best buy consulting presentation -- badm 4801 case competiton

Best Buy, Inc. Ohhhhhh(BBY)

November 13th, 2015

The Team2

Molly BockBBA, Marketing & IBUSmbock@gwu.edu

Carlos LarreateguiBBA, Finance & IBUScarlos93@gwu.edu

Kevin ConnellBBA, Financekevinconnell@gwu.edu

Veronica BuzaBA, Accountingveronicabuza@gwu.edu

Victor BitarBBA, Financevbitar@gwu.edu

Roadmap3

Core Challenge

Core Solution

Options

Idenfity Concerns

Recap and Conclusion

Company Background

Internal & External Company Analysis

4

Setting the stage.

Recommendation in a Nutshell5

In order to effectively compete in a low costindustry, Best Buy should continue theirdifferentiation strategy by eliminatingunnecessary costs and investing in corecompetencies.

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Let's jump in.

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Core Challenge

Core Solution

Options

Idenfity Concerns

Recap and Conclusion

Risk Analysis

Company Background

#1 Electronics Retailer

2014 sales of electronics in billions of USD; Source: Twice Top 100 CE Retailers List

8

AmazonWalmartBest Buy

30

22

18

Revenue Mix

Percentage of revenue allocation by product offerings; Source: Best Buy 2015 10-K

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OtherServicesAppliancesEntertainmentComputing andMobile Phones

ConsumerElectronics

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47

97

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Costs: Operating Margin

Source: Best Buy 2015 & 2013 10-K

10

2012201320142015

3.59

2.7

0.28

2.14

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Core Challenge

Core Solution

Company Background

Internal & External Company Analysis

Recap and Conclusion

Idenfity Concerns

Options

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WeaknessesStrengths

Internal Company Analysis

Internal Analysis13

End to end services

Multiple Channel Selling Strategy Customer Centric Business Model

Brand Loyalty

Strengths

Subject to economic volatility

Heavy reliance on few suppliers

Changing customer preferences make it difficult to (1) adequately train employees, and (2) havecurrent inventories

Showrooming

Weaknesses

Diverse product breadth

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ThreatsOpportunities

External Company Analysis

External Analysis15

Store-within-a-store system

Threats

Vertical Integration from competitors/suppliers

Pressure to keep margins down to remain competitive

Opportunities

In store classes

Geek SquadWebsite Enhancement

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Options

Idenfity Concerns

Recap and Conclusion

Internal & External Company Analysis

Company Background

Core Solution

Core Challenge

Concerns17

Suppliers verticallyintegrating

Purchasing trends Capital intensive growthmodel

Technology developmentcycle

Competing as a differentiator in a low cost industry

Increasing trend towards E-Commerce vs. decreasing

trend from brick and mortarReliance on few suppliers

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Idenfity Concerns

Core Challenge

Core Solution

Company Background

Internal & External Company Analysis

Recap and Conclusion

Options

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How to compete as a differentiator in acompetitively low cost industry

Core Challenge

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Options

Idenfity Concerns

Recap and Conclusion

Internal & External Company Analysis

Company Background

Core Solution

Core Challenge

Broad Solutions21

Strengthen online customer service platform

Enhance corporate culture

Improve relationships with suppliers

Invest in employee development

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Core Challenge

Core Solution

Company Background

Internal & External Company Analysis

Recap and Conclusion

Idenfity Concerns

Options

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Core Solution

Use savings generated by cost cuttingmeasures to invest in employees

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Cutting costs.

Leveraging Store within a Store Concept25

Increase supplier reliance on Best Buy

Increase ability to sell luxuryconsumer electronics

Gain favorable pricing from suppliers

Allow for rapid brick andmortar expansion on a

national level

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Investing in employees.

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Improve employeeperformance

evaluationImproved quality

Employee training

Enhance employee benefits and incentives

Speed of training to keep up withproduct cycle and consumer

preferences

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Impact.

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Attract and retain talent

Maximize Shareholder Wealth

Improve Customer Engagement Decrease Supplier PowerIncrease Brand Loyalty

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Company Background

Risk Analysis

Recap and Conclusion

Idenfity Concerns

Options

Core Solution

Core Challenge

Wrapping up31

To compete in a low cost industry as a differentiator, BestBuy should continue to cut costs and further invest in corecompetencies

If executed properly, shareholder wealth will be maximized

Best Buy should generate savings by forming businesspartnerships through store-within-a-store platform

Best Buy should then use the generated savings to invest inemployee development and corporate culture

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Questions?