices, importance of human capital, and contingency planning.
Over one hundred years ago, an entrepreneur named Sebastian Spering Kresge opens his first retail store in 1899. The store was named Five-and-Dime and was located in downtown Detroit. The store was named Five-and-Dime because everything in the store was priced at either five cents or ten cents. This low price gained him a lot of customers and a lot of publicity. With this new found publicity, in 1912, he opened 85 more stores with annual sales of $10 million. As time went on, the prices have changed to $1 or less, but the business philosophy has remained the same. Around this time, the retail environment was getting very competitive, and the company needed to make some changes to keep up. In 1959, Kresge hired Harry B. Cunningham to become the president of the company. Under Cunningham leadership, the first Kmart store was opened in 1962 in Garden City, Michigan. In 1966, sales in 162 Kmart stores and Kresge stores topped the $1 billion mark and in 1968, the S. S. Kresge aired its first T.V. commercial. In 1976, Kresge made history by opening 271 Kmart stores in 1 year and becoming the first ever retailer to launch 17 million square feet of sales space in a single year. By 1977, nearly 95% of the S. S. Kresge sales were generated by Kmart so the company officially decided to change its name to Kmart Corporations. In 1991, Kmart opened the first supercenter in Medina, Ohio offering a full-service grocery area. In 1996, a complete redesign of Kmart was launched, changing its name to Big Kmart [or BigK] and in 1999, Kmart launch a new internet presence, named bluelight.com [now known as kmart.com]. In 2002, Kmart filed for Chapter 11 bankruptcy protection. (Corpor...
Due to the fact that Best Buy is non-collusive, they face a kinked demand curve that ultimately determines the firm’s relative market share. The demand curve consists of an elastic and inelastic portion. Oligopolies avoid both portions, where in the elastic portion, competitors keep prices low to steal customers, and the inelastic portion where price war occurs since competitors also lower prices, resulting in no gain in demand.
Management is a key to success, and Kmart needs proper management to help create a positive image that attracts more customers. Kmart’s disorderly management and bankruptcy caused many customers to shop with other retailers. According to Carr, Wal-Mart and Kmart were the same size in 1990. Since then, Kmart has grown far slower than its rival or the industry. Once one of the largest discount retailers, Kmart filed for the biggest Chapter 11 bankruptcy for discount retailing in the United States (2002). Struggling to find the right type of management has been one of Kmart’s problems that ultimately helped lead the company to its downfall. Kmart is constantly changing CEO’s, and thus focuses. Kmart has had four different CEO’s since 2000, all with different management objectives.
Let start with Costco. Costco is Wholesale, Retail Corporation which operates an international chain of membership distribution centers that provides quality, brand name merchandise at noticeably more affordable rates than a conventional wholesale or retail sources. Costco 's warehouses display the largest and great product categories such as groceries, candy, appliances, television and media, automotive supplies, tires, toys, hardware, sporting goods, jewelry, watches, cameras, books, house wares, apparel, health and beauty aids, tobacco, furniture, office supplies and office Their ability to distribute the cut rate from their operating proficiencies in supply chain management and cash flow, permits them to offers items at discounted rate and a lower price than their competitors. For Costco the meaning of being the low-cost provider while also differentiating from the competitors is ambiguous at best. Costco’s CEO, Jim Sinegal, is certain that low priced, and the high value merchandises are exactly what is needed maintain and achieve a staying power in the industry.
The eighties prompted change as well as the opening of Best Buy’s first superstore. During 1983, a new corporate name was approved and the Sound of Music Company became known as Best Buy Co., Inc. With mounting consumer support Best Buy continued its road to expansion by opening an additional five stores. In 1985, the newly named company was being publicly traded under the symbol BBY. The late eighties brought forth additional change for the continuously growing company. Best Buy adopted a new concept in retail merchandising with the opening of massive superstores. The new concept shifted the placing of all inventory on the sales floor and hiring a specialized staff of non-commissioned service representatives (FAQ). Such adaptations have fueled the company into progression and continued to promote the company’s corporate vision of “Making life fun and easy”(Fact Sheet).
Best Buy’s History & Main Characters: Best Buy is Minneapolis-based and is North America's leading specialty retailer of consumer electronics, personal computers, entertainment software and appliances. Throughout Best Buy's 37-year history, the company has maintained the tradition of making life fun and easy for customers and employees, while providing a significant return to partners and investors. It has 80,000 employees and over 550 stores in the U.S., in addition to the brands Best Buy Canada, Future Shop and Magnolia Hi-Fi. Their leadership is led by Dick Schulze, Founder and Chairman, Brad Anderson, Vice Chairman and CEO, Al Lenzmeier, President and COO, and Darren Jackson, Executive Vice President of Finance and CFO. Chairman Dick Schulze founded Best Buy in 1966 with the Sound of Music, an audio component systems store in St. Paul, Minn. In 1973, Vice Chairman and CEO Brad Anderson joined Sound of Music as a salesperson. The company quickly expanded into video products and computers, was renamed Best Buy in 1983, and became a public company in 1985. Best Buy’s revenues for fiscal year 2003 were $20.9 billion and net earnings of $622 million. It was ranked number 91 on the Fortune 500 in 2003 (Bestbuy.com). Best Buy stores are redefining the way customers shop by offering an unparalleled assortment of affordable, easy-to-use entertainment and technology products and services available through its network of more than 550 retail stores in 48 states and online at BestBuy.com. Best Buy is scheduled to open 60 new stores in fiscal 2003 and is on track to have 650 stores by fiscal 2005. Magnolia Hi-Fi is a high-end electronics retailer specializing in audio and video solutions for homes, ...
Case Study of The Home Depot Preface This Essentials of Strategic Management assignment has been made by three persons which have been working together and individually to finish the assignment properly and in time. Secondly, we would like to thank the company whose websites we were able to visit and use, to get additional information that we could use for leading the assignment of Home Depot to a successful ending. We can say, that it was a pleasure to work on this assignment and would, in the third place, like to thank each other. The persons who worked on this assignment, for the effort and time that is put in the assignment, that brought us to this finished version.
Some core competencies that must be exploited are: Brand Kmart is an existing well-known and trusted national brand in USA Kmart has private label and designer clothing that is well endorsed Infrastructure Kmart has a large number of well-located, low-cost, leased stores in urban far away from competitors through out the country ( Appendix B ). Staffing Confidence by the market in Kmart is created by the achievements of its staff and management. With the turn-around strategy in place, new blood has been put into the top management structures. In any renewal there will be retrenchment as unprofitable stores are closed. This can be used as an opportunity to retain and move high performing staff to where they are needed and to get rid of non-performing staff. Anderson the chairperson of Kmart is well supported by Wall Street and the board of Directors. These new staff members enter the company with needed skills to address problems in certain areas that previously were poorly managed such as inventory control and merchandising. Store locations, layout and Performance Stores conveniently located away from competitors like Wal-mart and Target therefore less to compete for customers face-to-face. There are 250 non-performing stores who have already been identified as being more cost effective to close than continue with running costs. Expertise exists in-house for the planning of store layout and appearance to meet different customer segments. This concentration of effort will enable focus on key areas Technology Kmart has already invested in good retailing systems. The system can be use to control inventory, supplier payments, track customer buying and monitor income versus profit margins across all stores. Research and Development The planning department is well established and in cross-functional to provide various perspective. The planning department to ensure that strategies at all levels are executed can further use the access to past data and knowledge of changes in buying patterns. Financial Backing JP Morgan Chase has agreed to support Kmart to avert the current threat of closure due to bankruptcy.
Arthur, A., Thompson, Margaret, A., Peteraf, John, E. Gamble, A., J., Strickland III. (2014). Crafting & Executing Strategy: The Quest for Competitive Advantage 19e: Concepts & Cases. C6-C25.
By the 1980s, just before the rise of Wal-Mart, Kmart had become complacent. It believed it would be the king of discount retailing, now and forever. It didn't perform an accurate SWOT analysis, but to be fair, who could have seen the rise of Wal-Mart to the position of the world's number-one retailer? Still, as Wal-Mart built new stores in town after town, supported by cutthroat pricing and solid logistics, Kmart's complacency would cost them. Part of the problem was that as Wal-Mart was pouring money into information technology (IT), Kmart's IT budget continued to shrink – not just once, but several years in a row. While Wal-Mart's logistics and supply chain management got sharper, Kmart's stagnated. And while Wal-Mart was able to squeeze more value out of its stores and its systems, Kmart lost ground. By the time Kmart had finally decided to start devoting more resources to IT, it was so far behind Wal-Mart that catching up would have been a near-impossible task without the recession in the early part of this decade. With the effects of the recession taken into account, Kmart instead was consigned to also-ran status among discount retailers.
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 25-40.
Porter, M. E., 1999. The Five Forces that Shape Competitive Strategy. Harvard business review, p. 80.
Strategic plan reviews the mission and vision of a company (Armajani 2012). For Best Buy, it aims at providing customers the latest devices and services at an attractive price at any time via multi-channel. And apart from just selling, it provides technical services and warranty of products in order to further improve customers’ experience to which the company highly valued (Best Buy 2014, p.25).
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 25-40.