Introduction
The model that has been developed by Michael Porter can be viewed as incredibly efficient and still can be used by modern companies. The need to have an understanding of the firm’s strengths and weaknesses should not be disregarded during the development of their strategies, and it could lead to a significant competitive advantage in most cases (Porter, 1991).
Rivalry
Best buy is one of the most well-known corporations that operates all over the globe and is focused on consumer electronics. Such retail companies as Radioshack and Circuit city may be viewed as direct competitors because they offer similar services and are aimed at the same target market. Also, it is important to note that the company has to deal with indirect competitors such as Amazon, E-Bay, Wal-Mart and others.
Another issue that should not be overlooked is that the popularity of online sales has been increasing over the years, and many companies may use this approach to minimize unnecessary expenses.
However, Best Buy is capable of using this aspect to its advantage. For instance, an individual may make a purchase, and the product will be delivered to a particular address or may be picked up at a store. It is necessary to mention that the second choice is beneficial for both parties because a customer will be able to avoid shipping fees, and a company will not have to deal with possible issues (Rao, Goldsby, & Iyengar, 2009).
Substitutes
Furthermore, it is understandable that many other companies offer products that are quite similar, but the enterprise takes advantage of the fact that the brand is well-known, and has managed to build valuable relationships with many consumers.
It is imperative to note that smartphones and tablets have many alternatives, and it is especially true for devices that are based on Android platform. Most of the products have similar specifications, but some of them have unique functionality and the role of materials have also been increasing because consumers want their devices to be durable.
Moreover, another aspect that should not be disregarded is that it may be necessary to put such products in different groups. However, it is important to understand that many other competitors do not provide such enormous variety of devices, and the quality of service is also lower most of the time (Bansal & Moritz, 2015).
Buyer Power
The role of buyer power also should not be overlooked most of the time, and a company should base its strategies depending on the target market. It can be described as an ability of consumers to influence the prices, quality of products and other aspects.
It is paramount to understand that an enterprise may be able to reduce buyer power if it is necessary and such approach is regarded as efficient. Also, it is necessary to mention that their influence increases if numerous alternatives are available, and a retailer has to reduce prices or participate in other activities to attract and retain consumers.
Discussion
Another aspect that should be mentioned is that the demands of customers are always increasing, and their expectations are set incredibly high at this point. However, the ability of consumers to influence prices is rather limited, and they have to accept offers that are made because electronics are of utmost importance in modern society, and it may be hard to find alternatives. On the other hand, the influence of suppliers is incredibly high most of the time because the business is dependent on them.
However, it is necessary to understand that manufacturers receive an enormous percentage of profits because of collaboration with Best Buy, and it is in their interest to ensure that both parties are satisfied with terms.
Moreover, it is paramount to understand that the complexity of many contracts and agreements has also increased recently, and such issues as global crises are especially problematic. The problem that needs to be mentioned is that suppliers may compete with others in some cases, and it is important to ensure that such conflicts are resolved because it may hurt the business in the long-term (Miklós‐Thal, Rey, & Vergé, 2011).
Barriers
The biggest problem many competitors have to deal with is that many companies in this industry are already well-established and have managed to get an excellent position on the market. Moreover, it is important to invest an enormous amount of resources because the industry is not stable most of the time, and some technologies that are introduced may be disruptive.
Also, it is necessary to note that connections with suppliers are of utmost importance, and it may not be an easy task for a new firm to get access to all the necessary products. Moreover, it is important to understand that such companies as Best Buy have invested amounts of resources into research of emerging technologies and approaches, and they keep track of latest trends in the industry to stay ahead of competitors (Chakravarthy & Lorange, 2007).
Another barrier that needs to be mentioned is that it may not be an easy task to attract the attention of customers because they prefer products from well-known companies most of the time. Overall, the biggest problem that firms may have to deal with is that it may not be an easy task to liquefy such businesses most of the time if any issues occur, and many enterprises are not ready to deal with such enormous risks.
Threats from the side of competitors also need to be mentioned. It is understandable that a business that has received support and investments may be able to gain a significant competitive advantage. Also, some of the strategies and techniques that may be used to attract customers must be taken into account. However, the fact that many consumers prefer to stay loyal to a particular brand should not be overlooked, and many enterprises provide such clients with a range of benefits such as discounts and others.
Conclusion
In conclusion, it is evident that Best Buy has managed to gain an advantageous position in the market and has managed to build an enormous base of clients thanks to efficient strategies and outstanding marketing. Also, it is necessary to mention that the company understands the importance of five forces that have been suggested by Porter, and consider them during the development of their approaches.
Moreover, it is necessary to note that numerous internal and external factors should be taken into account, and it is entirely possible that a relatively new firm will be capable of entering the market. However, the fact that the enterprise will have to deal with numerous issues should not be overlooked, and the situation is not going to change anytime soon because the current state of the industry has formed over the years.
References
Bansal, S., & Moritz, B. (2015). Perceived versus actual value of product substitution flexibility: An experimental investigation. Journal of Operations Management, 38(1), 56-70.
Chakravarthy, B., & Lorange, P. (2007). Continuous renewal and how Best Buy did it. Strategy & Leadership, 35(6), 4-11.
Miklós‐Thal, J., Rey, P., & Vergé, T. (2011). Buyer power and intraband coordination. Journal of the European Economic Association, 9(4), 721-741.
Porter, M. (1991). Towards a dynamic theory of strategy. Strategic management journal, 12(1), 95-117.
Rao, S., Goldsby, J.T., & Iyengar, D. (2009). The marketing and logistics efficacy of online sales channels. International Journal of Physical Distribution & Logistics Management, 39(2), 106-130.