Best Buy Co., Inc. SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

SWOT analysis is a vital strategic planning tool that can be used by Best Buy Co., Inc. managers to do a situational analysis of the organization . It is a useful technique to analyze the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Best Buy Co., Inc. is facing in its current business environment.

The Best Buy Co., Inc. is one of the leading organizatations in its industry. Best Buy Co., Inc. maintains its dominant position in market by critically analyzing and reviewing the SWOT analysis.  SWOT analysis an immensenly interactive process and requires effective coordination among various departments within the firm such as – marketing, finance, operations, management information systems and strategic planning.


Order Now - Best Buy Co., Inc. SWOT Analysis
Check out- Best Buy Co., Inc. PESTEL / PEST & Environment Analysis
Article continues after advertisement


The SWOT Analysis framework enables an organization to identify the internal strategic factors such as -strengths and weaknesses, & external strategic factors such as - opportunities and threats. It leads to a 2X2 matrix – also called SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix enables the managers of the Best Buy Co., Inc. to develop four types of strategies:

• SO (strengths-opportunities) Strategies
• WO (weaknesses-opportunities) Strategies
• ST (strengths-threats) Strategies
•  WT (weaknesses-threats) Strategies

SWOT Matrix Strategies Objective

The core purpose of SWOT matrix is to identify the strategies that an organization can use to exploit external opportunities, counter threats, and build on & protect Best Buy Co., Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to Best Buy Co., Inc. SWOT Analysis

Strengths of Best Buy Co., Inc. – Internal Strategic Factors

As one of the leading firms in its industry, Best Buy Co., Inc. has numerous strengths that enable it to thrive in the market place. These strengths not only help it to protect the market share in existing markets but also help in penetrating new markets. Based on Fern Fort University extensive research – some of the strengths of Best Buy Co., Inc. are –

Read - Best Buy Co., Inc. Porter 5 Forces Analysis & Industry Analysis
Article continues after advertisement

• Successful track record of integrating complimentary firms through mergers & acquisition. It has successfully integrated number of technology companies in the past few years to streamline its operations and to build a reliable supply chain.
• High level of customer satisfaction – the company with its dedicated customer relationship management department has able to achieve a high level of customer satisfaction among present customers and good brand equity among the potential customers.
• Highly skilled workforce through successful training and learning programs. Best Buy Co., Inc. is investing huge resources in training and development of its employees resulting in a workforce that is not only highly skilled but also motivated to achieve more.
• Strong distribution network – Over the years Best Buy Co., Inc. has built a reliable distribution network that can reach majority of its potential market.
• Highly successful at Go To Market strategies for its products.
• Superb Performance in New Markets – Best Buy Co., Inc. has built expertise at entering new markets and making success of them. The expansion has helped the organization to build new revenue stream and diversify the economic cycle risk in the markets it operates in.
• Automation of activities brought consistency of quality to Best Buy Co., Inc. products and has enabled the company to scale up and scale down based on the demand conditions in the market.
• Strong Brand Portfolio – Over the years Best Buy Co., Inc. has invested in building a strong brand portfolio. The SWOT analysis of Best Buy Co., Inc. just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.

---

Weakness of Best Buy Co., Inc. – Internal Strategic Factors

Weakness are the areas where Best Buy Co., Inc. can improve upon. Strategy is about making choices and weakness are the areas where a company can improve using SWOT analysis and build on its competitive advantage and strategic positioning.

Article continues after advertisement

• The marketing of the products left a lot to be desired. Even though the product is a success in terms of sale but its positioning and unique selling proposition is not clearly defined which can lead to the attacks in this segment from the competitors.
• Financial planning is not done properly and efficiently. The current asset ratio and liquid asset ratios suggest that the company can use the cash more efficiently than what it is doing at present.
• Not highly successful at integrating firms with different work culture. As mentioned earlier even though Best Buy Co., Inc. is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
• Days inventory is high compare to the competitors – making the company raise more capital to invest in the channel. This can impact the long term growth of Best Buy Co., Inc.
• Not very good at product demand forecasting leading to higher rate of missed opportunities compare to its competitors. One of the reason why the days inventory is high compare to its competitors is that Best Buy Co., Inc. is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
• Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Best Buy Co., Inc. needs to put more money in technology to integrate the processes across the board. Right now the investment in technologies is not at par with the vision of the company.
• The company has not being able to tackle the challenges present by the new entrants in the segment and has lost small market share in the niche categories. Best Buy Co., Inc. has to build internal feedback mechanism directly from sales team on ground to counter these challenges.

Opportunities for Best Buy Co., Inc. – External Strategic Factors

Article continues after advertisement

• The market development will lead to dilution of competitor’s advantage and enable Best Buy Co., Inc. to increase its competitiveness compare to the other competitors.
• Government green drive also opens an opportunity for procurement of Best Buy Co., Inc. products by the state as well as federal government contractors.
• Stable free cash flow provides opportunities to invest in adjacent product segments. With more cash in bank the company can invest in new technologies as well as in new products segments. This should open a window of opportunity for Best Buy Co., Inc. in other product categories.
• Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Best Buy Co., Inc..
• The new technology provides an opportunity to Best Buy Co., Inc. to practices differentiated pricing strategy in the new market. It will enable the firm to maintain its loyal customers with great service and lure new customers through other value oriented propositions.
• New trends in the consumer behavior can open up new market for the Best Buy Co., Inc. . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
• New customers from online channel – Over the past few years the company has invested vast sum of money into the online platform. This investment has opened new sales channel for Best Buy Co., Inc.. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.
• The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Best Buy Co., Inc. to increase its profitability.

Threats Best Buy Co., Inc. Facing - External Strategic Factors

• The demand of the highly profitable products is seasonal in nature and any unlikely event during the peak season may impact the profitability of the company in short to medium term.
• Rising raw material can pose a threat to the Best Buy Co., Inc. profitability.
• The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
• Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
• Intense competition – Stable profitability has increased the number of players in the industry over last two years which has put downward pressure on not only profitability but also on overall sales.
• New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
• New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
• No regular supply of innovative products – Over the years the company has developed numerous products but those are often response to the development by other players. Secondly the supply of new products is not regular thus leading to high and low swings in the sales number over period of time.

Limitations of SWOT Analysis for Best Buy Co., Inc.

Although the SWOT analysis is widely used as a strategic planning tool, the analysis does have its share of limitations.

• Certain capabilities or factors of an organization can be both a strength and weakness at the same time. This is one of the major limitations of SWOT analysis . For example changing environmental regulations can be both a threat to company it can also be an opportunity in a sense that it will enable the company to be on a level playing field or at advantage to competitors if it able to develop the products faster than the competitors.
• SWOT does not show how to achieve a competitive advantage, so it must not be an end in itself.
• The matrix is only a starting point for a discussion on how proposed strategies could be implemented. It provided an evaluation window but not an implementation plan based on strategic competitiveness of Best Buy Co., Inc.
• SWOT is a static assessment - analysis of status quo with few prospective changes. As circumstances, capabilities, threats, and strategies change, the dynamics of a competitive environment may not be revealed in a single matrix.
• SWOT analysis may lead the firm to overemphasize a single internal or external factor in formulating strategies. There are interrelationships among the key internal and external factors that SWOT does not reveal that may be important in devising strategies.

Article continues after advertisement

Weighted SWOT Analysis of Best Buy Co., Inc.

In light of the above mentioned limitations of the SWOT analysis / matrix, corporate managers decided to provide weightage to each internal strength and weakness of the firm. Organizations also assess the likelihood of events taking place in the coming future and how strong their impact could be on company's performance.

This method is called Weighted SWOT analysis. It is better than doing simplistic SWOT analysis because with Weighted SWOT Analysis Best Buy Co., Inc. managers can focus on the most critical factors and discount the non-important one. It also solves the long list problem where organizations ends up making a long list but none of the factors deemed too critical.

Limitation of Weighted SWOT analysis of Best Buy Co., Inc.

This approach also suffers from one major drawback - it focus on individual importance of factor rather than how they are collectively important and impact the business holistically.

Buy Custom Essay and Term Paper on SWOT Analysis / Matrix , Weighted SWOT Analysis of Best Buy Co., Inc.

Example of Weighted SWOT Analysis

You can email us to get an example document of Weighted SWOT analysis.

SWOT Worksheet & Template

If you like to do your own SWOT analysis or want to make your own Weighted SWOT SWOT matrix then feel free to download Fern Fort University SWOT Analysis Template.

References / Citations & Bibliography

• M. E. Porter, Competitive Strategy(New York: Free Press, 1980)
• A. D. Chandler, Strategy and Structure (Cambridge, Mass.: MIT Press, 1962)
• O. E. Williamson, Markets and Hierarchies(New York: Free Press, 1975);
• L. Wrigley, Divisional Autonomy and Diversification (PhD, Harvard Business School, 1970)
• R. E. White, Generic Business Strategies, Organizational Context and Performance: An Empirical Investigation, Strategic Management Journal7 (1986)