978-1259913747 Best Buy Case Part 2

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subject Words 1557
subject Textbook Strategic Management 3rd Edition
subject Authors Frank Rothaermel
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Teaching Note —Best Buy Co., Inc.
Additional Resources
1. http://money.cnn.com/2015/03/03/investing/best-buy-earnings/. (1:10)”Best Buy is not the next
RadioShack,” March 3, 2015. A video analysis arguing that “Best Buy’s turnaround is for real.”
2. http://www.forbes.com/sites/panosmourdoukoutas/2014/12/12/why-best-buy-is-still-in-busi-
ness-and-rising-smartly/. “Why Best Buy is still in business and rising . . . smartly,” December 12,
2014. A more recent update on Best Buy’s turnaround. Mourdoukoutas contends that Best Buy has
developed a business model that successfully leverages its competitive advantages (scale and loca-
tion) to counter the competitive challenge from Amazon.com.
3. http://seekingalpha.com/article/1835332-with-its-restructuring-efforts-underway-best-buys-
revenue-growth-remains-under-pressure?source=email_rt_article_readmore. This article offers
4. http://seekingalpha.com/article/1735592-best-buy-is-worth-at-least-50-per-share?source=email_
5. http://seekingalpha.com/article/1747652-why-best-buy-will-not-crumble-like-j-c-
6. http://money.cnn.com/video/investing/2013/10/31/investing-buzz-halloween-trick-treat-
stocks-best-buy-jc-penney.cnnmoney (1:13). “Best Buy is market’s Halloween treat,” October 31,
2013. This is a CNNMoneyclipfeaturingBestBuy’srisetobecomethetopperformingstockontheS&P
500 in 2013.
7. http://money.cnn.com/video/investing/2013/06/03/investing-the-buzz-best-buy.cnnmoney
8. http://money.cnn.com/video/investing/2012/08/21/investing-best-buy.cnnmoney (1:30). “Best
9. http://money.cnn.com/video/markets/2012/05/22/mkts-bz-best-buy.cnnmoney/ (1:39). “Best
Buy in leadership limbo,” May 22, 2012. A CNNMoneyclipdiscussingBestBuy’ssalesandleadership
woesafterBrianDunnwasforcedtostepdownasCEOduetoscandal.
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Teaching Note —Best Buy Co., Inc.
EXHIBIT TN-1 Online Consumer Electronics Market in the United States
Breadth of Selection
Apple
Walmart
22%
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Teaching Note —Best Buy Co., Inc.
EXHIBIT TN-2 Best Buy’s Tangible and Intangible Resources
Tangible Resources Intangible Resources
1 Stores and inventory 1 M&A knowledge/inorganic growth success
7 Geek Squad 7 Technological expertise
8 Other personnel (truck drivers, managers, etc.) 8 Cumulative retail experience
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Teaching Note —Best Buy Co., Inc.
EXHIBIT TN-3 Applying the VRIO Framework to Assess Best Buy’s Competitive Advantage
Interface’s Resources and
Capabilities
… are they?
Valuable
V
Rare
R
Costly to
Imitate
I
Organized
to capture
value
O
Is the Capability a Core Competence?
(Usually 3–4 per Firm)
No—not rare, relatively inexpensive and
easy to imitate, and substitutable via
bricks-and-mortar stores or third-party
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Teaching Note —Best Buy Co., Inc.
EXHIBIT TN-4 A Breakdown of Best Buy’s Stores by Brand and International Location
Europe Canada China Mexico
The
Carphone
Warehouse
Stores
The
Phone
House
Stores
Future
Shop
Stores
Best Buy
Stores
Best Buy
Mobile
Stand-
Alone
Stores
Five Star
Stores
Best Buy
Stores
Best Buy
Express
Stores
Europe
Canada
Alberta — — 17 12 8 — — —
British Columbia — — 22 9 10 — — —
Manitoba — — 4 2 — — — —
China
Anhui — — — — — 20 — —
Henan — — — — — 12 — —
Jiangsu — — — — — 131 — —
(continued)
International Segment
The following table summarizes the location of our International segment stores at the end of fiscal 2013 (11-month):
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Teaching Note —Best Buy Co., Inc.
EXHIBIT TN-4 (Continued)
Source: 2103 Best Buy Annual Report (10K), page 20.
Europe Canada China Mexico
The
Carphone
Warehouse
Stores
The
Phone
House
Stores
Future
Shop
Stores
Best Buy
Stores
Best Buy
Mobile
Stand-
Alone
Stores
Five Star
Stores
Best Buy
Stores
Best Buy
Express
Stores
Mexico
Estado de Mexico — — — — — — 3 —
Distrito Federal — — — — — — 5 1
The following table summarizes the ownership status and total square footage of our International segment store locations at the end of fiscal
2013 (11-month):
Europe Canada China Mexico
The
Carphone
Warehouse
Stores
The
Phone
House
Stores
Future
Shop
Stores
Best Buy
Stores
Best Buy
Mobile
Stand-
Alone
Stores
Five Star
Stores
Best Buy
Stores
Best Buy
Express
Stores
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Teaching Note —Best Buy Co., Inc.
EXHIBIT TN-5 Best Buy’s International Presence
Canada Mexico
Future Shop
Stores Best Buy Stores
Best Buy Mobile
Stand-Alone
Stores Best Buy Stores
Best Buy Express
Stores
Canada
Saskatchewan 2 2 — — —
Mexico
Coahuila — — — — 1
Estado de Mexico — — — 3 1
International Segment
The following table summarizes the location of our International segment continuing operations stores at the end of fiscal 2015:
(continued)
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Teaching Note —Best Buy Co., Inc.
EXHIBIT TN-5 (Continued)
Source: 2105 Best Buy Annual Report (10K), pages 17-18.
Canada Mexico
Future Shop
Stores Best Buy Stores
Best Buy Mobile
Stand-Alone
Stores Best Buy Stores
Best Buy Express
Stores
International Segment
The following table summarizes the location of our International segment continuing operations stores at the end of fiscal 2015:
The above tables exclude 181 Five Star store locations with a total of 5,928,000 square feet, which were held for sale as of January 31, 2015. The sale of Five Star was completed on
February 13, 2015.
In March 2015, we made a decision to consolidate Future Shop and Best Buy stores and websites in Canada under the Best Buy brand. This resulted in permanently closing 66 Future
Shop stores and converting 65 Future Shop stores to the Best Buy brand. We separately closed two Future Shop locations in March 2015 as part of our normal operations.
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Teaching Note —Best Buy Co., Inc.
Endnotes
1. Best Buy 2015 Letter to Shareholders. http://investors.bestbuy.com/files/doc_financials/2015/annual/
FY-2015-Letter-to-Shareholders.pdf.
2. Ibid.
3. Best Buy Co., Inc: Customer-Centricity. Teaching note. Harvard Business School. HBS No. 5-509-074. June 23,
2009.
4. Best Buy. Investor presentation. April 29, 2009.
5. Bustillo, M., and Jarzemsky, M. (2011), “Best Buy gets squeezed,” TheWallStreetJournal, September 14.
6. Best Buy. Investor presentation. April 29, 2009.
7. Fitzgerald, Drew, “Fear of ‘Showrooming’ Fades,” TheWallStreetJournal, Nov. 3, 2013. http://online.wsj.
com/news/articles/SB10001424052702303661404579175690690126298?mod=WSJ_qtoverview_wsjlatest.
8. Ibid.
9. http://www.fastcompany.com/1826637/best-buys-fate-lies-boutique-mobile-tech-not-big-box-stores.
10. Zimmerman, Ann, “Samsung Sets Up Boutique in Best Buy,” TheWallStreetJournal, Apr. 4, 2013. http://
online.wsj.com/news/articles/SB10001424127887323916304578400950892706088.
11. “Microsoft Boutiques At Best Buy: Guess Who Wins,” Forbes, Jul. 9, 2013. http://www.forbes.com/sites/
ycharts/2013/07/09/microsoft-boutiques-at-best-buy-guess-who-wins/.
12. Best Buy. Investor presentation. April 29, 2009.
13. Best Buy. 2013. Annual Report. http://s2.q4cdn.com/785564492/files/doc_financials/2013/annual/BBY-
2013-10KT_FINAL.pdf
14. Ibid.
15. Best Buy Fiscal 2015 Annual Report. http://investors.bestbuy.com/files/doc_financials/2015/annual/
FY-2015-Annual-Report-on-Form-10K.pdf.

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