Best Buy in China


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Case Details:

Case Code : BSTR299
Case Length : 20 Pages
Period : 2003-2008
Pub Date : 2009
Teaching Note :Not Available
Organization : Best Buy Co. Inc. Industry : Electronics / Consumer appliances Retail
Countries : China

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts Contd...

Initial Response is Positive

In a country like China, where the consumers were bombarded with options by the vendor representatives and where the prices could be brought down through negotiations, analysts were not sure of Best Buy's prospects. But surprisingly, Best Buy performed better than expected. Analysts expressed the view that the customers were happy with Best Buy as they did not have to worry about the authenticity of the products or about warranties. On the whole, there were none of the uncertainties that shopping at other malls involved...

Challenges

In China, Best Buy had to contend with a number of challenges. In addition to strong local competition, it had to contend with price-conscious shoppers in a market where margins were very low compared to that in the US...

Looking Ahead

Some analysts were of the view that the Chinese venture might not prove profitable for Best Buy. Due to its China operations, the gross profit rate of the company went down by around 0.2% during the year ending March 01, 2008...

Exhibits

Exhibit I: Best Buy Logo
Exhibit II: Best Buy's Customer Centricity
Exhibit III: Best Buy - Statement of Earnings
Exhibit IV: Consumer Electronics Retail in China
Exhibit V: Consumer Electronics in China - Main Players
Exhibit VI: Operations - Five Star and Best Buy Stores in China
Exhibit VII: Top 11 Chain Retailers in China - 2007
Exhibit VIII: Training at Best Buy China


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