Best Buy Incorporation is the largest retailer of consumer electronics in the country (Best Buy Co., Inc. Company Profile, 2014). The retailer expands its business by acquiring new companies. The company’s internal environment explains why it is a leading retailer in the country. The company faces numerous challenges from new competitors in the industry. The bargaining power of its suppliers is forcing the company to utilize the best business practices. The customers are expecting the company to provide quality devices and services. The industry is full of electronics from foreign marketers and manufacturers such as Samsung and Sony (Best Buy Co., Inc. Company Profile, 2014). This explains why more customers are purchasing different consumer electronics from Best Buy’s competitors. The current economic situation explains why more retailers might emerge in the coming years. These retailers will market their electronics to the existing customers.
The above Porter’s Five Forces model explains why this industry is becoming attractive and competitive. Most of the competing companies such as Amazon.com, Wal-Mart, and eBay are making it impossible for Best Buy to retain its customers. The current wave of online marketing is also attracting more retailers thus making the industry more competitive. Industrial rivalry is also on the rise. Most of the competitors in the consumer electronics industry are marketing the same products to the existing consumers (Gibson & Billings, 2003). This explains why the level of rivalry has increased in the industry (Gibson & Billings, 2003). The leading competitors such as Wal-Mart and eBay always provide better services and support to their customers. This situation explains why more companies and retailers might emerge in the future. These competitors have succeeded because of their business strategies.
The current situation also shows how companies such as Wal-Mart, Best Buy, Amazon, and eBay have continued to attract more customers in this sector. These giant retailers provide customized and quality services to their customers. The consumer electronics industry does not encounter any threat from potential new entrants. New investors will incur many expenses to open big electronic stores in the country. Best Buy has spent millions of dollars to remodel its stores. This explains why only a few retailers might invest in this sector. Best Buy’s business strategy depends on the bargaining powers of its suppliers. The leading suppliers include Dell, Yamaha, Samsung, and Apple. These “suppliers have a huge bargaining power” (Gibson & Billings, 2003, p. 64). The bargaining power of every supplier determines the success of the competitors in the consumer electronics industry (Company Information Best Buy, 2014). The case study also explains why every customer can purchase substitute goods from other retailers such as Amazon and eBay. This situation discourages new investors from joining the industry. The existing customers expect quality services and products from these retailers. This explains why a new competitor cannot provide quality services to the existing customers.
The leading competitors in the industry have established the best networks and strategies in order to succeed. This has increased the level of business rivalry. This scenario explains why the consumer electronics industry appears less attractive for new competitors. The strengths of the major companies in the industry explain why Best Buy continues to face new challenges (Ferrell & Hartline, 2010). Best Buy should reconsider the best strategies in order to achieve its goals. The company should also differentiate its business strategies in order to provide quality products to its customers.
Reference List
Best Buy Co., Inc. Company Profile. (2014). Web.
Company Information Best Buy. (2014). Web.
Ferrell, C., & Hartline, M. (2010). Marketing Strategy. New York: South-Western College Publisher.
Gibson, E., & Billings, A. (2003). Big Change at Best Buy: One Company’s Wild Ride Through Hyper-growth to Sustained Excellence. New York: Wiley.