Management consultants for a Business Strategy Class Case Competition. We were assigned to Best Buy, Inc.

1. Best Buy, Inc. Ohhhhhh(BBY)
November 13th, 2015

2. The Team
2
Molly Bock
BBA, Marketing & IBUS
mbock@gwu.edu
Carlos Larreategui
BBA, Finance & IBUS
carlos93@gwu.edu
Kevin Connell
BBA, Finance
kevinconnell@gwu.edu
Veronica Buza
BA, Accounting
veronicabuza@gwu.edu
Victor Bitar
BBA, Finance
vbitar@gwu.edu

3. Roadmap
3
Core Challenge
Core Solution
Options
Idenfity Concerns
Recap and Conclusion
Company Background
Internal & External Company Analysis

4. 4
Setting the stage.

5. Recommendation in a Nutshell
5
In order to effectively compete in a low cost
industry, Best Buy should continue their
differentiation strategy by eliminating
unnecessary costs and investing in core
competencies.

6. 6
Let's jump in.

7. 7
Core Challenge
Core Solution
Options
Idenfity Concerns
Recap and Conclusion
Risk Analysis
Company Background

8. #1 Electronics Retailer
2014 sales of electronics in billions of USD; Source: Twice Top 100 CE Retailers List
8
AmazonWalmartBest Buy
30
22
18

9. Revenue Mix
Percentage of revenue allocation by product offerings; Source: Best Buy 2015 10-K
9
OtherServicesAppliancesEntertainmentComputing and
Mobile Phones
Consumer
Electronics
31
47
9
7
5
1

10. Costs: Operating Margin
Source: Best Buy 2015 & 2013 10-K
10
2012201320142015
3.59
2.7
0.28
2.14

11. 11
Core Challenge
Core Solution
Company Background
Internal & External Company Analysis
Recap and Conclusion
Idenfity Concerns
Options

12. 12
WeaknessesStrengths
Internal Company Analysis

13. Internal Analysis
13
End to end services
Multiple Channel Selling Strategy Customer Centric Business Model
Brand Loyalty
Strengths
Subject to economic volatility
Heavy reliance on few suppliers
Changing customer preferences make it difficult to (1) adequately train employees, and (2) have
current inventories
Showrooming
Weaknesses
Diverse product breadth

14. 14
ThreatsOpportunities
External Company Analysis

15. External Analysis
15
Store-within-a-store system
Threats
Vertical Integration from competitors/suppliers
Pressure to keep margins down to remain competitive
Opportunities
In store classes
Geek SquadWebsite Enhancement

16. 16
Options
Idenfity Concerns
Recap and Conclusion
Internal & External Company Analysis
Company Background
Core Solution
Core Challenge

17. Concerns
17
Suppliers vertically
integrating
Purchasing trends
Capital intensive growth
model
Technology development
cycle
Competing as a differentiator in a low cost industry
Increasing trend towards E-
Commerce vs. decreasing
trend from brick and mortar
Reliance on few suppliers

18. 18
Idenfity Concerns
Core Challenge
Core Solution
Company Background
Internal & External Company Analysis
Recap and Conclusion
Options

19. 19
How to compete as a differentiator in a
competitively low cost industry
Core Challenge

20. 20
Options
Idenfity Concerns
Recap and Conclusion
Internal & External Company Analysis
Company Background
Core Solution
Core Challenge

21. Broad Solutions
21
Strengthen online customer service platform
Enhance corporate culture
Improve relationships with suppliers
Invest in employee development

22. 22
Core Challenge
Core Solution
Company Background
Internal & External Company Analysis
Recap and Conclusion
Idenfity Concerns
Options

23. 23
Core Solution
Use savings generated by cost cutting
measures to invest in employees

24. 24
Cutting costs.

25. Leveraging Store within a Store Concept
25
Increase supplier reliance on Best Buy
Increase ability to sell luxury
consumer electronics
Gain favorable pricing from suppliers
Allow for rapid brick and
mortar expansion on a
national level

26. 26
Investing in employees.

27. 27
Improve employee
performance
evaluation
Improved quality
Employee training
Enhance employee benefits and incentives
Speed of training to keep up with
product cycle and consumer
preferences

28. 28
Impact.

29. 29
Attract and retain talent
Maximize Shareholder Wealth
Improve Customer Engagement Decrease Supplier PowerIncrease Brand Loyalty

30. 30
Company Background
Risk Analysis
Recap and Conclusion
Idenfity Concerns
Options
Core Solution
Core Challenge

31. Wrapping up
31
To compete in a low cost industry as a differentiator, Best
Buy should continue to cut costs and further invest in core
competencies
If executed properly, shareholder wealth will be maximized
Best Buy should generate savings by forming business
partnerships through store-within-a-store platform
Best Buy should then use the generated savings to invest in
employee development and corporate culture

32. 32
Questions?