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Best Buy's International Strategy
Transcript of Best Buy's International Strategy
Best Buy Mobile
Joint Venture with CPW Weaknesses Exit Strategy
Stock Price Opportunities Threats Reduce Store Size
E-Commerce and China
Emerging Markets Chairman and Director
Competition Initial Strategy Four Key Geographic Areas
Maximize International Returns Modes of Entry Acquisitions
Domestic and Abroad
Dual Branding Strategy Best Buy in China 2003: Best Buy Entered China
2006: Acquisition of Five Star
4th largest electronics retailer in China
December 2006: First "Best Buy" store in Shanghai
2007: Best Buy had 1% share of $80 billion consumer electronics market
February 2011: Best Buy announced closing of Best Buy-Branded Stores in China
Best Buy said they may reopen stores just months after closures Failure in China "We were STUPID and ARROGANT" -David Deno, Best Buy Asia's chief, Wall Street Journal American business model vs. Chinese business model
Competition of local retailers
MISTAKE: Best Buy's focus on large flagship stores (like in the U.S.) rather than smaller, conveniently located retail outlets Success in China Five Star's 166 stores generated about $1.7 billion in fiscal 2011
The company projects Chinese sales to surpass $4 billion by 2016 Best Buy Europe Initial Strategy: Expand to the UK before the rest of Europe
2008: $2.1 Billion joint-venture with Carphone Warehouse
2010: First Best Buy store opened in UK Best Buy Failure in UK January 2012: Best Buy closed all of its UK stores
Loss of close to £140m
Poor financial results
Opened stores during recession
Too few stores
Understanding the Competion Best Buy in Turkey 2009: Best Buy opened its first store in Turkey
2011: Best Buy announced the closure of its Turkish operations 1966
2000 ARGUMENTS FOR GOING INTERNATIONAL "We have built this company for the long haul"
-Brian Dunn Seeking growth- not just big box stores
To be successful- must use multiple store formats and various channels
Best Buy Mobile, Vending Machines, Etc.
Replication of business model in other countries PROBLEMS World Economy
International comparable store sales fell 3.2%
Decline would have been worse without China
Struggle to establish own branded stores Current Situation March 2012 Announcement
4th quater net loss of $1.7 billion
Closing of 50 big box stores, cut 400 HQ jobs, cut costs by $800 million
Stock prices cut in half
April 2012 : CEO Brain Dunn Resigned
2nd quarter sales down by 3% and earnings down by 90%
Hired Hubert Joly as CEO Conclusion Potential through E-Commerce March 2012: emphasis on e-commerce development
October 2012: Hired new e-commerce president Scott Durschlag
18% increase in online sales from 2011-2012