Best Buy Business Model

Introduction
This plan of action is to denote exactly what measures Best Buy must take to ensure that it is able to both maintain, as well as expand, its share of the retail market for electronics and other retail items. The truth of the matter is at this point Best Buy is at a critical juncture in both its business model and processes, and must proceed in the right direction in order to achieve the aforementioned objectives. Failure, then, to heed this report and all of its details could mean a regression of Best Buy’s business opportunities.
Situation Analysis:
There are a number of prominent facets of key analytics proof points indicative of the situation in which Best Buy finds itself as 2017 transitions to 2018. One of the most significant of these pertains to its international business. Best Buy’s international business is one the few key areas which was not positively impacted by the Renew Blue plan which you implemented a number of years ago, Mr. Jolly. In fact, it has continued to flounder the way it had prior to the implementation of Renew Blue. Proof of this fact is demonstrated by the December unveiling of Best Buy’s attempts to sell all of its operations in China. Also supporting this fact is the reality that through the early part of 2015 Best Buy was trying to consolidate the remainder of its international business.
Another key point regarding Best Buy’s situation which I am sure you are well aware of is the way the electronics market, and the retail industry as a whole, has transitioned. The first is the onset of online purchases, ecommerce, and mobile shopping. A good percentage of the market share for electronics and retail focuses on these core areas; this fact is immensely reflected in the success of Best Buy’s online activity. Developments in showrooming and webrooming are indicative of this reality; Best Buy has utilized this knowledge to impact its online activities in relation to those related to physical stores. However, the chief point regarding the advent of online shopping is the fact that Best Buy’s main competitors are no longer traditional bricks and mortar operations such as Circuit City, which went out of business a while ago. Although there is still substantial amount of business value generated from physical stores (Amazon’s unveiling of physical locations reinforces this point), Best Buy is competing in a contemporary market largely based online and mobile technologies. Thus, the company’s business model must adjust to reflect these facts accordingly.
Recommendations
In lieu of this situation analysis, the first recommendation is for Best Buy to discontinue its presences in the international electronics and retail industry. Long before the aforementioned events at the end of 2014 and at the beginning of 2015, Best Buy’s international business was consistently losing market share. The implementation for this recommendation should take place immediately. By the end of 2018 Best Buy should sell off all of its international businesses, including its Best Buy Mobile stores. Doing so would behoove the company by not only generating a source of revenue from the sales, but also enabling it to focus the rest of its material and personnel resources on its domestic engagements. As such, it should serve as a win-win situation which helps the organization to concentrate on its more lucrative business endeavors.
Another recommendation is to focus the bulk of the Renew Blue strategy on the confluence between online and physical store resources. No one can argue that the fundamental strength of the Renew Blue measures is the online productivity and sales ramifications. Online sales are the primary reason why the Renew Blue initiative was able to make a billion dollars at the end of its initial phase. The principal weakness of Renew Blue was the resources allocated to the international business activities, for which the previous recommendation accounts. The principal threat to the Renew Blue plan is the online activities of competitors such as Wal-Mart and Amazon, while the most salient opportunity for this plan is leverage showrooming and webrooming opportunities. The projected goal for the second phase of this plan is to raise another 400 million in capital by 2018. The specific strategy behind Best Buy’s showrooming and webrooming opportunities involves maximizing the online environment to affect physical store sales, and optimizing physical store sale activities to advantage the online environment. Thus, at various points during the year Best Buy should have more competitive prices online than in store, and also have more competitive prices in-store than online. Doing so will fuel the trend of having customers price things in store and then purchase them online at a better bargain, as well as the opposite. This recommendation also pertains to the current numbers game in which Best Buy should continue to attempt to actively match the prices of competitors such as Amazon. The objective is for the showrooming practices to counteract the effects of the webrooming practices, and vice versa.
Implicit to this recommendation is the recommendation to continue utilizing a multi-channel product and service delivery model. As you yourself have previously identified, Mr. Jolly, this facet of Best Buy’s business is one of its core differentiators against competitors such as Amazon and Wal-Mart. The three facets of this multi-channel are online operations, physical store locations, and in-home service. The latter is one which the company must continue to keep leveraging in order to maintain this facet of competitor differentiation. The specific implementation goal for this recommendation is to benchmark Amazon’s delivery model—particularly its delivery times and delivery prices. Meanwhile, it is essential to continue utilizing the Geek Squad as a means of further personalizing both customer interactions and service delivery. This facet of Best Buy is one of its strengths and should be incorporated into this strategic measure.
Your plan of action for resolving the case issue(s). Should be as specific as possible and include implementation details and dates. Be sure to include expected benefits of your actions (for example, expected revenues or profit) and possible risks.
Conclusion
In summary, there are three recommendations which my firm has found will be instrumental in Best Buy’s ability to effect competitive advantage in the coming year. The first is to sell of its international locations at a profit, enabling the company to dedicate those resources to its domestic ventures in North America. The second is to balance the efforts of showrooming with webrooming by alternating the different times of the year in which there are lower prices online or in store to remain competitive with entities such as Amazon. Finally, the company should prioritize its multi-channel approach as well. You can contact me online for any questions.