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Best Buy in China

In: Business and Management

Submitted By kileysweety
Words 1534
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MEMORANDUM
To: James C. McKeon, Executive Vice President – World Marketing
From: Matt Bridges
Re: Case #4: Best Buy Inc., Dual Branding in China
Date: December 2, 2013

The Situation:
The situation presented was Best Buy Inc., the number one retailer of consumer electronics (CE) in the United States, had acquired ownership in the Chinese company Five Star, the third largest CE chain retailer in China. The problem occurring from this ownership of Five Star was the international expansion of Best Buy and how it would be handled while expanding into China. In 2002, Best Buy had acquired 100% ownership of the largest Canadian CE chain retailer, Future Shops, in their beginnings of international expansion. Senior vice president, John Noble, was at the head of the Best Buy International and steered the company to implement a dual-brand strategy in launching Best Buy into Canada. What this means by dual-branding was that even though the two retailer were owned and operated by the same mother company, they went into a head-to-head competition as separate entities of the single companies. This was the first of this strategy that Best Buy had ever implemented and it was deemed to fail because the company was not used to this type of operation. But within the first year of full competition between the two brands, upper management had seen this tactic become very successful.

In the decision of how to approach this situation there was much controversy on how this would be handled. There was always the option of Best Buy to completely absorb the Future Shop brand and transform all the already established stores to Best Buy locations. Within the short run, this would look like the most financially intelligent decision of the company, but with further investigation, there would be a large “cultural shock” to the employees and consumers by implementing a new

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