Best Buy Case Analysis

643 WordsApr 15, 20143 Pages
Best Buy Case Analysis In 1966 Best Buy began as a single location car and home stereo store founded by Richard Shulze in Minnesota. Now the company is an electronic superstore that has thousands of stores throughout the U.S., Canada, the U.K., and Asia. Best Buy has set themselves apart from its competitors, and have been successful for decades. The electronic superstore sells consumer electronics, home office equipment, appliances, and electronic services. Best Buy showed that they were the electronic store giant when their competitors, Circuit City and CompUSA were shut down due to the recession. Unlike these companies, the recession did not slow Best Buy’s revenue until 2011 when they had a sluggish 1.16 revenue growth for the 2011…show more content…
According to Ran Jay Gulati of Harvard Business School, Best buy was able to do a better job than its competitors at looking at the electronic industry. They do not look at the industry from a company standpoint but instead from a consumer point of view. Instead of telling customers what to buy, they figure out what the customers want, and their tendencies. Best Buy is also highly skillful at anticipating all the needs a customer may have when they come into the store looking to buy a product. The economic downturn and changes in the competitive nature of the industry has affected Best Buy and is a reason for it’s sluggish growth in 2011. A major attribute that factored into Best Buy’s decreasing net income was an increase in selling, general and administrative expenses. They did not adjust their fixed costs when their revenue growth decreased and the economic downturn changed it’s competitive nature. Of Best Buy’s total gross revenues domestic sales contributed to 74 percent while the international segment contributed to the rest. Best Buy’s most successful international regions consist of Europe, Canada, and China and their international gross revenue has increased 15 percent per year whereas their domestic gross revenue has only increased to less than 6 percent per year. Compared to their competitors, Best Buy’s gross profit margin ranks second only to Wal-Mart’s. Their 25.14 percent is only slightly less than Wal-Mart’s 25.26 percent.
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