Best Buy's organizational structure and retail evolution from Sound of Music

Best Buy began its operations in 1966 by founder Richard M. Shulze. The company started its operations by a single radio shop called "The Sound of Music." By 1970, Sound of music was already successful and earning annual revenues exceeding one million dollars. The company was selling asa radio and Hi-Fi stereo and maintained a good status, until 1981 when a tornado hit one of the original stores. Tornodo damages its inventory. Inventory was sold from piles in the wrecked stores, it is known as the "Tornado sale," which became an annual event. Intrigued by the idea of selling things in a more non-traditional way, Shulze decided to change the company's name to Best Buy Co. And simply put product out on the shelf for customers to buy instead of behind a glass counter. This idea would find huge success and in a few decades time Best Buy Co. would become the electronics retail giant it is today.

Best buy is presently the number one seller of consumer electronics in the United States and is quickly becoming the leading electronics company in the world. Products sold by best buy range from home appliances to computers as well as other personal electronics and media products. The company's annual income reaches up to 45 billion USD (Yahoo finance, 2009). Presently, Best Buy is one of the few remaining consumer electronics retailers. Having lost its major competitor Circuit City in2009, Best Buy is now in competition with Wal-Mart and Target, both Department stores have competitive target section.

Organizational structure of Best Buy

Organizational structure of the organization is bit complex. The company consists of many sub-organizations like its Best Buy Mobile and Geek Squad divisions. Best Buy also works under a few different names in several countries, for instance in few parts of Canada Best Buy works as Future Shop. For the sake of this analysis we will focus on the basic Best Buy structure as well as the Best Buy Mobile and Geek Squad structures since these are often found in the same locations.

Best Buy is a perfect example of a network style of organization. At the base of the network is the store level employees, this comprises Best Buy sales staff as well as Best Buy Mobile sales, inventory associates and merchandising. Each employee is assigned a department and a department supervisor. The department supervisors typically act as the link between base level employees and management, though often base level employees will deal with store level management directly. Each department supervisor is under a sub-category which is headed by an assistant manager who operates under the general manager. This is the basic structure of a single Best Buy store organization. Best Buy mobile and Geek Squad staff often have to work with management at the store level but they technically are not under the command of a stores assistant or general manager. A stores management staff communicates with district management. District management is allotted with 20 stores to monitor. Best Buy Mobile and Geek squad have their own district staffs to answer to instead of the core Best Buy staff

Districts are allotted to regions, which are controlled by regional managers. There are over 40 regions in Best Buy's organizational structure.

The regional managers are in charge of these regions and answerable directly to corporate staff who work under the company executives. This led us to the top of our organizational structure with the CEO of the organization, and his board of executives. Best Buy mobile and Geek Squad have their own regional and corporate staffs that makes correspondence with the company executives. The company often makes a series of restructuring, most recently in early 2009 where they lay off some people in the store department. However, despite this restructuring the general organization always remains similar to the aforementioned model.

Effectiveness of Leadership style

Leadership style of Best Buy mainly focuses on its employees and its website claims that every day our 167000 employees are committed to helping deliver the technology solutions that enable easy access to people, knowledge, ideas and fun. (Best Buy)

Leadership style of Best Buy has been effective up to now as it gives rewards to those who contribute in by constructive decision-making and company claims that it encourages those employees who dare to take risk.

The leadership style of Best Buy has earned them a status of leading company in the electronics business.

Ineffectiveness of Leadership style

Ineffectiveness of Leadership style of the Best Buy lies that they often punish those employees that fail implement their ideas constructively. Employees do have a fear that they will be fired if they fail.

Secondly another important loophole that seems to have in the leadership style of the Best Buy is lack of proper accountability as Brian Dunn was involved in illicit relationship with an employee women, later on he was fired but it costs considerable amount of profits to company. Moreover, it also cost loss of goodwill to Best Buy as well.

Impact of Organizational Structure on Leadership

Purpose Statement

Every employee wants to be result driven and moreover leaders should also be people oriented so that every employee feels it to be part of the community and moreover leadership should see through complex situation and see alternatives when they are most needed.

Defining the problem

Defining the problem is an art that can be solved only with the true leadership. It can be explained with first day experience of (Brian Dunn ex-CEO). He explains that how his boss define the problem and helps him to solve it.

"It was a Saturday. I hit the sales floor and proceeded to not really understand all the items I was trying to sell to the customers, and it was a series of very difficult exchanges. At the end of the day, the store manager came up to me and said, "How did it go?" I told him in very direct terms it was a lousy experience. The manager proceeded to talk to me about the Minnesota Twins, the Minnesota Vikings, fishing & #8230; He made it personal right away, and then he said, "Why don't you come in next Saturday morning and I'll teach you a little bit about how I operated on the sales floor." And it really made a difference. What stuck with me from that was that the store manager was talking to me about what I was capable of doing here, and was willing to give of him to help."

(Smith, 2008)

Alternative solutions and selected solutions

Best buy claims in their key values that they try to unleash the potential of the employee and enabling employees to see through times polish leadership in Best buy and selected alternative solutions that are feasible.

Current performance of Best Buy

Best Buy declared results for the fourth fiscal quarter of 2012. The giant of electronics industry missed estimates in both the second and third fiscal quarters, and it showed mixed results in the fourth quarter. Revenue came in at $16.6 billion compared to analysts' consensus of $17.15 billion, and non-GAAP earnings of $2.47 per share, up 25% from the same quarter in fiscal 2011, beating the Street's $2.15 EPS consensus. " (epstein, 2012)

Conclusion

Currently Best buy is showing mixed performance but it has been leading company for so many years it looks that their main strength is ideas from their employees which they have driven from their customers by giving them confidence and resultantly their relationship with their investor has been strengthen. Best buy should implement good programmed of accountability from top to down and should keep an eye on every employee and gives rewards for their good performance. A comprehensive accountability programme should be incorporated so that incidents like of Brian Dunn (ex CEO) expulsion should not be repeated.