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Bestbuy

In: Business and Management

Submitted By vanhvu
Words 1432
Pages 6
Best Buy has experienced poor performance in three areas: declining sales, declining net profits, and poor cash flow. Best Buy’s revenue decreased 4.7% during the 2010 fiscal year, and fell 2.4% in 2011. The company lost $1.23 billion, or $3.36 per share in 2011 (Savitz, 2012). “During the fiscal year ended 2011, the company’s cash and short term investments reduced to $1,125 million, as compared to $1,916 million in fiscal 2010” (GlobalData, 2012, p.2). This report will conduct a situation analysis of Best Buy, assess the internal and the external environment, and summarize key issues that can explain Best Buy’s declining sales, disappointing profits, and poor cash flow.
Six potential causes of Best Buy’s declining sales are: 1. Ineffective strategy from the management board While e-commerce is booming and Internet sales are flourishing, Best Buy has not developed its Internet retailing operations aggressively, and is falling behind other virtual retailers. From 2006 to 2011, online sales of consumer electronics have seen overall value growth of $9 billion (Euromonitor International, 2012). One of Best Buy’s competitors, Amazon, is a profitable e-commerce business. It has captured many customers with its cheaper options, fast shipment, and convenient way to shop. Euromonitor International (2012) asserts that although Best Buy’s Internet retailing operations have a significant growth rate of 17%, Internet sales account for only 5% of the company's total sales value in 2011.This statistic shows that Best Buy is lagging behind competitors in e-commerce business. Best Buy’s strategy did not follow the online shopping trend, failed to build up its Internet retailing operations, and thus attracted fewer customers. 2. Lack of institutional and individual skills
Best Buy’s poor marketing, sales, and innovation skills have caused its disappointing

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