Best Buy Case Study

Best Buy Case Study

Aqueelah Raines

Bryant & Stratton College

BUSS325: Global Management

T. Burton

December 8, 2018

Best Buy Case Study

The company Best Buy is American multinational consumer electronics retailer headquartered in Richfield, Minnesota. It was originally founded by Richard M. Schulze and James Wheeler in 1966 as an audio specialty store called Sound of Music. In 1983, with seven stores and 10 million in annual sales, Sound of Music it was rebranded under its current name with more emphasis placed on consumer electronics (Best Buy, n.d.). In addition, Best Buy was the first international retailer of consumer electronics (CE) to penetrate the Chinese market (SHUGUANG WANG, 2012).

In 2006, Best Buy acquired a majority interest in Chinese appliance retailer Jiangsu Five Star Appliance for $180 million. Jiangsu was the fourth largest appliance chain in China with 193 stores across eight Chinese provinces (Best Buy, n.d.). They adopted a dual-brand strategy that was used in their store in Canada. The approach this establishment utilize is marketing dominance in one large Urban Centre first before opening more stores in the adjacent cities. Instead of branching out to other areas Best Buy opened up six stores in Shanghai; however, there was no Five Start presence (SHUGUANG WANG, 2012).

In 2010, Best Buy changed the marketing strategy by opening up one store in Suzhou and Hangzhou. By using the same procedure that was conducting in North America transferred it to China. In addition, Best Buy was under the impression that the same strategies that was used in United States and Canada will be useful in China. Their negotiation process were to make sure consumer shop easy, so the stores were organized by categorize by products. Furthermore, when Best Buy conducting prices they made the price transparency in order to distinguish itself from its Chinese competitors (SHUGUANG WANG, 2012). In addition, Best Buy placed everything on their company’s website as well as prices. In regards of employee recognition they did not reward its sales associates with commission (SHUGUANG WANG, 2012).

Despite of all the resources Best Buy have international, organizational strength and rich alliances they was unable to turn around in China. In results, on February 22, 2011, Best Buy announced the closure if all its China Stores due to under performance (SHUGUANG WANG, 2012).

Any company entering a new market area will face disadvantages compare with the local firms because the local company’s is accustomed to the country religion, business structure, and idea of the market target in certain areas. Especially, when expanding a company international require some form of competitive advantage as a precondition in order to find a balance in the disadvantages associated with being new to the country (SHUGUANG WANG, 2012).