Reference no: EM132247541

Starting in 2005, Best Buy initiated a strategic transition to a customer-centric operating model, which was completed in 2007. Prior to 2005, the company focused on customer groups such as affluent professional males, young entertainment enthusiasts, upscale suburban mothers, and technologically advanced families. After the transition, Best Buy focused more on customer lifestyle groups such as affluent suburban families, trendsetting urban dwellers, and the closely knit families of Middle America. To target these various segments, Best Buy acquired firms with aligned strategies, which were used as a competitive advantage against its strongest competition, such as Circuit City and Wal-Mart. The acquisitions of Pacific Sales, Speakeasy, and Napster, along with the development of Best Buy Mobile, created more product offerings, which led to more profits.

Marketing these different types of products and services was a difficult task. That was why Best Buy’s employees had more training than competitors. This knowledge service was a value added competitive advantage. Since the sales employees no longer operated on a commission-based pay structure, consumers could obtain knowledge from salespeople without being subjected to high-pressure sales techniques. This was generally seen to enhance customer shopping satisfaction.

Best Buy’s operating goals included increasing revenues by growing its customer base, gaining more market share internationally, successfully implementing marketing and sales strategies in Europe, and having multiple brands for different customer lifestyles through M&A (Merger and Acquisition).

Domestic Best Buy store operations were organized into eight territories, with each territory divided into districts. A retail field officer oversaw store performance through district managers, who met with store employees on a regular basis to discuss operations strategies such as loyalty programs, sales promotion, and new product introductions. Along with domestic operations, Best Buy had an international operation segment, originally established in connection with the acquisition of Canada-based Future Shop.

The objectives of Best Buy’s human resources department were to provide consumers with the right knowledge of products and services, to portray the company’s vision and strategy on an everyday basis, and to educate employees on the ins and outs of new products and services.

Best Buy employees were required to be ethical and knowledgeable. This principle started within the top management structure and filtered down from the retail field officer through district managers, and through store managers to the employees on the floor. Every employee must have the company’s vision embedded in their service and attitude.

Despite Best Buy’s efforts to train an ethical and knowledgeable employee force, there were some allegations and controversy over Best Buy employees, which gave the company a bad black eye in the public mind. One lawsuit claimed that Best Buy employees had misrepresented the manufacturer’s warranty in order to sell its own product service and replacement plan. The lawsuit accused Best Buy of “entering into a corporate-wide scheme to institute high-pressure sales techniques involving the extended warranties” and “using artificial barriers to discourage consumers who purchased the ‘complete extended warranties’ from making legitimate claims.”

In a more recent case (March 2009), the U.S. District Court granted Class Action certification to allow plaintiffs to sue Best Buy for violating its “Price Match” policy. According to the ruling, the plaintiffs alleged that Best Buy employees would aggressively deny consumers the ability to apply the company’s “price match guarantee.” The suit also alleged that Best Buy had an undisclosed “Anti-Price Matching Policy,” where the company told its employees not to allow price matches and gave financial bonuses to employees who complied.

1. Explain the contribution of various functional areas of Best Buy Company to its well-being.

2. Identify opportunities and threats as well as strengths and weakness of the company.

3. Determine the issues affecting to the strategic competitive advantage of the company.

4. Determine the issues affecting to the strategic competitive advantage of the company