Best Buy Inc. is a specialty retailer in the U.S, specializing in entertainment software, personal computers, consumer electronics, and related services. The company has over 1,150 retail stores across America, China, and Canada. Best Buy offers various products including their own private brands such as Geek Squad, Init, Rocketfish, Insignia, and Dynex. It operates in two main segments: international and domestic. The international segment includes Chinese and Canadian stores along with online operations. The domestic segment includes U.S stores and online operations including Geek Squad,Bath Centers,Best Buy,Magnolia Audio Video,and Pacific Sales Kitchen.This paper aims to analyze how Best Buy adds value to its business system known as the value chain for creating shareholder value and gaining a competitive advantage.
Best Buy focuses primarily on expanding its customer base and reaching new markets, while also strengthening its current position. This involve
...s implementing a customer-centric approach and acquiring suitable targets both operationally and financially. The company's strategy encompasses inbound logistics, operations, outbound logistics, sales, marketing, and service.
In terms of inbound logistics, Best Buy sources input from multiple suppliers through various centers in the United States as well as distribution centers in Ontario and British Columbia, Canada. In 2005, the company had over 20 suppliers accounting for half of their merchandise purchases. By 2008, their largest suppliers (such as Apple, Toshiba, Samsung, Sony, and Hewlett-Packard) accounted for nearly 60% of purchases.
For outbound logistics, Best Buy utilizes direct and indirect channels such as online platforms and retail mechanisms to deliver products and services to customers. Their sales and marketing strategy positions them competitively against main rivals. One aspect of this strategy is their gift card program which defers proceeds unti
a customer uses the card to make a purchase – an approach that helps enhance customer loyalty.
Furthermore,Best Buy Company also sells extended contracts on behalf of third parties with commissions being recognized in revenue at the time of sale.The company itself supports the primary activities of the company, including infrastructure, human resource management, technology development, and procurement. Best Buy has fostered a culture that encourages approachability, friendliness, and respect among employees and clients. This culture has transformed their offices into collaborative spaces focused on teamwork. With a large workforce of over 167,000 employees and a growth rate of 7.2 percent, Best Buy has one of the industry's largest human resources. Their procurement program is highly effective thanks to strong relationships with suppliers that enable efficient timing of merchandise receipts and distribution consolidation (Serres, 2007). Additionally, Best Buy has implemented a new labor model that combines hourly pay with commissioned sales to keep up with technological advancements. Despite not focusing on research and development activities from 2005 to 2008, Best Buy has been successful in generating value for shareholders and establishing themselves as an industry leader. They were named Forbes Magazine's Company of the Year in 2004 and ranked among the top 10 "America's Most Generous Corporation" in 2005 by Forbes Magazine as well.
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