Description
BEST BUY'company changed its focus from product centric to customer centric.
A SWOT ANALYSIS
1
•
Best Buy is: – The largest retailer of consumer electronics – Headquartered in Richfield, United States – Sound of Music, 1966 by Richard M. Schulze • Consumer electronics, appliances, entertainment software, and home office equipment and software • March 9, 2009 – The largest electronics retail store in the eastern United States • Locations average about 44,000 square feet in size
2
REVENUE MIX-2005
6% 22%
37%
35%
Consumer Electronics Home Office Entertainment Software Appliances
3
SUBSIDIARIES
– – – – – Geek Squad Cinema Now Magnolia Audio Video, Pacific Sales In Canada operates under both the Best Buy and Future Shop label
4
THE CASE
• • • •
•
• • • •
8 years leader till 2004 Sales Fiscal year 2005 – USD 27.5 bn One style fits all customers Improved technology & increased competition. Hence, slow decline 4 strategies – Customer centricity, Efficient enterprise, Win with service, Win with entertainment Customer centricity successful at 32 pilot stores Aggressive roll out at 144 new centricity store 13 Dec 2005 – Missed 3rd quarter EPS Stock price fell nearly 12%
5
HOMAN’S MODEL
1. • • • • • • Founder Richard M. Schulze 1966, St. Paul, Minnesota Sound of Music Flagship store destroyed by tornado Therefore, sold off at ‘Best Buy’ High quality electronic store
6
HOMAN’S MODEL
2. Environment • Best Buy – High end customers • Wal Mart – 2003 started targetting this lucrative domain • Dell – Direct sales model • Amazon – Online retail • Target – Mass merchandising • Circuit City – Direct competitor ? Fading competitive advantage
7
HOMAN’S MODEL
3. Strategy Initial • One style fits all • Standard Operating Platform Later • Customer Centricity (Prof. Larry Seldon, Columbia University) • Segmentation (Barry, Jill, BB4B, Buzz, Ray) • Merchandizing at store
8
HOMAN’S MODEL
4. Structure Initial • Merchant Organization • Blue Shirts – Sales Force • Salaried sales force Later • Segment Leader & Merchants • Magnolia + Best Buy = Magnolia Audio Video • Geek Squad
9
HOMAN’S MODEL
5. Management Style Initial • Decision by top management • Training, motivation, rewarding, monitoring, measurement • 7-3-1 Later • Merchandising at store • GM’s greater involvement • GM + Merchants + Segment Leader • Compensation based on performance not job class
10
HOMAN’S MODEL
5. Management Style Six part continuum
A. Foundational
i. ii. iii. iv. v. vi. Leadership Talent SOP Business Acumen Segmentation Innovation
11
B. Customer Centricity
HOMAN’S MODEL
6. Management System • Chalk-Talks • Electronic, Home & Office products, related services • 1995 – Top retailer of PC’s to home users • Geek Squad – Customer service
12
HOMAN’S MODEL
7. Culture • 7-3-1 • Elvis tunes
8. People • Salaried • High Schoolers, Part timers
13
doc_194686761.pptx
BEST BUY'company changed its focus from product centric to customer centric.
A SWOT ANALYSIS
1
•
Best Buy is: – The largest retailer of consumer electronics – Headquartered in Richfield, United States – Sound of Music, 1966 by Richard M. Schulze • Consumer electronics, appliances, entertainment software, and home office equipment and software • March 9, 2009 – The largest electronics retail store in the eastern United States • Locations average about 44,000 square feet in size
2
REVENUE MIX-2005
6% 22%
37%
35%
Consumer Electronics Home Office Entertainment Software Appliances
3
SUBSIDIARIES
– – – – – Geek Squad Cinema Now Magnolia Audio Video, Pacific Sales In Canada operates under both the Best Buy and Future Shop label
4
THE CASE
• • • •
•
• • • •
8 years leader till 2004 Sales Fiscal year 2005 – USD 27.5 bn One style fits all customers Improved technology & increased competition. Hence, slow decline 4 strategies – Customer centricity, Efficient enterprise, Win with service, Win with entertainment Customer centricity successful at 32 pilot stores Aggressive roll out at 144 new centricity store 13 Dec 2005 – Missed 3rd quarter EPS Stock price fell nearly 12%
5
HOMAN’S MODEL
1. • • • • • • Founder Richard M. Schulze 1966, St. Paul, Minnesota Sound of Music Flagship store destroyed by tornado Therefore, sold off at ‘Best Buy’ High quality electronic store
6
HOMAN’S MODEL
2. Environment • Best Buy – High end customers • Wal Mart – 2003 started targetting this lucrative domain • Dell – Direct sales model • Amazon – Online retail • Target – Mass merchandising • Circuit City – Direct competitor ? Fading competitive advantage
7
HOMAN’S MODEL
3. Strategy Initial • One style fits all • Standard Operating Platform Later • Customer Centricity (Prof. Larry Seldon, Columbia University) • Segmentation (Barry, Jill, BB4B, Buzz, Ray) • Merchandizing at store
8
HOMAN’S MODEL
4. Structure Initial • Merchant Organization • Blue Shirts – Sales Force • Salaried sales force Later • Segment Leader & Merchants • Magnolia + Best Buy = Magnolia Audio Video • Geek Squad
9
HOMAN’S MODEL
5. Management Style Initial • Decision by top management • Training, motivation, rewarding, monitoring, measurement • 7-3-1 Later • Merchandising at store • GM’s greater involvement • GM + Merchants + Segment Leader • Compensation based on performance not job class
10
HOMAN’S MODEL
5. Management Style Six part continuum
A. Foundational
i. ii. iii. iv. v. vi. Leadership Talent SOP Business Acumen Segmentation Innovation
11
B. Customer Centricity
HOMAN’S MODEL
6. Management System • Chalk-Talks • Electronic, Home & Office products, related services • 1995 – Top retailer of PC’s to home users • Geek Squad – Customer service
12
HOMAN’S MODEL
7. Culture • 7-3-1 • Elvis tunes
8. People • Salaried • High Schoolers, Part timers
13
doc_194686761.pptx