Best Buy’s gross margin has decreased steadily from 2010 to 2014, meaning that Best Buy should try to find ways to cut back on cost of goods sold. Best Buy is spending more money over time to acquire and create the same products and services. Overall, a decrease in gross margin over time shows negative signs.
ROE has fluctuated over the years, but has seen a slight increase from 2010 to 2014. Best Buy is slowly increasing the amount of profits using money invested by shareholders. Overall, the increase in ROE from 2010 to 2014 is a positive sign.
Best Buy’s receivables turnover increasing over time means that the company is either becoming more efficient at collecting receivables or that Best Buy operates on a cash basis. Either way, seeing
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Best Buy’s differentiation strategy places a strong focus on the customer and their experience which sets them apart from the competition. This strategy plays an important role when making recommendations for Best Buy.
First, I recommend that Best Buy innovates their online presence. Best Buy’s research and development and information systems teams would pair up and spend three to six months reconfiguring Best Buy’s online shopping experience. Best Buy must ensure that their updated website is compatible with mobile devices and tables. Every four to six weeks, test groups should be used to navigate the website as if they were making purchases. The test group should consist of Best Buy’s customer base, which the article establishes is Urban Trendsetters, Empty Nesters, Middle America, and Upscale Suburban.
Since Best Buy is focused on customer experience, it is vital that the same customer service can be accessed online. This should be done by allowing a platform where customers can chat on Best Buy’s website with an employee. That online employee will be trained just like an in-store employee, or even could be an in-store employee who opts to work online for a few hours each
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Based on Best Buy’s customer base, I do not feel that the company does the best at marketing its products and services. I would recommend that Best Buy’s research and development team strategically locates where their customer base of Urban Trendsetters, Empty Nesters, Middle America, and Upscale Suburban consumers live. The company’s research and development team should also find areas where income levels are average or above. Areas where those two categories overlap should have intensive marketing. Television and radio advertisements in those areas expressing Best Buy’s expert advice, current deals on products and services, and a newly reconfigured online shopping experience should produce the best
BestBuy really needs to know the expectations of consumers to be able to align on the same distribution line than its competitors that continue to cut its market shares by offering the same products at very competitive prices. There is no doubt about the threat that may represent specially Wal-Mart for BestBuy, its "Every day low price" slogan speaks for itself. Today, quality’s problem is used as a marketing argument, but it’s not over true even though Walmart some low quality products. We have to notice that most of the producers of nowadays ’technologies are Asian countries as proof, IPhone and well-known brands technologies have always been manufactured in China. So the quality problem is not really the problem BestBuy is facing because there is no doubt that Wal-Mart and BestBuy have the same suppliers since everyone claims to offer high quality electronics. The first thing to do is to figure out how Walmart makes the difference by lowing its fixed and variables costs to better maximize profit even though offering low cost product. I think BestBuy needs to review its employees ‘training budget since they already have a good knowledge about the product they offer. As cited on page 22-4, even though its revenue grow, at the same time its net income and operating
Another potential source of competitive advantage is Best Buy’s Geek Squad. While this has been a successful line of business for Best Buy, this too could become obsolete. Already an expensive part of Best Buy, Geek Squad costs would most likely increase if they wanted it to be more widely used. The likelihood of Best Buy overcoming this is arguably even less than its likelihood of competing with Amazon’s quick inventory - between 30 and 40%. With technology changing and a trend towards more user-friendly interfaces and products, consumers may not require the help of Geek Squad representatives to assist with their product, as they can figure out any issues on their own or by searching online for troubleshooting or product help blogs, customer reviews, etc.
Analyzing Wal-Mart's annual report provides a positive outlook on Wal-Mart's financial health. Given the specific ratios and its comparison to other companies in the same industry, Wal-Mart is leading and more than likely continue its dominance. Though Wal-Mart did not lead in all numbers, its leadership and strong presence of the market cements the ongoing success. The review of the current ratio, quick ratio, inventory turnover ratio, debt ratio, net profit margin ratio, ROI, ROE, and P/E ratio all indicate an upbeat future for the company. The current ratio, which is defined as current assets divided by current liabilities, is a measure of how much liabilities a company has compared to its assets. Wal-Mart in the year of 2007 had a current ratio of .90, and as of January 2008 it had a current ratio of .81. The quick ratio, which is defined as current assets minus inventory divided by current liabilities, is a measure of a company's ability pay short term obligations. Wal-Mart in the year of 2007 had a quick ratio of .25, and as of January 2008 it had a ratio of .21. Both the current ratio and quick ratio are a measure of liquidity. Wal-Mart is not as liquid as its competitors such as Costco or Family Dollar Stores Inc. I believe the reason why Wal-Mart is not too liquid is because they are heavily investing their profits for expansion and growth. Management claims in their financial report that holding their liquid reserves in other currencies have helped Wal-Mart hedge against inflationary pressures of the US dollar. The next ratio to look at is the inventory ratio which is defined as the cost of sales divided by average inventory. In the year of 2007, Wal-Mart’s inventory ratio was 7.68, and as of January 2008 it was 7.96. Wal-Mart has a lot of sales therefore it doesn’t have too much a problem of holding too much inventory. Its competitors have similar ratios though they don’t have as much sales as Wal-Mart. Wal-Mart’s ability to sell at lower prices for same quality, gives them the edge against its competition. As of the year 2007, Wal-Mart had a debt ratio of .58, and as of January 2008, it had a debt ratio of .59. The debt ratio is calculated by dividing the total debt by its total assets. Wal-Mart has a lot more assets than it does debt so Wal-Mart is not overleveraged.
Concluding, Best Buy has advanced and achieved so much since their beginning in 1966, and with the importance of its employees and managers being put first and into definitive roles, will only make the company go further on their road to success. I am excited to see what the future holds for Best Buys organizational behavior changes and advancements to keep current and on the cutting edge.
Gross profit as a percentage of sales was 26.2% for 2015 compared to 25.8% for 2014
As part of its strategies RadioShack needs to expand and a "Worldwide Innovation" initiative, and in an effort to continue being aggressive, their new strategies needs to be innovative and consumer oriented. Additionally, if RadioShack wants to compete, they need to guarantee the best quality at the best price. Therefore, RadioShack requires assistance in sourcing the best quality products and best technology.
Home Depot’s improvements are been seen from stock prices to better customer experience through new technologies (www.forbes.com, 2015). The company’s stock increased by 175% and introduced FIRST phones, a mobile in-store technology (www.forbes.com, 2015). Therefore, the strategic plan is for this device is to increase customer interaction for information on products and checking its availability (www.forbes.com, 2015). Also, Home Depot put together another strategy which made same day shipping on customers that order online before 5 p.m. (www.forbes.com, 2015). However, Finance and Information Systems can’t be the only strategy focus for the company. It must consider all entities to ensure that all functional strategies are working together.
Best Buy reached out to TechForward for help in developing their own buyback program. “Best Buy allegedly held out the promise of a
Additionally, brand equity, the company’s reputation, and Best Buy’s internet presence and website are also valuable intangible resources. In fact, the article mentioned that Best Buy has the 11th largest e-commerce website worldwide. Best Buy’s core competency lies within the company’s focus towards “customer-centricity attained thorough the in-depth data analysis and systematic customer segmentation.” To restate that, Best Buy differentiates themselves from their competition by providing expert advice and service at prices that compete with competition.
In order to compete they would have to be able to price match their products and provide the wide array of consumer services like Best Buy. With over 1,700 stores in the U.S. this allows the consumer easy store access with product and employee interaction of which manifest the loyal returning consumer. These factors in combination would entail a vast amount of working capital from the start along with experienced employees and therefore detouring new
For example, actively supporting online community sites and forums, entering discussion and chat forums relating to their products and establishing a presence of a whitegoods retails brand that consumers can trust will all contribute to this objective. JB Hi-Fi can also use existing advertising material to prioritise whitegoods to the consumers and strengthen the link between the JB Hi-Fi brand and whitegoods products. In addition, JB Hi-Fi need to clearly communicate the after sales support provided by physical stores when consumers purchase fridges and freezers online. These strategies would build on existing operations and hence will not place undue pressure on existing budgets or significantly increase the cost of
uses differentiated business-level strategy by attracting customer through proving various and plentiful well-quality technology products. Moreover, the comfortable shipping environment and skilled salespeople can help Best Buy to deliver a good communication to customers. As Best Buy has been set up for over 20 years, it constructed a good and long relationship with customer loyalty, large customer base also retailer base. Thus, it is easier for Best Buy to maintain steady supplies.
Online retail and shopping sales has been growing consistently every year, not just in the US but worldwide. Not only does online shopping give customers more convenience, more variety, and more discreetness but it also gives customers better prices. While it is quite true that Wal-Mart has product variety and cheap prices – things customers want – the physical stores do not really give the convenience and discreteness that online retail and shopping does.
In the world of E-commerce, the orientation is always changing its position. Hence, as an owner of the business or being a marketing specialist, one can always need to be on his toes to make the trade stand firmly in its position. In order to carry on with the uprising sales structure, the professionals need to be able to evolve, and look for changing the technology which will definitely sway the customers while sustaining the profit margins. It is also being predicted that the customers will be anyhow spending over 427 billion this year on online retail shopping. So, in order to increase the profit margins maintaining such dynamic trends, then one needs to jump on these latest styles, patterns, and appearance for the upcoming conventions.
A seamless shopping experience is one that achieves consistency between the online and offline shopping experience. Today, customers want the convenience of online shopping to be carried over into their in-store shopping experience. This necessitates that products, prices, and promotions are the same in the store as they are on the retailer’s website. Despite the convenience of buying products online, customers still value the ability to see, touch, and try on products. And a lot of shoppers enjoy doing so with others, viewing the in-store shopping experience as a social engagement. Further, consumers often look to in-store experts – otherwise known as store associates – to provide product detail, answer their questions, and overall provide the personal touch that the online experience cannot. All of these factors expose the inherent limitations of purchasing products from an ecommerce website. Retailers would be wise to take notice of these limitations and take advantage of the obvious importance of the in-store shopping experience. The increased popularity of alternative fulfilment methods like ship-from-store and in-store pickup is the silver lining for brick-and-mortar businesses. Not only do these methods help retailers move more product and cut down on costs, having varied (and convenient) delivery options delights consumers. Regardless of whether a customer wants to buy online or in store, fulfilling the order can be done using the physical store, no matter what the method of fulfilment is. Many customers see the in-store shopping experience as an escape. By adding more amenities to their stores as part of the shopping experience. Free Wi-Fi, for example, provides the increased number of mobile shopper’s easy access to the Internet—which may seem counterintuitive. But if a product is