Introduction
Best Buy Co., Inc. is a retail business enterprise that deals in consumer electronics. In addition, the stocks of Best Buy Co. are traded within the New York Stock Exchange. It is interesting to note that Best Buy Company commands approximately 20% of the US domestic market share in consumer electronics. The firm distributes its products through the 24 stores located in the United States of America (Kwok, Dornbach-Bender, and Lange).
In addition, Best Buy Company also operates the United Kingdom, Mexico, and Turkey. In 2011, Best Buy Co. was ranked amongst the 100 best firms in the US. The following SWOT analysis aims at identifying the strengths, weaknesses, opportunities, and threats of Best Buy Company within the consumer electronics market. In addition, the paper provides specific recommendations in relation to the SWOT analysis.
SWOT Analysis of Best Buy Company
SWOT analysis is one of the strategic management tools that enterprises use in order to understand their strengths, weaknesses, opportunities, and threats. Through SWOT analysis it becomes very easy for a firm to understand how to use the strengths and opportunities to overcome the weaknesses and threats for the purposes of achieving their set objectives and targets.
Strengths
Indisputably, Best Buy Company is regarded as the largest firm selling consumer electronics in USA and other countries such as Mexico, Turkey, and the UK. The reason as to why the Best Buy Company is able to command approximately 20% of the consumer electronics market share is the unique market position.
Market positioning is an important strategy in ensuring that consumers are able to obtain the required goods. In addition, Best Buy Company has an extensive network of outlets and subsidiaries, which make the firm able to access many consumers within a shorter period (Kwok, Dornbach-Bender, and Lange). The strong network of stores enables the firm to continue enjoying economies of scale hence further positive performance.
According to Gulati, Best Buy Company operates a profitable business that has the capability and potential of growing. Increased growth rates, profitability, as well as the extensive involvement of the community are some of the strengths that Best Buy Company enjoys.
It is also important to note that another Best Buy Company’s strength stems from the alliances it has with not only the subsidiaries but also the consumers and other firms within related industries (Kwok, Dornbach-Bender, and Lange). Such alliances enable healthy relationships for business performance.
Weaknesses
Despite being ranked amongst the best 100 firms in the US based on its strengths, Best Buy Company has some specific weaknesses. The weaknesses include limited suppliers of consumer electronics, increased lawsuits, and insufficient geographic concentration. Best Buy Co. continues to over-rely on few suppliers hence subjecting the firm to serious consequences (Gulati).
In a different perspective, Best Buy Co. does not have any long term contracts besides the fact that there are many lawsuits that have so far been filed by some consumers and other competitors (Kwok, Dornbach-Bender, and Lange). For instance, some consumers charged the firm with an offence of hiding warranty details. Hence, Best Buy Co. continues to experience various forms of weaknesses.
Opportunities
Many opportunities exist within the consumer electronics market. Best Buy Co. has opportunities for making significant mergers and acquisitions. Through mergers and acquisitions, Best Buy Co. can grow and expand exponentially. Amazingly, over the past years Best Buy Co has been able to acquire more companies.
Strategic acquisition is a move that increases not only a firm’s capacity but also customer base. In addition, strategic opportunities will enable Best Buy Co. to enter into new markets, create new products, and enhance their company names (Gulati). Another opportunity that Best Buy Co. has is opening up opportunities in other countries through globalization.
Threats
Even though the consumer electronics market provides many opportunities, there are threats that Best Buy Co. needs to consider. The biggest threat that Best Buy Co. faces is competition.
With the reduction in barriers to new entrants, there has been increased number of firms within the consumer electronics market causing serious competition. Other than new entrants, Best Buy Co. needs to compete effectively with large firms such as Wal-Mart, which have some attractive offers such as free installations (Kwok, Dornbach-Bender, and Lange).
Furthermore, the increase in prices of electronics caused by the high inflation rate caused by global financial and economic crises has also posed serious threats on the firm. There have also been rising operating costs as well as fluctuations within the US economy (Gulati). These are the main threats that Best Buy Co. continues to face.
The following diagram provides a summary of the strengths, weaknesses, opportunities, and threats that Best Buy Co. continues to face.
Recommendations
Based on the above SWOT analysis, it is evident that there is need to have adequate strategies that would enable Best Buy Co. to continue performing exemplary. For instance, the firm needs to embark on intensive and extensive marketing and other promotional services in order to offer stiff competition to its competitors.
Furthermore, there is need for Best Buy Co. to expand its operations in other countries other than the US, Turkey, UK, and Mexico. Expanding the activities in other countries will provide additional market opportunities. Nonetheless, there is no doubt that Best Buy Co. has continued to perform effectively.
Works Cited
Gulati, Ranjay. “Inside Best Buy’s customer-centric strategy”. Harvard Business Review, (2010). Web.
Kwok, Ian., Dornbach-Bender, Rhett., and Lange, Rebecca. “Strategic report for Best Buy Co.”, Oasis Consulting, (2009): Web.