Introduction
Becoming a leader in any field relies on strategic approaches to marketing and analyzing the competitors, weaknesses, challenges, successes, or failure to lay a baseline of success. Internal market analysis entails the strengths, weaknesses, opportunities, and threats (SWOT), allowing organizations to identify for areas for improvement, understand advantages and make use of the opportunities. Best Buy is an electronic retailer headquartered in Richfield, Minnesota, United States. The company has been operating over the last 50 years, with the employee team reaching 125,000 workers (Stipp, 2021). The company has diversified and invested in the weaknesses to remain realistic and on a competitive edge.
Table 1: SWOT analysis for Best Buy
Strengths
Best Buy has a strong brand name, which has made the company dominate the United State’s electronics market. Electronics from Best Buy account for about 20% in the United States market (Stipp, 2021). In turn, the entity gains a unique market that works well for its business operations, making it appear in the list of top 50 electronic companies globally (Stipp, 2021). Best Buy has an excellent presence across the United States with outlets in strategic locations. The presence of a strong network has aided the company to maintain economies of scale. The firm has a good track record in profitability and corporate social responsibility (CSR). In that case, customer satisfaction is quite higher for the company as compared to its competitors.
Weaknesses
Despite the strong dominance in the United States, Best Buy also has weaknesses in the electronic market. For instance, overdependence on few suppliers is seen as the main weakness, giving the contractors strong bargaining power. As of 2007, Best Buy had 25 suppliers who made about 60% of the total purchases (Dellinger, 2019). The company has weak ties with suppliers and does not favor long-term contracts. As a result, the company will be exposed to shortages if the suppliers decide to end contracts. Best Buy has been having series of lawsuits based on its operations. For instance, the company was accused of higher charges for advertisements. In 2000, the company was sued for concealing warranties of products to sell their brands (Dellinger, 2019). The company’s overreliance on the United States market could affect its sales due to dollar fluctuation.
Opportunities
From the analysis of weaknesses, Best Buy has a wide array of opportunities to embrace. For instance, the company should consider the option of expanding and diversifying its operations in a foreign market. Increasing the pool of suppliers can see the company gain bargaining power over its suppliers. The company can also make major acquisitions, which will increase its client base and strengthen the brand image.
Threats
The existence of Amazon, Wal-Mart, and Apple poses a cutthroat competition to Best Buy. These companies offer installation services and have garnered adequate force to penetrate foreign markets. These competitors have reduced the company’s market share leading to limited profits. The skyrocketing price for rental equipment in the United States has caused profound impacts on the company’s sales by cutting profits.
Recommendations
From the SWOT analysis provided above, some recommendations can be provided, especially based on the threats and weaknesses. Best Buy needs to analyze its strengths, cushion the mentioned weaknesses and grab the opportunities to hedge the threats. To this end, the company should increase the number of suppliers, expand to foreign markets and invest in innovative technology such as cloud-based platforms to monitor all stores virtually.
References
Dellinger, A. J. (2019). Best Buy accused of sending woman directly to hacker. Forbes. Web.
Stipp, H. (2021). Total number of Best Buy stores from 2008 to 2020, by segment U.S. 2020. Statista. Web.