Founded In 1966, Best Buy Is An American Multinational

1057 WordsApr 25, 20175 Pages
Founded in 1966, Best Buy is an American multinational electronic store for technology and entertainment products and services that have stores in countries like Canada, Mexico, Turkey, UK, but it no longer does in China (Fang, 2012). China’s economic environment has gone through major ideological reforms. Their economic policy went from a centrally planned socialist economy to more of a socialist market economy during the 1970’s. With the reforms enabling rapid industrialization, this pushed citizens away from the agriculture sector and transition its people into the cities. China has the world’s largest population and this transition helped strengthen and grow their middle class (U.S. Census, 2017). This becomes the most ideal…show more content…
However, the fixed prices at Best Buy didn’t put pressure on consumers to purchase items right away. Instead it allowed them to research cheaper prices for the same product on the web. “Many chain operators have strong bargaining power with suppliers and efficient management of the supply chain, which gives companies cost advantages that allows them to retain profit margin,” (Fang, 2012). These issues hurt Best Buy’s expansion into China and, “by 2011, Best Buy closed all of its stores in China and in December 2014, they announced its decision to sell its Five Star stores to Jiayuan,” (Bailey, 2015). Where Best Buy focused on marketing and customer services to differentiate their store from others, their competitors understood that the Chinese consumer was more concerned with products and “good deals” on prices. Since a global strategy requires lots of centralization, this slowed down Corporate’s responsive times to adjust to China’s local market. I believe Best Buy’s performance could have been better had they entered the Chinese market differently. Buying land and building these few big stores similar to what you may find in every American suburban community created expenses that made it more difficult for Best Buy to capitalize on. The congestion of people living in metropolitan areas of China made accessibility very complicated. I would’ve suggested renting or leasing out smaller retail

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