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Best Buy SWOT & PESTLE Analysis

ID : 5287053| Feb 2021| 15 pages


Business Sector :Retail, Consumer Electronics

Operating Geography :North America, United States, Global

About Best Buy :

Best Buy is the largest retailer of consumer electronics in the U.S.A. It sells technology merchandise, services and solutions with approximately 1,600 stores in North America and nearly $40 billion in annual revenue. Seventy percent of the U.S.A citizens can access a Best Buy outlet within 15 mins of their place of residence and the Company also operates in Canada and Mexico. Richard M. Schulze and Gary Smoliak founded the Company in 1966 as an audio specialty store operating in the name of Sound of Music. Geek Squad, Magnolia Audio Video, and Pacific Sales are the chief subsidiaries of Best Buy. It featured on the New York stock Exchange in 1987. As of FY 2018, Best Buy has an employee strength of 125,000, as of 2018, spread across U.S.A., Canada, Mexico and sourcing offices in China. The Company is headquartered in Richfield, Minnesota. By the end of fiscal 2018, Best Buy has 1,200 large-format and 300 small-format stores, throughout their international and domestic segments. Best Buy is renowned for its recycling program, the company has partnered with Electric Recyclers International, a California company that is specialized in the recycling of electronics and technology. Best Buy claims to collect 409 pounds of e-waste each minute the stores are opened.
Best Buy officially has not declared a mission and vision statement for the company, however it has established specific company statements addressing to various aspects of the organization, like ‘Carbon and Energy Statement’, ‘Paper Procurement Statement’, ‘Best Buy Human Right Statement’, ‘Non-Discrimination Statement’, ‘Conflict Minerals Statement’, and ‘Standards for Recyclers’. The company operates on its 4 core values viz., ‘Unleash the Power of Our People’, ‘Learn from Challenge and Change’, ‘Show Respect, Humility, and Integrity’, ‘Have Fun While Being the Best’. Best Buy's customer value proposition is "To be the leading technology expert who makes it easy for customers to learn about and confidently enjoy the best technology."
The USP or Unique Selling Proposition of Best buy lies in being a consumer-centric company which endeavors at solving clients’ technology problems by addressing the essential human needs across a wide range of areas.

Best Buy Revenue :

$ 42.151 billion – FY ending 3rd February 2018 (y-o-y growth of +6.5%)
$ 39.403 billion – FY ending 3rd February 2017

Competitive Analysis of Best Buy

Previously known as ‘Sound of Music’, Best buy is a leading provider of technology products, operating in the US, Canada, and Mexico. The company sells hundreds of electronic goods under a parasol of its five home brands. The company’s Geek Squad agents provide expert advice on a broad portfolio of tech products, whether it is through online, walk-into store or a personal visit to a customer’s home; the best buy agents solve customer’s technology problems by addressing their key needs. Here is a utilization of SWOT analysis to assess the company's competitive stance by recognizing its internal strategic factors like strengths and weaknesses, external strategic factors like opportunities and threats. Precisely, SWOT analysis is a primitive and highly applicable evaluation model that evaluates the internal and external factors and their influences on the Company's micro and macro environment.
One of the core competencies of Best Buy is its accessibility, with 1500 stores in the US, more than 70% of US residents can access the Best Buy store in just 15 mins. This truly is a huge competitive advantage that Best Buy enjoys over its peers. Powerful market presence, robust fiscal muscle, large audience reach through the online platform, a top retailer in US, wide range of products, own brand products, customer-centric business model, skilled and dedicated employees etc., are some of the key strengths of Best Buy that gives the company an edge over its competitors.
One of the major weakness of Best buy is, its core business is highly dependent on the local consumers of the US; hence the profit of the company relies extensively on the US market. Since Best Buy is a supplier of luxury products and they are not the fundamental human needs, the economic downturn can lead to a decline in consumption of Best Buy’s goods.
Progression in technology is leveraging the computer and electronic retail sector, the high expected growth rate in this sector is a great opportunity for Best Buy to boost its sales. Expansion in potential markets, reaching out to more audiences through online platforms, penetrating the markets with E-commerce platform etc., can be some of the great achievable opportunities.
The retail sector in which Best Buy operates is highly competitive and the company faces substantial competition from multi-channel retailers, e-commerce businesses, technology service providers, traditional store-based retailers and vendors and mobile network carriers that extend their commodities and services straight to customers, which is a threat affecting Best Buy’s revenue and profitability.
The SWOT analysis for Best Buy is presented in a SWOT Matrix below, followed by detailed analysis:
1. Largest consumer retailer
2. Strong management team
3. Established support services
4. Persistent strong financials
1. High overhead costs
2. Increasing inventory levels
3. Dependence on domestic markets
1. Maintaining good vendor relationships
2. Growing its smart home business
3. Dwindling fortunes of competitors
1. Intense competition from e-retail giants
2. Higher expectation of customer satisfaction
3. Imposition of tariffs on Chinese imports by Trump administration
4. Online gaming popularity leading to decrease in demand for gaming products
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Detailed SWOT Analysis of Best Buy



1. Largest consumer retailer: Being the largest consumer retailer through brick-&-mortar stores gives them economies of scale, and the huge presence of these stores is a marketing initiative in itself. They can also leverage the “largest” tag to secure better deals from their suppliers. The multinational retailer sells both both products and services via its retail, mobile stand-alone, and smaller express stores under the Best Buy, Best Buy Express, Best Buy Mobile, Five Star, Future Shop, Geek Squad, Magnolia Audio Video, and Pacific Kitchen and Home Sales banners. The no. of U.S. Best Buy Stores jumped from 923 in 2008 to 1037 in 2016. The U.S. Best Buy Mobile stand-alone stores spiked from 9 to 350, while the Pacific Sales stores spiralled from 19 to 28 during the same period. As of 2017, Best Buy operated a total of 1,915 stores worldwide, out of which 1200 were large-format and 400 were small-format stores. The physical presence are a vital part of their omni channel strategy and lends them a unique competitive advantage. Best Buy ranks #72 on the Fortune 500 list for 2017.

2. Strong management team: The present CEO Hubert Joly, is an experienced leader and has brought about marked improvements in the firms he has worked at. According to BB&T analyst, Anthony Chukumba, “Best Buy’s senior management team has the background and track record necessary to execute its turnaround plan”. On an annual basis, Best Buy swung from a $1.23-billion loss on $43.4 billion in sales for the year ended March 2, 2012, to a $1.23-billion profit on $39.4 billion in sales for the year ended Jan. 31,FY 17, following a change in its fiscal year.

3. Established support services: The support services wing operated by Best Buy, called the Geek Squad, has played an important role in improving the Net Promoter Score of Best Buy by 300 basis points. Geek Squad installs and services appliances and computers, and thus, are the contact points for the store with the customers. Overall it drives $1billion in sales for the Company. Though Geek Squad are one of the cheapest options available in the market for servicing of computers, they have got good reviews for their services.

4. Persistent strong financials: For the third year in a row in 2017, Let's Buy continued to grow its Domestic comparable sales and non-GAAP operating income. Topline performance met expectations while earnings beat expectations. At the Enterprise level, on revenue of $39.4 billion, the Company hiked its non-GAAP operating income rate from 4% in FY 2016 to 4.5% in FY 2017 and upped its non-GAAP earnings per share by 28% from $2.78 in fiscal 2016 to $3.56* in fiscal 2017. US online revenue saw steady growth at 21% with increased traffic and higher conversion rates. $1.2 billion were paid to shareholders through dividends and share repurchases. The launch of the Best Buy 2020: Building the New Blue is aimed at bringing superior returns for its shareholders, all the time putting customer at the heart of the initiative


This section is available only in the 'Complete Report' on purchase.


This section is available only in the 'Complete Report' on purchase.


This section is available only in the 'Complete Report' on purchase.

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Check Out Analysis of Other Relevant Companies

1. The SWOT and PESTLE analysis report presents an understanding of the obscure internal and external factors influencing the brand and operations of Best Buy.
2. The SWOT/TOWS analysis report compounds all the internal strategic factors that render the major strengths and weaknesses of Best Buy
3. The report bestows intelligence on the external analysis, comprising the opportunities which can be consolidated to accomplish worldwide growth and development. It also talks about some pertinent threats to the company that threatens to impede growth
4. The reports highlight the core competencies of Best Buy and factors that help attain competitive advantage for the company over its rivals and competitors from the electronics retail industry
5. The Pestle analysis gives crisp information about current trends of the electronic retail industry and detailed picture of the external factors like political, economic, social, technological, legal and environmental factors and their influences on the industry and extensively on Best Buy
6. The analysis scrutinizes Best Buy's business diversification, hence extracting its key business segments and highlighting its significant competitors
7. Analysis of the acquisitions, mergers, share price, capital raising, equity transactions, alliances or partnership ventures that Best buy consented with deal valuations and the business aspirations or aims that were accomplished by them.
8. Insights into Best Buy’s business model, along with further breakdown and analysis of key business segments and business case study
9. Cognizance of current trends of the retail industry and its influences on the Best Buy company
10. A brief overview of Best Buy's founders, its corporate headquarters, owners & stakeholders, and revenue jumps. Additionally the report gives a picture about company information, company profile, business model, business plans and marketing strategy.
11. A glimpse into the Best Buy's Unique Selling Proposition, core values, value proposition, key performance indicators, and success factors
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