Best Buy a Minnesota-Based American Firm

When it comes to defining how a business pursuing a competitive advantage over its rivals, there are many elements to look for. Said elements are actions the company takes as part of its business strategy, some examples would be strengthening bargaining position with suppliers, gaining market share, entering new markets (including emerging markets), mergers and acquisition, forming strategic alliances, and improvements in other vital areas such as marketing or research and development. These actions come together forming a pattern of business approaches that defines a company’s strategy.

In the case of Best Buy, a Minnesota-based American firm that has become a leading provider of various technology products, we can see many strategic actions taken to gain an edge over its competitors. For example, Best Buy tries to keep competitive prices relative to its rivals in the space such as Walmart or Target by closely monitoring prices and offering a price matching program that honors prices from brick and mortar retail outlets, as well as online retailers such as Amazon.

In addition, Best Buy has taken steps to reduce their environmental impact by boldly pledging a goal to cut down their carbon emissions by 60 percent by 2020. Not only is such a move positive for the environment as a whole, it shows that Best Buy subscribes to the concept of corporate social responsibility and could turn out to be very good for Best Buy in the realm of public relations.

Best Buy has also taken steps to improve its bargaining power with its suppliers, five of whom (Samsung, Apple, Sony, Lenovo, and Hewlett-Packard) represent 70% of inventory purchases, by refusing to sign on to long-term contracts with the aforementioned vendors.

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Such a move would likely keep them in a better position for bargaining because of the rise and fall of many large technology companies could have them locked into a contract for products that no longer sell. Though Best Buy does not have long-term contracts with its largest vendors, it has maintained a great relationship with them, evident because of the reimbursements the firm receives from its vendors for product markdowns and sales incentives.

Much like the Starbucks example given early in chapter 1, Best Buy is also seeking to build upon its competitive advantage through optimizing and refining its physical stores. As of fairly recently, Best Buy gained the ability to ship from nearly every location in North America, allowing purchases of inventory that may only be available at a Best Buy 200 miles away. In addition, Best Buy customers also have the option to pick up an online order in any store location, similar to Walmart.

Given various elements of Best Buy’s competitive strategy, I am convinced that they fit the business approach of a best-cost provider strategy. I believe Best Buy fits the best-cost provider strategy because it not only attempts to match the prices of nearly any retailer who carries the same product, it also has differentiated and cemented itself as the best place to shop for your electronic needs.