ISSC362
Course Summary
Course : ISSC362 Title : IT Security: Attack & Defense
Length of Course : 8 Faculty :
Prerequisites : N/A Credit Hours : 3
Description
Course Description:
This course examines the techniques and technologies for penetration of networks, detection of attacks, and
prevention of attacks. This course addresses the techniques, the technologies, and the methodologies used
by cyber intruders (hackers) to select a target and launch an attack. Students will gain insight into the motives
and desired goals of hackers as well as effective tools and techniques used as countermeasures ensuring
data assets remain secure. This course focuses on techniques and technologies to detect such attacks even
while the attack is in progress; early detection enables the administrator to track the movements of the
hacker and to discover the intent and goals of the hacker. This course assesses the various
countermeasures to keep the system out of the “sights” of the hacker and to keep the hacker out of the
perimeter of the target network. This course also explores the laws and the legal considerations in
prosecuting computer crime.
Course Scope:
This course will allow students to see how attacks target networks and the methodology they follow. Students
will also learn how to respond to hacking attacks and how to fend them off. With the help of the experts in the
Information Systems Security and Assurance Series, the book will provide examples of information security
concepts and procedures are presented throughout the course.
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Objectives
After successfully completing this course, you will be able to:
1. Show how attackers map organizations
2. Describe common port scanning techniques
3. Identify some of the tools used to perform enumeration
4. Explain the significance of wireless security
5. List the issues facing Web servers
6. Describe the characteristics of malware
7. List the ways of detecting Trojans
8. Describe the process of DoS attacks
9. Describe the benefits of automated assessment tools
10. List the components of incident response
11. List the detective methods of IDS
Outline
Week 1: Course Overview Getting Started Introduction to Ethical Hacking
Activities
Reading: Chapters 1, 2, 3 and 4
PPT Review: Lessons 1, 2 and 3 (Physical Security)
Week 1 Discussion
Lab
Week 2: Footprinting, Port Scanning and Enumeration
Activities
Reading: Chapters 5, 6, and 7
PPT Review: Lessons 3 (Footprinting) and 4
Week 2 Discussion
Lab
Week 3: Web and Database Attacks
Activities
Reading: Chapter 9
PPT Review: Lesson 6
Week 3 Discussion
Lab
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Week 4: Malware, Worms, Viruses, Trojans and Backdoors
Activities
Reading: Chapters 10 and 11
PPT Review: Lesson 7
Week 4 Discussion
Lab
Week 5: Network Traffic Analysis
Activities
Reading: Chapters 12 and 13
PPT Review: Lesson 8
Week 5 Discussion
Midterm
Lab
Week 6: Wireless Vulnerabilities
Act ...
Historical philosophical, theoretical, and legal foundations of special and i...
IT Security Attack & Defense Course Overview
1. ISSC362
Course Summary
Course : ISSC362 Title : IT Security: Attack & Defense
Length of Course : 8 Faculty :
Prerequisites : N/A Credit Hours : 3
Description
Course Description:
This course examines the techniques and technologies for
penetration of networks, detection of attacks, and
prevention of attacks. This course addresses the techniques, the
technologies, and the methodologies used
by cyber intruders (hackers) to select a target and launch an
attack. Students will gain insight into the motives
and desired goals of hackers as well as effective tools and
techniques used as countermeasures ensuring
data assets remain secure. This course focuses on techniques
and technologies to detect such attacks even
while the attack is in progress; early detection enables the
administrator to track the movements of the
hacker and to discover the intent and goals of the hacker. This
course assesses the various
countermeasures to keep the system out of the “sights” of the
hacker and to keep the hacker out of the
perimeter of the target network. This course also explores the
laws and the legal considerations in
prosecuting computer crime.
Course Scope:
2. This course will allow students to see how attacks target
networks and the methodology they follow. Students
will also learn how to respond to hacking attacks and how to
fend them off. With the help of the experts in the
Information Systems Security and Assurance Series, the book
will provide examples of information security
concepts and procedures are presented throughout the course.
Page: 1 of 8 Date: 6/21/2020 3:01:15 AM
Objectives
After successfully completing this course, you will be able to:
1. Show how attackers map organizations
2. Describe common port scanning techniques
3. Identify some of the tools used to perform enumeration
4. Explain the significance of wireless security
5. List the issues facing Web servers
6. Describe the characteristics of malware
7. List the ways of detecting Trojans
8. Describe the process of DoS attacks
9. Describe the benefits of automated assessment tools
10. List the components of incident response
11. List the detective methods of IDS
Outline
Week 1: Course Overview Getting Started Introduction to
Ethical Hacking
Activities
Reading: Chapters 1, 2, 3 and 4
3. PPT Review: Lessons 1, 2 and 3 (Physical Security)
Week 1 Discussion
Lab
Week 2: Footprinting, Port Scanning and Enumeration
Activities
Reading: Chapters 5, 6, and 7
PPT Review: Lessons 3 (Footprinting) and 4
Week 2 Discussion
Lab
Week 3: Web and Database Attacks
Activities
Reading: Chapter 9
PPT Review: Lesson 6
Week 3 Discussion
Lab
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Week 4: Malware, Worms, Viruses, Trojans and Backdoors
5. Week 7: Incident Response
Activities
Reading: Chapter 14
PPT Review: Lesson 9 (Incident Response)
Week 7 Discussion
Week 7 Research Paper Due
Lab
Week 8: Defensive Technologies
Activities
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Reading: Chapter 15
PPT Review: Lesson 9 (Defense Technologies)
Week 8 Discussion
Final Exam
Lab
Evaluation
Grading will be based on weekly assignments: discussions labs,
quizzes, an individual project paper
(topic selection, outline and paper) and a case study.
6. There will be eight discussions (3.13% each) counting a total of
25% of the final grade. Answers
should restate the question with supporting sentences using the
terms, concepts, and theories from
the required readings. The key requirement is to express your
idea and then support your position
to demonstrate that you understand the material.
In addition, you are to respond to at least two of your
classmates’ postings by critiquing, supporting or
supplementing the other students’ answers. All responses should
be courteous with sound supporting
sentences. You may respond multiple times within a continuous
discussion with points and counter
points. Duplicate responses will not receive credit.
There will be eight labs (2.5% for each) counting a total of 25%
of the final grade. You can access
labs by selection on Online Labs. Step-by-Step instructions for
each lab are available, and you can
access these files within Lessons. Submit deliverables through
the Assignments link within your
course.
There will be one final exam (25 questions worth 4 points per
question) and one Midterm exam
(25 questions worth 4 points per question) accounting for a total
of 25% of the final grade. Each exam
will consist of 25 multiple choice questions pulled from
chapters covered from week 1 through 5 for
the Midterm and Weeks 1 through 8 for the Final exam.
There will be three exercises during this term counting a total of
25% of the final grade, completed
as follows:
7. a. Week 2 Topic Selection – selection of topic for the Week 7
Research Paper.
b. Week 4 Outline – outline of topics and subtopics for the
Week 7 Research Paper.
c. Week 7 Research Paper – present research paper on your
chosen topic.
Below is a list of pre-approved topics for the Week 7 Research
Paper:
Protecting IT: A Roadmap for Securing the Enterprise
Best Practices for Network Security
Firewalls: Great Network Security Devices, but Not a "Silver
Bullet"
Solution
Modern Day Attacks Against Firewalls and VPNs
VPN Security Vulnerabilities Exposed
The key to the research assignment is to demonstrate your
understanding of the topics, not to re-word the
text or reference material.
The paper will follow a conventional report format
(introduction, body, conclusion, references). The paper
is to follow the APA style guide, Sixth Edition (available via
8. bookstores). Also refer to APA’s online
resources: and the APUS web site:
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http://apastyle.apa.org/learn/tutorials/basics-tutorial.aspx
http://www.apus.edu/Online-Library/tutorials/apa.htm
Note: Review Announcements and Lessons for additional
instructions and course materials.
Each week you will also have chapter readings assigned, and
PowerPoint presentations to review.
All assignments, labs, discussion questions and quizzes are
required by 11:59 PM Eastern Standard
Time of the Sunday of the week assigned.
Grading:
Name Grade %
Discussions 25.00 %
3.13 %
3.13 %
10. ISSC362 Final Exam 12.50 %
ISSC362 Midterm Exam 12.50 %
Exercises 25.00 %
Week 2 Topic Selection 2.50 %
Week 4 Outline 7.50 %
Week 7 Research Paper 15.00 %
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Materials
Book Title: Requires CITRIX CLIENT SOFTWARE
INSTALLATION FOR ONLINE VIRTUAL LABS
accessibility - instructions provided inside the classroom.
Author: No Author Specified
Publication Info:
ISBN: N/A
Book Title: Hacker Techniques, Tools, And Incident Handling,
2nd ed. - the VitalSource e-book is provided
inside the classroom
Author: Oriyano
Publication Info: VS-Jones & Bartlett
11. ISBN: 9781284031713
Book Title: ISSC362 virtual lab manual provided inside the
classroom
Author:
Publication Info: CLASS-Jones & Bartlett
ISBN: 9781284064100
Starting April 2016 this title & edition has moved to
VitalSource. The VitalSource e-book
is provided via the APUS Bookstore. Please visit for more
information.
Software Requirements
1. Microsoft Office (MS Word, MS Excel, MS PowerPoint)
2. Mozilla Firefox (recommended browser)
Course Guidelines
Citation and Reference Style
Attention Please: Students will follow the APA Format as the
sole citation and reference style used in
written work submitted as part of coursework to the University.
Assignments completed in a narrative
essay or composition format must follow the citation style cited
12. in the APA Format.
Tutoring
Tutor.com offers online homework help and learning resources
by connecting students to certified
tutors for one-on-one help. AMU and APU students are eligible
for 10 free hours* of tutoring provided
by APUS. Tutors are available 24/7 unless otherwise noted.
Tutor.com also has a SkillCenter
Resource Library offering educational resources, worksheets,
videos, websites and career help.
Accessing these resources does not count against tutoring hours
and is also available 24/7. Please
visit the APUS Library and search for 'Tutor' to create an
account.
Late Assignments
Students are expected to submit classroom assignments by the
posted due date and to complete the
course according to the published class schedule. The due date
for each assignment is listed under
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13. http://www.tutor.com/colleges/landing/apus
http://apus.libguides.com/bookstore
each Assignment.
Generally speaking, late work may result in a deduction up to
15% of the grade for each day late, not to
exceed 5 days.
As a working adult I know your time is limited and often out of
your control. Faculty may be more flexible
if they know ahead of time of any potential late assignments.
Turn It In
Faculty may require assignments be submitted to Turnitin.com.
Turnitin.com will analyze a paper and
report instances of potential plagiarism for the student to edit
before submitting it for a grade. In some
cases professors may require students to use Turnitin.com. This
is automatically processed through the
Assignments area of the course.
Academic Dishonesty
14. Academic Dishonesty incorporates more than plagiarism, which
is using the work of others without
citation. Academic dishonesty includes any use of content
purchased or retrieved from web services
such as CourseHero.com. Additionally, allowing your work to
be placed on such web services is
academic dishonesty, as it is enabling the dishonesty of others.
The copy and pasting of content from
any web page, without citation as a direct quote, is academic
dishonesty. When in doubt, do not
copy/paste, and always cite.
Submission Guidelines
Some assignments may have very specific requirements for
formatting (such as font, margins, etc) and
submission file type (such as .docx, .pdf, etc) See the
assignment instructions for details. In general,
standard file types such as those associated with Microsoft
Office are preferred, unless otherwise
specified.
Disclaimer Statement
Course content may vary from the outline to meet the needs of
15. this particular group.
Communicating on the Discussion
Discussions are the heart of the interaction in this course. The
more engaged and lively the exchanges,
the more interesting and fun the course will be. Only
substantive comments will receive credit. Although
there is a final posting time after which the instructor will grade
comments, it is not sufficient to wait until
the last day to contribute your comments/questions on the
discussion. The purpose of the discussions is
to actively participate in an on-going discussion about the
assigned content.
“Substantive” means comments that contribute something new
and hopefully important to the
discussion. Thus a message that simply says “I agree” is not
substantive. A substantive comment
contributes a new idea or perspective, a good follow -up
question to a point made, offers a response to a
question, provides an example or illustration of a key point,
points out an inconsistency in an argument,
etc.
As a class, if we run into conflicting view points, we must
respect each individual's own opinion. Hateful
16. and hurtful comments towards other individuals, students,
groups, peoples, and/or societies will not be
tolerated.
Identity Verification & Live Proctoring
Faculty may require students to provide proof of identity when
submitting assignments or completing
assessments in this course. Verification may be in the form of a
photograph and/or video of the
student’s face together with a valid photo ID, depending on the
assignment format.
Faculty may require live proctoring when completing
assessments in this course. Proctoring may
include identity verification and continuous monitoring of the
student by webcam and microphone
during testing.
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University Policies
Student Handbook
17. Drop/Withdrawal policy
Extension Requests
Academic Probation
Appeals
Disability Accommodations
The mission of American Public University System is to provide
high quality higher education with emphasis
on educating the nation’s military and public service
communities by offering respected, relevant, accessible,
affordable, and student-focused online programs that prepare
students for service and leadership in a
diverse, global society.
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http://www.apus.edu/student-handbook/index.htm
http://www.apus.edu/student-handbook/withdrawal/
http://www.apus.edu/student-handbook/extension/
http://www.apus.edu/student-handbook/academic-
probation/index.htm
18. http://www.apus.edu/student-handbook/appeals-
matrix/index.htm
http://www.apus.edu/student-handbook/Disability-
Accommodations/index.htmCourse
SummaryDescriptionObjectivesOutlineWeek 1: Course
Overview Getting Started Introduction to Ethical HackingWeek
2: Footprinting, Port Scanning and EnumerationWeek 3: Web
and Database AttacksWeek 4: Malware, Worms, Viruses,
Trojans and BackdoorsWeek 5: Network Traffic AnalysisWeek
6: Wireless VulnerabilitiesWeek 7: Incident ResponseWeek 8:
Defensive TechnologiesEvaluationMaterialsCourse
GuidelinesUniversity Policies
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
ة عودي س ال ية عرب ال كة ل مم ال
يم ل ع ت ال وزارة
ية ترون ك اإلل ة عودي س ال عة جام ال
College of Administrative and Financial
Sciences
19. Assignment 2
Strategic Management (MGT 401)
Deadline: 20/11/2021 @ 23:59
Course Name: Strategic Management
Student’s Name:
Course Code: MGT401
Student’s ID Number:
Semester: First
CRN:
Academic Year:2021-22
For Instructor’s Use only
Instructor’s Name:
Students’ Grade:
Marks Obtained/Out of 5
Level of Marks: High/Middle/Low
Instructions – PLEASE READ THEM CAREFULLY
· The Assignment must be submitted on Blackboard (WORD
format only) via allocated folder.
· Assignments submitted through email will not be accepted.
· Students are advised to make their work clear and well
presented, marks may be reduced for poor presentation. This
includes filling your information on the cover page.
20. · Students must mention question number clearly in their
answer.
· Late submission will NOT be accepted.
· Avoid plagiarism, the work should be in your own words,
copying from students or other resources without proper
referencing will result in ZERO marks. No exceptions.
· All answered must be typed using Times New Roman (size 12,
double-spaced) font. No pictures containing text will be
accepted and will be considered plagiarism).
· Submissions without this cover page will NOT be accepted.
Assignment No 2: Case study
· Submission Date by students: Before the end ofWeek- 11th
· Weight:5 Marks
· Place of Submission: Students Grade Centre
· Learning Outcomes:
1. Describe the different issues related to environmental
scanning, strategy formulation, and strategy implementation in
diversified organizations. (Lo2)
2. Explain the contribution of functional, business and
corporate strategies in the competitive advantage of the
organization. (Lo3)
3. Communicate issues, results and recommendations
21. coherently, and effectively regarding appropriate strategies for
different situations (Lo 6)
Read carefully the case study No 24 from your textbook (Best
Buy Co. Inc: Sustainable customer centricity Model?) and
answer the following questions:
1. Identify opportunities and threats as well as strengths and
weakness of the company 1pt
2. What is/are the strategy (ies) used by Best Buy? 1 pt
3. Explain the contribution of various functional areas of Best
Buy Company to its well-being. 1 pt
4. Determine the issues affecting to the strategic competitive
advantage of the company. 1pt
5. Recommend solutions for Best Buy to improve its
competitive advantage. 1pt
Notes:
· Copy/paste the phrases from the text is not acceptable. You
22. must use your own words.
· Using the terminology developed in the course of strategic
Management is highly valued.
Best Buy Co. InC., headquartered In rIChfIeld, MInnesota, was
a specialty retailer
of consumer electronics. It operated over 1100 stores in the
United States, accounting
for 19% of the market. With approximately 155,000 employees,
it also ran more than
2800 stores in Canada, Mexico, China, and Turkey. The
company’s subsidiaries
included Geek Squad, Magnolia Audio Video, and Pacific Sales.
In Canada, Best Buy
operated under both the Best Buy and Future Shop labels.
Best Buy’s mission was to make technology deliver on its
promises to customers. To
accomplish this, Best Buy helped customers realize the benefits
of technology and techno-
23. logical changes so they could enrich their lives in a variety of
ways through connectivity: “To
make life fun and easy,”1 as Best Buy put it. This was what
drove the company to continually
increase the tools to support customers in the hope of providing
end-to-end technology solutions.
As a public company, Best Buy’s top objectives were sustained
growth and earnings. This
was accomplished in part by constantly reviewing its business
model to ensure it was satisfying
customer needs and desires as effectively and completely as
possible. The company strived to have
not only extensive product offerings but also highly trained
employees with extensive product
625
C A S E 22
Best Buy Co. Inc. (2009):
Sustainable Customer-Centricity
Model?
Alan N. Hoffman
Bentley University
25. by permission. The author would like to thank MBA students
Kevin Clark, Leonard D’Andrea, Amanda Genesky,
Geoff Merritt, Chris Mudarri, and Dan Fowler for their
research. No part of this publication may be copied, stored,
transmitted, reproduced, or distributed in any form or medium
whatsoever without the permission of the copyright
owner, Alan N. Hoffman.
Z22_WHEE0811_14_GE_CA22.indd 625 5/20/14 12:00 PM
626 C A S E 2 2 Best Buy Co. Inc. (2009): Sustainable
Customer-Centricity Model?
knowledge. The company encouraged its employees to go out of
their way to help customers un-
derstand what these products could do and how customers could
get the most out of the products
they purchased. Employees recognized that each customer was
unique and thus determined the
best method to help that customer achieve maximum enjoyment
from the product(s) purchased.
From a strategic standpoint, Best Buy moved from being a
26. discount retailer (a low-price
strategy) to a service-oriented firm that relied on a
differentiation strategy. In 1989, Best Buy
changed the compensation structure for sales associates from
commission-based to non-
commissioned-based, which resulted in consumers having more
control over the purchasing pro-
cess and in cost savings for the company (the number of sales
associates was reduced). In 2005,
Best Buy took customer service a step further by moving from
peddling gadgets to a customer-
centric operating model. It was now gearing up for another
change to focus on store design and
providing products and services in line with customers’ desire
for constant connectivity.
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DESIGN SERVICES OF
27. S4CARlISlE
Publishing Services
Company History2
From Sound of Music to Best Buy
Best Buy was originally known as Sound of Music. Incorporated
in 1966, the company started
as a retailer of audio components and expanded to retailing
video products in the early 1980s
with the introduction of the videocassette recorder to its product
line. In 1983, the company
changed its name to Best Buy Co. Inc. (Best Buy). Shortly
thereafter, Best Buy began operat-
ing its existing stores under a “superstore” concept by
expanding product offerings and using
mass marketing techniques to promote those products.
Best Buy dramatically altered the function of its sales staff in
1989. Previously, the sales
staff worked on a commission basis and was more proactive in
assisting customers coming
into the stores as a result. Since 1989, however, the commission
structure has been terminated
and sales associates have developed into educators that assist
28. customers in learning about the
products offered in the stores. The customer, to a large extent,
took charge of the purchasing
process. The sales staff’s mission was to answer customer
questions so that the customers
could decide which product(s) fit their needs. This differed
greatly from their former mission
of simply generating sales.
In 2000, the company launched its online retail store:
BestBuy.com. This allowed
customers a choice between visiting a physical store and
purchasing products online, thus
expanding Best Buy’s reach among consumers.
Expansion Through Acquisitions
In 2000, Best Buy began a series of acquisitions to expand its
offerings and enter international
markets:
2000: Best Buy acquired Magnolia Hi-Fi Inc., a high-end
retailer of audio and video products
and services, which became Magnolia Audio Video in 2004.
This acquisition allowed
Best Buy access to a set of upscale customers.
29. 2001: Best Buy entered the international market with the
acquisition of Future Shop Ltd, a
leading consumer electronics retailer in Canada. This helped
Best Buy increase revenues,
gain market share, and leverage operational expertise. The same
year, Best Buy also
opened its first Canadian store. In the same year, the company
purchased Musicland, a
mall-centered music retailer throughout the United States
(divested in 2003).
2002: Best Buy acquired Geek Squad, a computer repair service
provider, to help develop a
technological support system for customers. The retailer began
by incorporating in-store
Geek Squad centers in its 28 Minnesota stores, then expanding
nationally, and eventually
internationally in subsequent years.
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Publishing Services
C A S E 2 2 Best Buy Co. Inc. (2009): Sustainable Customer -
Centricity Model? 627
2005: Best Buy opened the first Magnolia Home Theater “store-
within-a-store” (located
within the Best Buy complex).
2006: Best Buy acquired Pacific Sales Kitchen and Bath Centers
Inc. to develop a new
customer base: builders and remodelers. The same year, Best
Buy also acquired a 75%
stake in Jiangsu Five Star Appliance Co., Ltd, a China-based
appliance and consumer
electronics retailer. This enabled the company to access the
31. Chinese retail market and led
to the opening of the first Best Buy China store on January 26,
2007.
2007: Best Buy acquired Speakeasy Inc., a provider of
broadband, voice, data, and informa-
tion technology services, to further its offering of technological
solutions for customers.
2008: Through a strategic alliance with the Carphone
Warehouse Group, a UK-based provider
of mobile phones, accessories, and related services, Best Buy
Mobile was developed.
After acquiring a 50% share in Best Buy Europe (with 2414
stores) from the Carphone
Warehouse, Best Buy intended to open small-store formats
across Europe in 2011.3 Best
Buy also acquired Napster, a digital download provider, through
a merger to counter the
falling sales of compact discs. The first Best Buy Mexico store
was opened.
2009: Best Buy acquired the remaining 25% of Jiangsu Five
Star. Best Buy Mobile moved
into Canada.
32. Industry Environment
Industry Overview
Despite the negative impact the financial crisis had on
economies worldwide, in 2008 the
consumer electronics industry managed to grow to a record high
of US$694 billion in sales—a
nearly 14% increase over 2007. In years immediately prior, the
growth rate was similar: 14%
in 2007 and 17% in 2006. This momentum, however, did not
last. Sales dropped 2% in 2009,
the first decline in 20 years for the electronics giant.
A few product segments, including televisions, gaming, mobile
phones, and Blu-ray players,
drove sales for the company. Television sales, specifically LCD
units, which accounted for 77%
of total television sales, were the main driver for Best Buy, as
this segment alone accounted for
15% of total industry revenues. The gaming segment continued
to be a bright spot for the indus-
try as well, as sales were expected to have tremendous room for
growth. Smartphones were an-
other electronics industry segment predicted to have a high
33. growth impact on the entire industry.
The consumer electronics industry had significant potential for
expansion into the global
marketplace. There were many untapped markets, especially
newly developing countries.
These markets were experiencing the fastest economic growth
while having the lowest own-
ership rate for gadgets.4 Despite the recent economic downturn,
the future for this industry
was optimistic. A consumer electronics analyst for the European
Market Research Institute
predicted that the largest growth will be seen in China (22%),
the Middle East (20%), Russia
(20%), and South America (17%).5
Barriers to Entry
As globalization spread and use of the Internet grew, barriers to
entering the consumer
electronics industry were diminished. When the industry was
dominated by brick-and-mortar
companies, obtaining the large capital resources needed for
entry into the market was a barrier
for those looking to gain any significant market share.
Expanding a business meant purchas-
34. ing or leasing large stores that incurred high initial and
overhead costs. However, the Internet
significantly reduced the capital requirements needed to enter
the industry. Companies like
Amazon.com and Dell utilized the Internet to their advantage
and gained valuable market share.
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Publishing Services
628 C A S E 2 2 Best Buy Co. Inc. (2009): Sustainable
Customer-Centricity Model?
35. The shift toward Internet purchasing also negated another once
strong barrier to entry: cus-
tomer loyalty. The trend was that consumers would research
products online to determine which
one they intended to purchase and then shop around on the
Internet for the lowest possible price.
Even though overall barriers were diminished, there were still a
few left, which a company
like Best Buy used to its advantage. The first, and most
significant, was economies of scale. With
over 1000 locations, Best Buy used its scale to obtain cost
advantages from suppliers due to high
quantity orders. Another advantage was in advertising. Large
firms had the ability to increase
advertising budgets to deter new entrants into the market.
Smaller companies generally did not
have the marketing budgets for massive television campaigns,
which were still one of the most
effective marketing strategies available to retailers. Although
Internet sales were growing, the in-
dustry was still dominated by brick-and-mortar stores. Most
consumers looking for electronics—
especially major electronics—felt a need to actually see their
36. prospective purchases in person.
Having the ability to spend heavily on advertising helped
increase foot traffic to these stores.
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$15,000
$20,000
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
2005
37. 2006
2007
2008
2009
2010
ExHIbIt 1
Quarterly Sales, Best
Buy Co., Inc.
SOURCE: Best Buy Co., Inc.
Internal Environment
Finance
While Best Buy’s increase in revenue was encouraging (see
Exhibit 1), recent growth had
been fueled largely by acquisition, especially Best Buy’s fiscal
year 2009 revenue growth. At
38. the same time, net income and operating margins had been
declining (see Exhibits 2 and 3).
Although this could be a function of increased costs, it was
more likely due to pricing pres-
sure. Given the current adverse economic conditions, prices of
many consumer electronic
products had been forced down by economic and competitive
pressures. These lower prices
caused margins to decline, negatively affecting net income and
operating margins.
Best Buy’s long-term debt increased substantially from fiscal
2008 to 2009 (see Exhibit 4),
which was primarily due to the acquisition of Napster and Best
Buy Europe. The trend in
available cash has been a mirror image of long-term debt.
Available cash increased from fiscal
2005 to 2008 and then was substantially lower in 2009 for the
same reason.
$0
$200
$400
40. 2009
2010
ExHIbIt 2
Quarterly Net
Income, Best
Buy Co., Inc.
SOURCE: Best Buy Co., Inc.
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C A S E 2 2 Best Buy Co. Inc. (2009): Sustainable Customer-
Centricity Model? 629
While the change in available cash and long-term debt were not
desirable, the bright side
was that this situation was due to the acquisition of assets,
which led to a significant increase
in revenue for the company. Ultimately, the decreased
availability of cash would seem to
be temporary due to the circumstances. The more troubling
concern was the decline in net
income and operating margins, which Best Buy needed to find a
way to turn around. If the
problems with net income and operating margins were fixed, the
trends in cash and long-term
debt would also begin to turn around.
At first blush, the increase in accounts receivable and inventory
was not necessarily alarm-
ing since revenues were increasing during this same time period
(see Exhibit 5). However,
closer inspection revealed a 1% increase in inventory from
42. fiscal 2008 to 2009 and a 12.5% in-
crease in revenue accompanied by a 240% increase in accounts
receivable. This created a poten-
tial risk for losses due to bad debts. (For complete financial
statements, see Exhibits 6 and 7.)
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
2005
2006
2007
44. n
s
$1,500
$2,000
2005 2006 2007 2008 2009
Long term Debit
Cash
ExHIbIt 4
Long-Term Debt
and Cash, Best
Buy Co., Inc.
SOURCE: Best Buy Co., Inc.
$0
$1,000
45. $2,000
$3,000
$4,000
$5,000
2005 2006 2007 2008 2009
Inventory
Accounts receivable
ExHIbIt 5
Accounts Receivable
and Inventory, Best
Buy Co., Inc.
SOURCE: Best Buy Co., Inc.
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630 C A S E 2 2 Best Buy Co. Inc. (2009): Sustainable
Customer-Centricity Model?
ExHIbIt 6 Consolidated Balance Sheets, Best Buy Co., Inc. ($ in
millions, except per share and share amounts)
February 28, 2009 March 1, 2008
Assets
Current assets:
Cash and cash equivalents $498 $1,438
Short-term investments 11 64
47. Receivables 1,868 549
Merchandise inventories 4,753 4,708
Other current assets 1,062 583
Total current assets 8,192 7,342
Property and equipment:
Land and buildings 755 732
Leasehold improvements 2,013 1,752
Fixtures and equipment 4,060 3,057
Property under capital lease 112 67
6,940 5,608
Less accumulated depreciation 2,766 2,302
Net property and equipment 4,174 3,306
Goodwill 2,203 1,088
Tradenames 173 97
Customer relationships 322 5
Equity and other investments 395 605
Other assets 367 315
Total assets $15,826 $12,758
Liabilities and shareholders’ equity
48. Current liabilities:
Accounts payable $4,997 $4,297
Unredeemed gift card liabilities 479 531
Accrued compensation and related expenses 459 373
Accrued liabilities 1,382 975
Accrued income taxes 281 404
Short-term debt 783 156
Current portion of long-term debt 54 33
Total current liabilities 8,435 6,769
Long-term liabilities 1,109 838
Long-term debt 1,126 627
Minority interests 513 40
Shareholders’ equity:
Preferred stock, $1.00 par value: Authorized — 400,000 shares;
Issued
and outstanding — none — —
Common stock, $0.10 par value: Authorized — 1.0 billion
shares; Issued and
outstanding — 413,684,000 and 410,578,000 shares,
respectively 41 41
49. Additional paid-in capital 205 8
Retained earnings 4,714 3,933
Accumulated other comprehensive (loss) income (317) 502
Total shareholders’ equity 4,643 4,484
Total liabilities and shareholders’ equity $15,826 $12,758
SOURCE: Best Buy Co., Inc. 2009 Form 10-K, p. 56.
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50. C A S E 2 2 Best Buy Co. Inc. (2009): Sustainable Customer -
Centricity Model? 631
Best Buy’s marketing goals were four-fold: (1) to market
various products based on the
customer-centricity operating model, (2) to address the needs of
customer lifestyle groups,
(3) to be at the forefront of technological advances, and (4) to
meet customer needs with end-
to-end solutions.
Best Buy prided itself on customer centricity that catered to
specific customer needs and
behaviors. Over the years, the retailer created a portfolio of
products and services that comple-
mented one another and added to the success of the business.
These products included seven
distinct brands domestically, as well as other brands and stores
internationally:
Best Buy: This brand offered a wide variety of consumer
electronics, home office products,
entertainment software, appliances, and related services.
51. Best Buy Mobile: These stand-alone stores offered a wide
selection of mobile phones, acces-
sories, and related e-services in small-format stores.
Geek Squad: This brand provided residential and commercial
product repair, support, and
installation services both in-store and onsite.
Fiscal Years Ended
February 28,
2009
March 1,
2008
March 3,
2007
Revenue $45,015 $40,023 $35,934
Cost of goods sold 34,017 30,477 27,165
Gross profit 10,998 9,546 8,769
Selling, general and administrative expenses 8,984 7,385 6,770
Restructuring charges 78 — —
52. Goodwill and tradename impairment 66 — —
Operating income
Other income (expense)
Investment income and other 35 129 162
Investment impairment (111) — —
Interest expense (94) (62) (31)
Earnings before income tax expense, minority
interests and equity in income (loss) of affiliates
Income tax expense 674 815 752
Minority interests in earnings (30) (3) (1)
Equity in income (loss) of affiliates 7 (3) —
Net earnings $1,003 $1,407 $1,377
Earnings per share
Basic $2.43 $3.20 $2.86
Diluted $2.39 $3.12 $2.79
Weighted-average common shares outstanding
(in millions)
53. Basic 412.5 439.9 482.1
Diluted 422.9 452.9 496.2
1,870 2,161 1,999
1,700 2,228 2,130
ExHIbIt 7
Consolidated
Statements of
Earnings, Best
Buy Co., Inc. ($ in
millions, except per
share amounts)
SOURCE: Best Buy Co., Inc. 2009 Form 10-K, p. 57.
Marketing
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Customer-Centricity Model?
Magnolia Audio Video: This brand offered high-end audio and
video products and related
services.
Napster: This brand was an online provider of digital music.
Pacific Sales: This brand offered high-end home improvement
products, primarily including
appliances, consumer electronics, and related services.
55. Speakeasy: This brand provided broadband, voice, data, and
information technology services
to small businesses.
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 moth-
ers, and technologically advanced families.6 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.7 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 prod-
uct offerings, which led to more profits.
56. 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.
Operations
Best Buy’s operating goals included increasing revenues by
growing its customer base, gain-
ing more market share internationally, successfully
implementing marketing and sales strate-
gies 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 ter-
ritory divided into districts. A retail field officer oversaw store
performance through district
57. managers, who met with store employees on a regular basis to
discuss operations strategies
such as loyalty programs, sales promotion, and new product
introductions.8 Along with do-
mestic operations, Best Buy had an international operation
segment, originally established in
connection with the acquisition of Canada-based Future Shop.9
In fiscal 2009, Best Buy opened up 285 new stores in addition
to the European acquisition
of 2414 Best Buy Europe stores. It relocated 34 stores and
closed 67 stores.
Human Resources
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
58. on the floor. Every employee
had to have the company’s vision embedded in their service and
attitude.
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Centricity Model? 633
Despite Best Buy’s efforts to train an ethical and knowledgeable
employee force, there
59. were some allegations and controversy over Best Buy
employees, which gave the company
a black eye in the public mind. One lawsuit claimed that Best
Buy employees had misrepre-
sented 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 barri-
ers to discourage consumers who purchased the ‘complete
extended warranties’ from making
legitimate claims.”10
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.”11 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
60. bonuses to employees who
complied.
Competition
Brick-and-Mortar Competitors
Wal-Mart Stores Inc., the world’s largest retailer, with revenues
over US$405 billion, operated
worldwide and offered a diverse product mix with a focus on
being a low-cost provider. In
recent years, Wal-Mart increased its focus on grabbing market
share in the consumer electron-
ics industry. In the wake of Circuit City’s liquidation,12 Wal -
Mart was stepping up efforts by
striking deals with Nintendo and Apple that would allow each
company to have their own
in-store displays. Wal-Mart also considered using Smartphones
and laptop computers to drive
growth.13 It was refreshing 3500 of its electronics departments
and was beginning to offer a
wider and higher range of electronic products. These efforts
should help Wal-Mart appeal to
the customer segment looking for high quality at the lowest
possible price.14
61. GameStop Corp. was the leading video game retailer with sales
of almost US$9 billion as
of January 2009, in a forecasted US$22 billion industry.
GameStop operated over 6000 stores
throughout the United States, Canada, Australia, and Europe, as
a retailer of both new and
used video game products including hardware, software, and
gaming accessories.15
The advantage GameStop had over Best Buy was the number of
locations: 6207 GameStop
locations compared to 1023 Best Buy locations. However, Best
Buy seemed to have what it took
to overcome this advantage—deep pockets. With significantly
higher net income, Best Buy
could afford to take a hit to its margins and undercut GameStop
prices.16
RadioShack Corp. was a retailer of consumer electronics goods
and services, including
flat panel televisions, telephones, computers, and consumer
electronics accessories. Although
the company grossed revenues of over US$4 billion from 4453
locations, RadioShack consis-
tently lost market share to Best Buy. Consumers had a
62. preference for RadioShack for audio
and video components, yet preferred Best Buy for their big box
purchases.17
Second tier competitors were rapidly increasing. Wholesale
shopping units were becom-
ing more popular, and companies such as Costco and BJ’s had
increased their piece of the
consumer electronics pie over the past few years. After Circuit
City’s bankruptcy, mid-level
electronics retailers like HH Gregg and Ultimate Electronics
were scrambling to grab Circuit
City’s lost market share. Ultimate Electronics, owned by Mark
Wattles, who was a major
investor in Circuit City, had a leg up on his competitors.
Wattles was on Circuit City’s board
of executives and had firsthand access to profitable Circuit City
stores. Ultimate Electronics
planned to expand its operations by at least 20 stores in the near
future.
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634 C A S E 2 2 Best Buy Co. Inc. (2009): Sustainable
Customer-Centricity Model?
Amazon.com Inc., since 1994, had grown into the United States’
largest online retailer with
revenues of over US$19 billion in 2008 by providing just about
any product imaginable
through its popular website. Created as an online bookstore,
Amazon soon ventured into vari-
ous consumer electronics product categories including
computers, televisions, software, video
games, and much more.18
64. Amazon.com gained an advantage over its supercenter
competitors because it was able to
maintain a lower cost structure compared to brick-and-mortar
companies like Best Buy. Amazon
was able to push those savings through to its product pricing
and selection/diversification. With
an increasing trend in the consumer electronics industry to shop
online, Amazon.com was posi-
tioned perfectly to maintain strong market growth and
potentially steal some market share away
from Best Buy.
Netflix Inc. was an online video rental service, offering
selections of DVDs and Blu-ray
discs. Since its establishment in 1997, Netflix had grown into a
US$1.4 billion company.
With over 100,000 titles in its collection, the company shipped
for free to approximately
10 million subscribers. Netflix began offering streaming
downloads through its website,
which eliminated the need to wait for a DVD to arrive.
Netflix was quickly changing the DVD market, which had
dramatically impacted brick-
and-mortar stores such as Blockbuster and Hollywood Video
65. and retailers who offered DVDs
for sale. In a responsive move, Best Buy partnered with
CinemaNow to enter the digital movie
distribution market and counter Netflix and other video rental
providers.19
Online Competitors
Core Competencies
Customer-Centricity Model
Most players in the consumer electronics industry focused on
delivering products at the lowest
cost (Wal-Mart—brick-and-mortar; Amazon—web-based). Best
Buy, however, took a differ-
ent approach by providing customers with highly trained sales
associates who were available
to educate customers regarding product features. This allowed
customers to make informed
buying decisions on big-ticket items. In addition, with the Geek
Squad, Best Buy was able to
offer and provide installation services, product repair, and
ongoing support. In short, Best Buy
provided an end-to-end solution for its customers.
66. Best Buy used its customer-centricity model, which was built
around a significant data-
base of customer information, to construct a diversified
portfolio of product offerings. This
let the company offer different products in different stores in a
manner that matched customer
needs. This in turn helped keep costs lower by shipping the
correct inventory to the correct
locations. Since Best Buy’s costs were increased by the high
level of training needed for sales
associates and service professionals, it had been important that
the company remain vigilant
in keeping costs down wherever it could without sacrificing
customer experience.
The tremendous breadth of products and services Best Buy was
able to provide allowed
customers to purchase all components for a particular need
within the Best Buy family.
For example, if a customer wanted to set up a first-rate audio-
visual room at home, he or
she could go to the Magnolia Home Theater store-within-a-store
at any Best Buy location
and use the knowledge of the Magnolia or Best Buy associate in
the television and audio
67. areas to determine which television and surround sound theater
system best fit their needs.
The customer could then employ a Geek Squad employee to
install and set up the televi-
sion and home theater system. None of Best Buy’s competitors
offered this extensive level
of service.
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C A S E 2 2 Best Buy Co. Inc. (2009): Sustainable Customer-
68. Centricity Model? 635
Through its series of acquisitions, Best Buy had gained valuable
experience in the process of
integrating companies under the Best Buy family. The ability to
effectively determine where
to expand was important to the company’s ability to
differentiate itself in the marketplace.
Additionally, Best Buy was also successfully integrating
employees from acquired compa-
nies. Best Buy had a significant global presence, which was
important because of the maturing
domestic market. This global presence provided the company
with insights into worldwide
trends in the consumer electronics industry and afforded access
to newly developing markets.
Best Buy used this insight to test products in different markets
in its constant effort to meet
and anticipate customer needs.
Successful Acquisitions
Retaining Talent
Analyzing Circuit City’s demise, many experts concluded one
of the major reasons for the
69. company’s downfall was that Circuit City let go of their most
senior and well-trained sales
staff in order to cut costs. Best Buy, on the other hand, had a
reputation for retaining talent and
was widely recognized for its superior service. Highly trained
sales professionals had become
a unique resource in the consumer electronics industry, where
technology was changing at an
unprecedented rate, and was a significant source of competitive
advantage.
Challenges Ahead
Economic Downturn
Electronics retailers like Best Buy sold products that could be
described as “discretionary
items, rather than necessities.”20 During economic recessions,
however, consumers had less
disposable income to spend. While there was optimism about a
possible economic turnaround
in 2010 or 2011, if the economy continued to stumble, this
could present a real threat to sellers
of discretionary products.
In order to increase sales revenues, many retailers, including
70. Best Buy, offered customers
low-interest financing through their private-label credit cards.
These promotions were tremen-
dously successful for Best Buy. From 2007 to 2009, these
private-label credit card purchases
accounted for 16%–18% of Best Buy’s domestic revenue. Due
to the credit crisis, however,
the Federal Reserve issued new regulations that could restrict
companies from offering de-
ferred interest financing to customers. If Best Buy and other
retailers were unable to extend
these credit lines, it could have a tremendous negative impact
on future revenues.21
Pricing and Debt Management
The current depressed economic conditions, technological
advances, and increased competi-
tion put a tremendous amount of pricing pressure on many
consumer electronics products.
This was a concern for all companies in this industry. The fact
that Best Buy did not compete
strictly on price structure alone made this an even bigger
concern. Given the higher costs that
Best Buy incurred training employees, any pricing pressure that
decreased margins put stress
71. on Best Buy’s financial strength. In addition, the recent
acquisition of Napster and the 50%
stake in Best Buy Europe significantly increased Best Buy’s
debt and reduced available cash.
Even in prosperous times, debt management was a key factor in
any company’s success, and
it became even more important during the economic downturn.
(See Exhibits 6 and 7 for Best
Buy’s financial statements.)
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72. 636 C A S E 2 2 Best Buy Co. Inc. (2009): Sustainable
Customer-Centricity Model?
As technology improved, product life cycles, as well as prices,
decreased. As a result, margins
decreased. Under Best Buy’s service model, shorter product life
cycles increased training
costs. Employees were forced to learn new products with higher
frequency. This was not only
costly but also increased the likelihood that employees would
make mistakes, thereby tarnish-
ing Best Buy’s service record and potentially damaging one of
its most important, if not its
most important, differentiators. In addition, more resources
would be directed at research of
new products to make sure Best Buy continued to offer the
products consumers desire.
One social threat to the retail industry was the growing
popularity of the online market-
place. Internet shoppers could browse sites searching for the
best deals on specific products.
This technology allowed consumers to become more educated
about their purchases, while
73. creating increased downward price pressure. Ambitious
consumers could play the role of a
Best Buy associate themselves by doing product comparisons
and information gathering with-
out a trip to the store. This emerging trend created a direct
threat to companies like Best Buy,
which had 1023 stores in its domestic market alone. One way
Best Buy tried to continue the
demand for brick-and-mortar locations and counter the threat of
Internet-based competition
was by providing value-added services in stores. Customer
service, repairs, and interactive
product displays were just a few examples of these services.22
Products and Service
Leadership
The two former CEOs of Best Buy, Richard Shultze and Brad
Anderson, were extremely suc-
cessful at making the correct strategic moves at the appropriate
times. With Brad Anderson
stepping aside in June 2009, Brian Dunn replaced him as the
new CEO. Although Dunn
worked for the company for 24 years and held the key positions
of COO and President during
74. his tenure, the position of CEO brought him to a whole new
level and presented new chal-
lenges, especially during the economic downturn. He was
charged with leading Best Buy into
the world of increased connectivity. This required a revamping
of products and store setups to
serve customers in realizing their connectivity needs. This was
a daunting task for an experi-
enced CEO, let alone a new CEO who had never held the
position.
Wal-Mart
Best Buy saw its largest rival, Circuit City, go bankrupt.
However, a new archrival,
Wal-Mart, was expanding into consumer electronics and
stepping up competition in a price
war Wal-Mart hoped to win. Best Buy needed to face the
competition not by lowering prices,
but by coming up with something really different. Best Buy had
to determine the correct path
to improve its ability to differentiate itself from competitors,
which was increasingly difficult
given an adverse economic climate and the company’s financial
stress. How Best Buy could
maintain innovative products, top-notch employees, and
75. superior customer service while
facing increased competition and operational costs was an open
question.
N o t e s
1. Best Buy Co. Inc., Form 10-K. Securities and Exchange
Commission, February 28, 2009.
2. Ibid.
3. Ibid.
4. Greg Keller, “Threat Grows by iPod and Laptop,” The
Colum-
bus Dispatch, May 18, 2009, http://www.dispatch.com/live/
content/business/stories/2009/05/18/greener_gadgets.ART_
ART_05-18-09_A9_TMDSJR8.html (July 10, 2009).
5. Larry Magid, “Consumer Electronics: Future Looks Bright,”
CBSNews.com, May 2, 2008, http://www.cbsnews.com/stories/
2008/05/02/scitech/pcanswer/main4067008.shtml (July 10,
2009).
6. Best Buy Co. Inc., Form 10-K, 2009.
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Centricity Model? 637
7. Ibid.
8. Ibid.
9. Ibid.
10. Manhattan Institute for Policy Research, “They’re Making a
Federal Case Out of It . . . in State Court,” Civil Justice Report
77. 3,
2001, http://www.manhattan-institute.org/html/cjr_3_part2.htm.
11. “Best Buy Bombshell!” HD Guru, March 21, 2009, http://
hdguru.com/best-buy-bombshell/.
12. Circuit City Stores Inc. was an American retailer in brand-
name
consumer electronics, personal computers, entertainment soft-
ware, and (until 2000) large appliances. The company opened
its
first store in 1949 and liquidated its final American retail stores
in 2009 following a bankruptcy filing and subsequent failure to
find a buyer. At the time of liquidation, Circuit City was the
second-largest U.S. electronics retailer, after Best Buy.
13. Z. Bissonnette, “Wal-Mart Looks to Expand Electronics
Business,”
Bloggingstocks.com, May 18, 2009, http://www.bloggingstocks
.com/2009/05/18/wal-mart-looks-to-expand-electronics-
business/.
14. N. Maestrie, “Wal-Mart Steps Up Consumer Electronics
Push,” Reuters, May 19, 2009, http://www.reuters.com/article/
technologyNews/idUSTRE54I4TR20090519.
78. 15. Capital IQ, “GameStop Corp. Corporate Tearsheet,” Capital
IQ,
2009.
16. E. Sherman, “GameStop Faces Pain from Best Buy, Down-
loading,” BNET Technology, June 24, 2009, http://industry
.bne t .com /tec h nol ogy/ 1000232 9 /g a mestop-faces-pain-
from-best-buy-downloading/.
17. T. Van Riper, “RadioShack Gets Slammed,” Forbes.com,
February 17, 2006,
http://www.forbes.com/2006/02/17/radioshack-
edmondson-retail_cx_tr_0217radioshack.html.
18. Capital IQ, “Amazon.com Corporate Tearsheet,” Capital
IQ,
2009.
19. T. Kee, “Netflix Beware: Best Buy Adds Digital Dow nloads
with CinemaNow Deal,” paidContent.org, June 5, 2009, http://
paidcontent.org/article/419-best-buy-adds-digital-movie-
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20. Best Buy Co., Inc., Form 10-K, 2009.
79. 21. Ibid.
22. Ibid.
Z22_WHEE0811_14_GE_CA22.indd 637 5/20/14 12:00 PM
Cover
Brief ContentsContentsPrefaceAbout the AuthorsPart One:
Introduction to Strategic Management and Business Policy
Chapter 1: Basic Concepts of Strategic Management
The Study of Strategic Management
Phases of Strategic Management
Benefits of Strategic ManagementGlobalization, Innovation, and
Sustainability: Challenges to Strategic Management
Impact of GlobalizationImpact of InnovationGlobal Issue:
Regional Trade Associations Replace National Trade Barriers
Impact of SustainabilityTheories of Organizational
AdaptationCreating a Learning OrganizationBasic Model of
Strategic ManagementEnvironmental ScanningStrategy
FormulationStrategy ImplementationEvaluation and
ControlFeedback/Learning ProcessInitiation of Strategy:
Triggering EventsStrategic Decision MakingWhat Makes a
Decision StrategicMintzberg's Modes of Strategic Decision
Making
Strategic Decision-Making Process: Aid to Better Decisions
The Strategic Audit: Aid to Strategic Decision MakingEnd of
Chapter Summary
80. Appendix 1.A: Strategic Audit of a Corporation
Chapter 2: Corporate Governance
Role of the Board of DirectorsResponsibilities of the Board
Members of a Board of DirectorsInnovation Issue: JCPenney
and Innovation
Strategy Highlight: Agency Theory Versus Stewardship Theory
in Corporate Governance
Nomination and Election of Board MembersOrganization of the
BoardImpact of the Sarbanes-Oxley Act on U.S. Corporate
Governance
Global Issue: Global Business Board Activism At Yahoo!
Trends in Corporate GovernanceThe Role of Top
ManagementResponsibilities of Top ManagementSustainability
Issue: CEO Pay and Corporate Performance
End of Chapter Summary
Chapter 3: Social Responsibility and Ethics in Strategic
Management
Social Responsibilities of Strategic Decision
MakersResponsibilities of a Business
FirmSustainabilityCorporate StakeholdersSustainability Issue:
Marks & Spencer Leads the Way
Strategy Highlight: Johnson & Johnson Credo
Ethical Decision MakingSome Reasons for Unethical
BehaviorGlobal Issue: How Rule-Based and Relationship-Based
Governance Systems Affect Ethical Behavior
81. Innovation Issue: Turning a Need into a Business to Solve the
Need
Encouraging Ethical BehaviorEnd of Chapter Summary
Part Two: Scanning the Environment
Chapter 4: Environmental Scanning and Industry Analysis
Environmental ScanningIdentifying External Environmental
VariablesSustainability Issue: Green Supercars
Global Issue: SUVs Power on in China
Identifying External Strategic FactorsIndustry Analysis:
Analyzing the Task EnvironmentPorter's Approach to Industry
Analysis
Industry EvolutionInnovation Issue: Taking Stock of an
Obsession
Categorizing International IndustriesInternational Risk
AssessmentStrategic GroupsStrategic
TypesHypercompetitionUsing Key Success Factors to Create an
Industry MatrixCompetitive IntelligenceSources of Competitive
IntelligenceStrategy Highlight: Evaluating Competitive
Intelligence
Monitoring Competitors for Strategic
PlanningForecastingDanger of AssumptionsUseful Forecasting
TechniquesThe Strategic Audit: A Checklist for Environmental
ScanningSynthesis of External Factors—EFASEnd of Chapter
Summary
Chapter 5: Internal Scanning: Organizational Analysis
82. A Resource-Based Approach to Organizational AnalysisCore
and Distinctive CompetenciesUsing Resources to Gain
Competitive Advantage
Determining the Sustainability of an Advantage
Business ModelsValue-Chain AnalysisIndustry Value-Chain
AnalysisCorporate Value-Chain AnalysisScanning Functional
Resources and CapabilitiesBasic Organizational Structures
Corporate Culture: The Company Way
Global Issue: Managing Corporate Culture for Global
Competitive Advantage: ABB vs. Panasonic
Strategic Marketing Issues
Innovation Issue: DoCoMo Moves against the Grain
Strategic Financial Issues
Strategic Research and Development (R&D) Issues
Strategic Operations Issues
Strategic Human Resource (HRM) Issues
Sustainability Issue: The Olympic Games-Sochi 2014 and Rio
2016
Strategic Information Systems/Technology Issues
The Strategic Audit: A Checklist for Organizational Analysis
Synthesis of Internal FactorsEnd of Chapter Summary
Part Three: Strategy Formulation
Chapter 6: Strategy Formulation: Situation Analysis and
Business Strategy
Situational Analysis: SWOT ApproachGenerating a Strategic
83. Factors Analysis Summary (SFAS) Matrix
Finding a Propitious NicheReview of Mission and
ObjectivesBusiness StrategiesPorter's Competitive Strategies
Global Issue: The Nike Shoe Strategy vs. The New Balance
Shoe Strategy
Innovation Issue: CHEGG and College Textbooks
Cooperative StrategiesSustainability Issue: Strategic
Sustainability-Espn
End of Chapter Summary
Chapter 7: Strategy Formulation: Corporate Strategy
Corporate StrategyDirectional StrategyGrowth
StrategiesStrategy Highlight: Transaction Cost Economics
Analyzes Vertical Growth Strategy
International Entry Options for Horizontal GrowthGlobal Issue:
Global Expansion is not Always A Path to Expansion
Controversies in Directional Growth StrategiesStability
StrategiesRetrenchment StrategiesPortfolio AnalysisBCG
Growth-Share MatrixSustainability Issue: General Motors and
The Electric Car
Advantages and Limitations of Portfolio AnalysisManaging a
Strategic Alliance PortfolioCorporate ParentingInnovation
Issue: To Red Hat or Not?
Developing a Corporate Parenting StrategyHorizontal Strategy
and Multipoint CompetitionEnd of Chapter Summary
Chapter 8: Strategy Formulation: Functional Strategy and
84. Strategic Choice
Functional StrategyMarketing StrategyFinancial Strategy
Research and Development (R&D) Strategy
Operations Strategy
Global Issue: Why doesn't Starbucks want to Expand to Italy?
Purchasing Strategy
Sustainability Issue: How Hot is Hot?
Logistics Strategy
Innovation Issue: When an Innovation Fails to Live Up to
Expectations
Human Resource Management (HRM) Strategy
Information Technology Strategy
The Sourcing Decision: Location of FunctionsStrategies to
AvoidStrategic Choice: Selecting the Best StrategyConstructing
Corporate Scenarios
The Process of Strategic Choice
Developing PoliciesEnd of Chapter Summary
Part Four: Strategy Implementation and Control
Chapter 9: Strategy Implementation: Organizing for Action
Strategy ImplementationWho Implements Strategy?What Must
Be Done?Developing Programs, Budgets, and
ProceduresSustainability Issue: A Better Bottle-Ecologic Brands
Achieving SynergyHow is Strategy to Be Implemented?
Organizing for Action
Structure Follows Strategy
85. Stages of Corporate Development
Innovation Issues: The P&G Innovation Machine Stumbles
Organizational Life CycleAdvanced Types of Organizational
StructuresReengineering and Strategy ImplementationSix
SigmaDesigning Jobs to Implement Strategy
International Issues in Strategy ImplementationInternational
Strategic Alliances
Stages of International Development
Global Issue: Outsourcing Comes Full Circle
Centralization Versus Decentralization
End of Chapter Summary
Chapter 10: Strategy Implementation: Staffing and Directing
StaffingStaffing Follows Strategy
Selection and Management Development
Innovation Issue: How to Keep Apple "Cool"
Problems in Retrenchment
International Issues in Staffing
LeadingSustainability Issue: Panera and The "Panera Cares
Community Cafe"
Managing Corporate Culture
Action Planning
Management by Objectives
Total Quality Management
International Considerations in Leading
Global Issue: Cultural Differences Create Implementation
86. Problems in Merger
End of Chapter Summary
Chapter 11: Evaluation and Control
Evaluation and Control in Strategic ManagementMeasuring
PerformanceAppropriate Measures
Types of Controls
Innovation Issue: Reuse of Electric Vehicle Batteries
Activity-Based Costing
Enterprise Risk Management
Primary Measures of Corporate Performance
Balanced Scorecard Approach: Using Key Performance
Measures
Sustainability Issue: E-Receipts
Primary Measures of Divisional and Functional Performance
Responsibility Centers
Using Benchmarking to Evaluate Performance
International Measurement Issues
Global Issue: Counterfeit Goods and Pirated Software: A Global
Problem
Strategic Information SystemsEnterprise Resource Planning
(ERP)
Radio Frequency Identification (RFID)
Divisional and Functional is Support
Problems in Measuring Performance
Short-Term Orientation
87. Goal Displacement
Guidelines for Proper ControlStrategic Incentive
ManagementEnd of Chapter Summary
Part Five: Introduction to Case Analysis
Chapter 12: Suggestions for Case Analysis
The Case MethodResearching the Case SituationFinancial
Analysis: A Place to BeginAnalyzing Financial Statements
Common-Size Statements
Z-Value and the Index of Sustainable Growth
Useful Economic Measures
Format for Case Analysis: The Strategic AuditEnd of Chapter
Summary
Appendix 12.A: Resources for Case Research
Appendix 12.B: Suggested Case Analysis Methodology Using
the Strategic Audit
Appendix 12.C: Example of Student-Written Strategic Audit
Part Six: Cases in Strategic Management
Section A: Corporate Governance: Executive Leadership
Case 1: The Recalcitrant Director at Byte Products, Inc.:
Corporate Legality versus Corporate Responsibility
Several