Threat Of Best Buy Essay

One threat to SHLD is its competition with many retailers because it is not very differentiated from its competitors and lacks brand loyalty, thus nothing is stopping the customer from overlooking Sears and visiting a rival retailer. Another threat is a downturn in the economy which could wreck havoc on SHLD’s financial position.

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 variety of brand names such as Best Buy, Best Buy Mobile, The Carphone Warehouse, Five Star, Future Shop, Geek Squad, Magnolia Audio Video, Pacific Sales, and The Phone House (Bestbuy.com, 4). The domestic segment consists of all operations within the United States, while the international segment includes all operations in Canada, Europe, Mexico, and China. The Best Buy 's success is contingent on the market 's demand for electronics. The company 's strategy is to provide good customer service combined with lower prices (news.cnet.com). Best Buy 's success is directly related to economic conditions, the cost of goods, and other things like fuel prices. The company 's strategy depends upon the ability to offer customers a broad selection of name-brand products; therefore, leading its success to depend upon satisfactory supplier relationships (Bestbuy.com, 8). Best Buy, as it is included in the retail segment, is a seasonal store. Their stronger quarter is the fourth quarter, which they can contribute to the holiday season for their success.

Strong threat from Amazon.com as change in consumer purchase habits shows a trend towards home-shopping.

Best buy is a company that offers technology, products, and services. It is one of the leading companies in electronic sales. This company has over 1,000 locations worldwide and due to all these stores Best Buy seems to run into some type of conflict throughout the years. The two components of conflict, Task and relationship conflict all had influenced on how Best Buy dealt with the problems they faced as demonstrated throughout the lawsuits, conflicts with rival companies and trouble within the organization. Best buy being such a large organization is usually going to run into some conflicts.

To understand Best Buy’s performance, it is important to use Porter’s Five Forces framework to analyze best buy and other firms in the retail industry; more specifically the consumer electronics retail industry. Barriers to entry/Threat of New Entrants The threat of new entrants in this industry are low, due to the large amount of capital needed for the physical location and costly inventory. In 2012, Best Buy’s financial statements showed that the company spent $766 million updating stores and introducing new technology. This is common for stores in this industry, which will deter new entrants from coming in because they just don’t have the initial capital.

The organization has also faced a lot of challenges mainly due to the changing times where people primarily use the internet to purchase items rather than going to the shop themselves. Various factors contributed to the success of Best Buy. One of the reasons was that when they decided to go global

This company partners with over 120 factories and some that are located overseas which provide foreign jobs. They work hand and hand with the suppliers on the design, production and testing on all products. They also exceed expectations for a safe and healthy work environment where all workers are treated fairly, respectfully and equally and same to the customers. In my research I also came across that Best Buy also participates in a U.S. and China joint Customs and Border Protection, they are also involved in a program called Custom-Trade Partnership Against Terrorism (C-TPAT) in which I found very intriguing since you never hear of companies doing this or at least I have not, since I am military and while finding this out they will now have more support from me. I would say Best Buy is an organization that takes its social and ethic responsibilities serious and has surpassed my expectations.

The forces characterize an industry by considering the threat of new entrants, power of buyers and suppliers, threat of substitutes and the impact among rival competitors. The threat of substitutes is the strongest for Costco. This threat comes from specialty discount stores, broad product discounters and hypermarkets followed by online sellers as an alternative threat. Both act to increase the power of existing buyers, particularly for shoppers who are satisfying needs versus wants.

With more than 60% of Amazon's revenue coming from general merchandise and electronic sales, this might be the most significant threat facing the company

Industry Rivals – Industry Rivals such as Circuit City and Radio Shack have been hurt in some markets due to the expansion of Best Buy, but by having a better customer service rating, some customers are coming back.

The threat of substitutes for Amazon is high. With the exception of its patented technology, there are quite a lot of alternatives to Amazon’s products and services. In addition to physical presence, most companies have an online store as well. Amazon’s products can be purchased all over the internet and they are just spread out among different web sites. The companies operate in brick-and-click mode providing the similar product categories and competitive prices have become the biggest threat for Amazon. However it is extremely difficult for Amazon to establish physical stores or launch price

The level of threat to the industry is relatively high with competition from the Internet changing the face of merchandising the most. Big names like Wal-Mart and

It makes sense for Best Buy to worry more about Wal-Mart, which is getting more involved in electronics retailing, and less about Circuit City. The competitors are a diverse lot today, and for them to continue to grow they're going to have to get much better at everything they do and define themselves in clear ways. Best Buy's plan is to revamp its stores according to the types of customers they serve. A strategy previously mentioned, customer centricity, focuses on targeting five prototypical customers, all of whom have been given names: "Jill," a busy suburban mom; "Buzz," a focused, active younger male; "Ray," a family man who likes his technology practical; "BB4B" (short for Best Buy for Business), a small professional employer; and "Barry," an affluent professional male who's likely to drop tens of thousands of dollars on a home theater system. Their most current focus is on a "Jill" based store, the soccer mom who has money to spend but typically hasn't a clue of where or how to find products in the store. According to the data Best Buy has collected, Jill shops a few times a year, usually twice at an electronics store, but she usually spends a significant amount.

As the U.S. economy has slowed, bringing consumer spending down with it, nearly every retailer has felt some pain. Best Buy has managed this crisis better than its most similar competitors, considering that the slowdown all but killed Circuit City and CompUSA. Nevertheless, Best Buy’s stock fell 16% from December 2007 to February 2008, and has fallen another 12% since then, while low-cost retail leaders such as Wal-Mart have benefited as consumers seek out the lowest possible price for everyday necessities. Best Buy’s

As we can see they have poor employees and service, which takes away from the business because people rather not go to a place like that. This becomes a major threat because when you have other stores like Amazon, Wal-Mart, Costco, where there are all the same products sold and maybe even at better prices, people are going to want to go to there. These other major stores definitely attract people because they have low prices and keep up with people’s demands. Wal-Mart is even known to match competitors prices and Amazon usually always offers free shipping and low prices. When you see other stores that do better you go to them. You choose places where you are most