Best Buy Co., Inc.: Competing on the Edge SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Best Buy Co., Inc.: Competing on the Edge
While Circuit City struggles, Best Buy has overtaken it to become the premier consumer electronics retailer in the United States. What has driven its success? How can it be sustained?
Swot Analysis of "Best Buy Co., Inc.: Competing on the Edge" written by John R. Wells, Travis Haglock includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Buy Overtaken facing as an external strategic factors. Some of the topics covered in Best Buy Co., Inc.: Competing on the Edge case study are - Strategic Management Strategies, Competition, Strategy execution and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Best Buy Co., Inc.: Competing on the Edge casestudy better are - – increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices,
increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Best Buy Co., Inc.: Competing on the Edge
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Best Buy Co., Inc.: Competing on the Edge case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Buy Overtaken, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Buy Overtaken operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Best Buy Co., Inc.: Competing on the Edge can be done for the following purposes –
1. Strategic planning using facts provided in Best Buy Co., Inc.: Competing on the Edge case study
2. Improving business portfolio management of Buy Overtaken
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Buy Overtaken
Strengths Best Buy Co., Inc.: Competing on the Edge | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Buy Overtaken in Best Buy Co., Inc.: Competing on the Edge Harvard Business Review case study are -
Training and development
– Buy Overtaken has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Best Buy Co., Inc.: Competing on the Edge Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Operational resilience
– The operational resilience strategy in the Best Buy Co., Inc.: Competing on the Edge Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High switching costs
– The high switching costs that Buy Overtaken has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Cross disciplinary teams
– Horizontal connected teams at the Buy Overtaken are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Successful track record of launching new products
– Buy Overtaken has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Buy Overtaken has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
High brand equity
– Buy Overtaken has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Buy Overtaken to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Buy Overtaken digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Buy Overtaken has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to recruit top talent
– Buy Overtaken is one of the leading recruiters in the industry. Managers in the Best Buy Co., Inc.: Competing on the Edge are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Strategy & Execution industry
– Best Buy Co., Inc.: Competing on the Edge firm has clearly differentiated products in the market place. This has enabled Buy Overtaken to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Buy Overtaken to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Buy Overtaken in the sector have low bargaining power. Best Buy Co., Inc.: Competing on the Edge has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Buy Overtaken to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Buy Overtaken is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Buy Overtaken is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Best Buy Co., Inc.: Competing on the Edge Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Strategy & Execution field
– Buy Overtaken is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Buy Overtaken in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Best Buy Co., Inc.: Competing on the Edge | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Best Buy Co., Inc.: Competing on the Edge are -
Increasing silos among functional specialists
– The organizational structure of Buy Overtaken is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Buy Overtaken needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Buy Overtaken to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Best Buy Co., Inc.: Competing on the Edge, it seems that the employees of Buy Overtaken don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Buy Overtaken is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Best Buy Co., Inc.: Competing on the Edge can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study Best Buy Co., Inc.: Competing on the Edge has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Buy Overtaken 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Buy Overtaken has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Interest costs
– Compare to the competition, Buy Overtaken has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Lack of clear differentiation of Buy Overtaken products
– To increase the profitability and margins on the products, Buy Overtaken needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Buy Overtaken has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Best Buy Co., Inc.: Competing on the Edge should strive to include more intangible value offerings along with its core products and services.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Best Buy Co., Inc.: Competing on the Edge HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Buy Overtaken has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Buy Overtaken has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow to strategic competitive environment developments
– As Best Buy Co., Inc.: Competing on the Edge HBR case study mentions - Buy Overtaken takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Opportunities Best Buy Co., Inc.: Competing on the Edge | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Best Buy Co., Inc.: Competing on the Edge are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Buy Overtaken in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Buy Overtaken to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Using analytics as competitive advantage
– Buy Overtaken has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Best Buy Co., Inc.: Competing on the Edge - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Buy Overtaken to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Buy Overtaken has opened avenues for new revenue streams for the organization in the industry. This can help Buy Overtaken to build a more holistic ecosystem as suggested in the Best Buy Co., Inc.: Competing on the Edge case study. Buy Overtaken can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Buy Overtaken to increase its market reach. Buy Overtaken will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Buy Overtaken can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Buy Overtaken to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Buy Overtaken is facing challenges because of the dominance of functional experts in the organization. Best Buy Co., Inc.: Competing on the Edge case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Buy Overtaken to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Buy Overtaken to hire the very best people irrespective of their geographical location.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Buy Overtaken can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Buy Overtaken can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Building a culture of innovation
– managers at Buy Overtaken can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Manufacturing automation
– Buy Overtaken can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Buy Overtaken can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Best Buy Co., Inc.: Competing on the Edge, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Best Buy Co., Inc.: Competing on the Edge External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Best Buy Co., Inc.: Competing on the Edge are -
Stagnating economy with rate increase
– Buy Overtaken can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
High dependence on third party suppliers
– Buy Overtaken high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Buy Overtaken will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Consumer confidence and its impact on Buy Overtaken demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Buy Overtaken can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Best Buy Co., Inc.: Competing on the Edge .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Buy Overtaken in the Strategy & Execution sector and impact the bottomline of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Buy Overtaken business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Buy Overtaken with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Buy Overtaken has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Buy Overtaken needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Buy Overtaken in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Buy Overtaken.
Regulatory challenges
– Buy Overtaken needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Weighted SWOT Analysis of Best Buy Co., Inc.: Competing on the Edge Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Best Buy Co., Inc.: Competing on the Edge needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Best Buy Co., Inc.: Competing on the Edge is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Best Buy Co., Inc.: Competing on the Edge is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Best Buy Co., Inc.: Competing on the Edge is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Buy Overtaken needs to make to build a sustainable competitive advantage.