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Internal organization Analysis of Best Buy Company Report

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Updated: Jun 15th, 2019

The perpetual technological development has made organizations to device new approaches of operating in the current global and dynamic market in order to remain relevant. Best Buy Company is not an exemption. Resources, whether tangible or intangible, form the core competencies for organizations to acquire strategic competitiveness (Hitt, Ireland, and Hoskisson 72).

The process of gaining competitive advantage requires a vivid internal analysis of a company’s strengths, opportunities, weaknesses, and threats. With the global economy, firms like Wal-Mart and Best Buy have to understand their internal operations to guide them in analyzing and managing an internal organization from a multi-faceted approach. With the fall of Circuit City in 2009, Target and Wal-Mart remain the main competitors of Best Buy, as they deal in electronics.

The company’s internal capabilities can enable it sustain its competitive edge; for instance, the numerous shopping outlets make it possible for Best Buy to remain in contact with large customer base.

In analyzing resources, capabilities, and core competencies that firms can manipulate to gain competitive edge and strategic competitiveness over its perennial competitors, the treatise takes a case example of the Best Buy Company. Moreover, the discourse discusses how the management and the entire leadership attempt to bring out the best from the company’s internal opportunities.

Best Buy is a dealer in appliances, computers, video games, cell phones, and electronic products. In addition, the company offers online e-commerce, as well as internet services. At the same time, the inclusion of IT services like online e-commerce and cloud computing make Best Buy to face stiff competition from Google, Amazon, and Digital River (Fitzsimmons par. 3). With stiff competition from the multibillion firms, Best Buy has to supply products that fully meet the needs of the customers as compared to those of the competitors.

The concept of product branding is significant in enhancing customers’ satisfaction since effective organizations use customers’ feedbacks in producing future products. Best Buy enjoys a strong brand presence that the CEO Hubert Joly and the knowledgeable staff have built to create strategic competitiveness. Since no competitive advantage lasts forever, Best Buy constantly applies innovation in their operations in order to come up with new product designs and supply chains.

The strengths of Best Buy include the affordability and commonality of electronic products, use of Geek Squad in enhancing competency in technological services to customers, and the creation of Best Buy Mobile that offers all-inclusive assortment of mobile phones and their accessories (Chang, Heelan, and King par. 4). Moreover, the company has well-known brands, and strong internet presence and online infrastructure.

The former CEO, Brad Anderson believed in concluding sales well, selecting the right merchandise, and opening new stores, as the key capabilities for the company. These company’s core competencies based their strength on the vast resources that the firm obtained through motivation, training, and product education.

On the part of its weaknesses, the company has witnessed major governance challenges, variety of brands, improper management of inventory, and weakening of financial conditions. The company’s financial strength is revealed with the annual income exceeding $45 billion, domestic revenue reaching $38.5 billion while international revenue reaching $13.0 billion in 2011.

The period of 2007 to 2010 has reported an increase in international gross revenue at an average of 15% per annum, while in the domestic segment it has reported less than 6%.

The financial resources, which form part of the tangible resources, present an internal strength of the company, as well as the right number of stores with updated products. In North America, the company has 1,400 stores, and across China and Europe, there are over 2,500 stores. In 2010, the company opened the first big box store and transformed Chinese outlets to Five Star branded stores.

With a profit of $651 million and revenue of $16.26 billion in 2011 and knowledgeable personnel, the giant electronic retailer can invest in the intangible resources through talent management (Chang, Heelan, and King par. 8). In this dimension, Best Buy can get involved in training the available 120,000 employees, as well as hiring competent employees in order to give them competitive edge in the crowded market. As part of the intangible resources, Best Buy has to ensure that it remains updated on changes in the electronic market.

Being a technological company, training the large number of employees increases the expertise level needed for large-scale operations. Training the available workforce on new technological developments will enable the firm to be up-to-date with the customers’ needs; therefore, it will offer services that satisfy customers at any instance. If the corporation invests in the available human resource, it will attain competitive edge over its competitors like Amazon and Wal-Mart.

The approach to train employees on technical issues will help in offering specialized services to consumers; a service that is not common in other electronic retailers like Wal-Mart (Chang, Heelan, and King par. 9). The company can customize the diverse workforce that consists of technicians, personal shoppers and other expertise to enhance productivity in specific segments.

Customizing employees to each segment can assist the firm in presenting technology in better ways than the competitors do, giving valuable suggestions available, and cross-selling leading to larger margins. However, the process of customization increases expenses, as evident in the third quarter of 2005 in which expenses hiked to 21.7% in comparison to 19.5% in the previous year.

In line with the aforementioned strengths, the firm can outsource to China given that the country has lower cost of production compared to the US. Evidently, a reduction in the production cost implies a high working capital, thus increasing investment opportunities for Best Buy Corporation.

The entire process calls for creativity as a way of creating unique, valuable, and difficult-to-copy competitive advantages. In this aspect, competitive advantage is not about operational effectiveness, which involves executing similar services far much beyond what the rivals do; it entails executing similar services in different ways from the competitors or executing different services from those of the competitors.

Outsourcing, benchmarking, and business process engineering are some of the recent innovations within the management field that businesses have applied in the activities. With threats of stiff competition to reduce prices and awesome advertisement tactics in the crowded market, Best Buy has position its different brands in a manner that is rare, non-substitutable, valuable, and costly to imitate by the competitors.

Wal-Mart’s growth is also a great threat to Best Buy given that it rose 5% behind the company. In order to maintain a competitive edge over this perennial competitor, managers at Best Buy must assist the company in obtaining and using resources, capabilities, and core competencies in means that create value (Fitzsimmons par. 7).

In sum, creating value for customers and possessing a global mind-set help top executives to avoid uncertainty, complexity, and intra-organizational conflict that can affect managerial decisions about a firm’s core competencies, capabilities, and resources.

The reputational resources and strong borrowing capacity that Best Buy commands position it at an advantage edge over its competitors. Markedly, the abundant resources cannot make the corporation to gain competitive advantage over its competitors if there are no competent and dedicated management to set up strategic competitive ideas.

Works Cited

Chang, Dennis, Kayla Heelan, and Rachanda King. Best Buy Analysis. Slideshare.net. N.p., n.d. Web.

Fitzsimmons, Kakie. Best Buy Corporation Strategic Management Analysis. Academia.edu. N.p., n.d. Web.

Hitt, Michael A., R. Duane Ireland, and Robert E. Hoskisson. Strategic management: competitiveness and globalization. 3rd ed. Cincinnati: South-Western College Pub., 1999. Print.

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