best buy does best buy fail in china? mei meng( melody): 311066615 xilin wang(lin):310071992 yizhuo...
TRANSCRIPT
Best BuyDoes Best buy fail in China?
Mei Meng( Melody): 311066615Xilin Wang(Lin):310071992Yizhuo Wang( Bill):311289959
Outline
• Company profile• Does it fail• Problems• Failure diagnose• Possible solutions
Best Buy review
• 2003, the first office in Shanghai
• 2006 May, acquire shares of Five Star appliance
• 2007 January, the first brand store in Shanghai
• 2011, announced to close the 9 branded stores in China
Five forces model
• Existing competitive rivalry between supplier- strong
GOME, SUNING • Threat of new market entrants- strongCircuit city of USA, Yamada and Island appliance from
Japan• Bargaining power of buyers- strongLittle differences in products, prefer more familiar and
local brand• Bargaining power of suppliers- complex• Threat of substitute products Easily to be replaced
by appliance department of stores, supermarkets and shopping web sites, such as TAOBAO, EBAY and 360buy
SWOT model
• StrengthGood customer service, good quality, rich management
experience in Europe • WeaknessHigh retail price and cost, weak market share• OpportunityForeign brand effect, new categories• ThreatStrong local competitors and new entrant, little
familiarity with local customer, cultural difference
Key issues1. Slow expansion strategy
Primarily open stores by acquiring the real estate, not renting and leasing
Before fully expanding, the main domestic competitor, Suning & Gome had controlled
China market
2. Lack of retail experience and research in China
Environment change, culture difference, product preference
Price too high, focus on product diversity rather than brands and
quality
3. Lose location advantage
Local competitors have dominated valuable location, and set up barriers
to Best Buy
Other Problems
1. Local political issue :examination and approval issue by Chinese government
2. Lack of supplier relationships and network support
3. Low- efficient communication system between China and US headquarter
Solutions
1. Change the expansion strategyOpen the new stores in small cities rather than
big citiesRent stores rather than acquisition2. Offer free high quality after-sale services3. Reposition of price strategy4. Strengthen local supplier network
Any Questions?
Thank you!