Strategic Management at Best Buy

Best Buy Case Study

Given Best Buy’s internal and external environment, does the company have appropriate functional strategies? Explain for each function in the company.

Functional strategies are usually a part of the overall corporate strategy that is prepared for the various functional areas in the organizational structure (Wheelen, Hunger, Hoffman, & Bamford, 2018). Best Buy does have appropriate function strategies, which are finance strategy, marketing strategy, operations strategy, and human resources strategy. The financial strategy for Best Buy aimed at increasing revenue. To increase revenue, the company had to undertake some acquisitions and this worked perfectly for the company. The financial strategy focuses on the capital structure of the company by choosing the kind of structure that the company would prefer. Enterprise asset management also falls under this strategy.

The functional marketing strategy focuses on promotional techniques and their application (Wheelen et al., 2018). Pricing optimization, distribution problems, the structure of production, company image, and public relations also fall under marketing strategy. Best Buy focused mostly on customer centricity to cater to specific customer behaviors and needs. Their marketing strategy aimed to market various products based on the customer-centricity model, address customer lifestyle group’s needs, be at the forefront of technological advances, and meet the needs of the customer with end-to-end solutions.

The operating strategy goals for Best Buy were to increase revenues through an increase in customer numbers, successfully implementing sales and marketing strategies across Europe, gaining more market share internationally, and have multiple brands to cater for the different customer lifestyles by Merger and Acquisitions. This was the strategy that Best Buy focused upon and it worked pretty well for the company.

The human resources strategy was to ensure that the employees are adequately trained to offer the customers the right knowledge regarding the products and services that the company sells. This functional area also focused on portraying the strategy and vision of the company on an everyday basis and educating employees on the ins and outs of any new products and services.

What should be Best Buy’s strategic approach to its competitors, both online and Wal-Mart?

Best Buy should focus on value addition to its consumers. With most of its competitors only interested in selling the product, Best Buy must differentiate itself by the value it adds to the consumer. The company should continue training its employees on the new products and services it is launching. This allows the sales staff to answer customer questions. They can also be able to advise the customers on the best fit for them based on their needs. This is a good value addition since the consumer will not get the same level of assistance anywhere else. Consumers who are not knowledgeable regarding electronics will benefit the most and they will keep going back to Best Buy for all their electronic needs since they are assured of assistance. Having staff who will even go to install and set up the electronics at the customer's house is another value that the competitors do not have.

Best Buy should also look into launching an online store to rival Amazon. The online store should be targeted to all its current locations and to other locations where the company does not have a physical presence. Online stores allow the company to reach out to consumers in far-flung locations who require the products and services that the company offers. With the online store, the company can still offer the consumer the vital information regarding the products and have a team that is ready to answer all the questions raised online. This way there will be no disconnect between the offline and online stores. The value adds that comes with purchasing a product from Best Buy physical shop can also be included. However, this would be restricted by location. It is not possible to have technicians located all over the world. Therefore, it will not be possible to offer installation services for all customers.

Of Best Buy’s three core competencies identified in the case, which one could most likely represent a sustainable competitive advantage for the company?

The consumer-centricity model is most likely to represent a sustainable competitive advantage for the company. The reasoning behind this is that this model is focused on the consumer and the changing needs of the consumer. For a company to continue being competitive it needs to ensure that it does what it does in the best way possible. As has been shown this model is resource-intensive, which makes it hard for competitors to replicate. The electronics industry is constantly changing and the company has to ensure that its sales staff are trained about the new products and services that the company is offering. The sales staff need this information if they are to comprehensively answer the questions that customers ask. This means that the company spends a considerable amount of money training its employs and this would be a hindrance to its competitors. This model is sustainable since there will always be consumers who prefer to make their purchases from a physical store as compared to an online store.

Consumer education is beneficial to the company as the consumer does not feel like the company sales staff are trying too hard to sell a particular product. The sales staff focusing on giving information about the different products and the advantages of one over the other allows the consumer to make their own choice based on what the customer wants. Therefore, the purchase decision comes from the customer and not from the sales staff. Consumers who are not comfortable with making purchases online can visit a store where they will be given advice and support in their purchase decision. Support comes in many forms including being supported to make the installation if they are not proficient or if they need assistance. This gives the company an edge over its rivals as they do not offer such a service. The additional setup and installation service can be sold easily as it is linked directly to a product the consumer is purchasing.

Given the information in the case, how would you advise Best Buy’s executive management team on strategy formulation for the company going forward?

From the information, it is clear that the company has some things that are working and others are not working. Electronics retailers will be affected by an economic downturn and the company should be prepared for the impact this would have on its revenue streams. The company will have to rethink its model of not competing on pricing. If the consumers do not have the funds to purchase electronics they will seek the cheapest retailer regardless of the service offered. Best Buys should look into cutting down on staff training to ensure that it can manage to have competitive prices for its products. While staff training is vital, with a depressed economy peoples' spending power is reduced and they will only be buying what they can afford. If a product can be found elsewhere cheaply, they are likely to buy it there even if the service is not top-notch.