Best Buy Expansion Strategy

When Best Buy, the leading American consumer electronics retailer planned to expand its operations outside the United States in December 2000, they earmarked Canada as the first foreign country for its international expansion strategy. The choice was mainly driven by the fact that Canada was its closest neighbor with a retail market that was largely similar to the domestic United States market, which Best Buy had already dominated. The Canadian consumer electronic retail market was largely fragmented, with the dominant force being future shop which had 15% of the market share. The original expansion strategy for Best Buy was to enter the Canadian market and directly compete with future shop as well as the other market players for a piece of the market share.

The expansion strategy into Canada detailed a plan to initially open a few stors in the Toronto metropolitan area within the year 2003, with an intention of expanding to other major urban areas within 3 years with 15 other stores. The long-term strategic plan was to set up between 60 to 65 stores across Canada to directly compete with future shop’s existing 95 retail outlets. At this stage, Best Buy had identified Future Shop as its main competitor and most of the strategic planning was targeted at biting into Future Shop’s market share to establish market dominance.

However, in August 2001, a meeting between the founders of the two retail giants subsequently led to a deal in which Best Buy bought Future Shop in its entirety. This development nullified Best Buy’s initial strategy for entering the Canadian retail market and necessitated the development of a new strategy. In an unprecedented move, that was considered risky at the time (Boyle 69-75), Best Buy opted to maintain F...

... middle of paper ...

...inant player with the majority of the market share) then the dual brand strategy is better suited when you acquire the retail chain with the largest market share over the option of rebranding over the new acquisition as the expansion process gains from the continuity offered by the acquisition’s existing brand recognition and loyalty giving it much needed continuity as the main brand gradually sets itself up.

WORKS CITED

Boyle, Matthew. "Best Buy’s giant gamble." Fortune, April 3 (2006): 69-75.

Chakravarthy, Bala, and Peter Lorange. "Continuous renewal, and how Best Buy did it." Strategy & Leadership 35.6 (2007): 4-11.

Chandrasekhar, R. "Best Buy Inc.-Dual Branding In China." (2009)

Muzellec, Laurent, and Mary Lambkin. "Corporate rebranding: destroying, transferring or creating brand equity?." European Journal of Marketing 40.7/8 (2006): 803-824.