Kingdom of Saudi ‫المملكة العربية السعودية‬

Arabia ‫وزارة التعليم‬

Ministry of Education ‫الجامعة السعودية اإللكترونية‬
Saudi Electronic
University

College of Administrative and Financial Sciences

Assignment 2
Strategic Management (MGT 401)
Deadline: 11/11/2023 @ 23:59

Course Name: Strategic Management Student’s Name:

Course Code: MGT401 Student’s ID Number:
Semester: First CRN:
Academic Year:2023-24

For Instructor’s Use only

Instructor’s Name:
Students’ Grade: Level of Marks: High/Middle/Low
Marks Obtained /Out of 10

Instructions – PLEASE READ THEM CAREFULLY

 The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
 Assignments submitted through email will not be accepted.
 Students are advised to make their work clear and well presented, marks may be reduced
for poor presentation. This includes filling your information on the cover page.
 Students must mention question number clearly in their answer.
 Late submission will NOT be accepted.
 Avoid plagiarism, the work should be in your own words, copying from students or
other resources without proper referencing will result in ZERO marks. No exceptions.
 All answered must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism).
 Submissions without this cover page will NOT be accepted.
 Assignment No. 2: Case Study

Learning Outcomes:
 Describe the different issues related to environmental scanning, strategy
formulation, and strategy implementation in diversified organizations- CLO2
 Explain the contribution of functional, business, and corporate strategies in the
competitive advantage of the organization-CLO3.
 Distinguish between different types and levels of strategy and strategy
implementation-CLO4
 Communicate issues, results, and recommendations coherently, and effectively
regarding appropriate strategies for different situations-CLO6

Read carefully case study No. 24 from your textbook (Best Buy Co. Inc:
Sustainable Customer Centricity Model?) and answer the following
questions:

1. Identify opportunities and threats as well as strengths and weaknesses of the company
(draw a SWOT matrix). 2pts
2. What is the competitive strategy used by Best Buy? Justify your answer. 2pts
3. What are the main functional strategies used by this company? Are they successful?
Justify 2pts
4. What are the different difficulties faced by the company to maintain and reinforce its
competitive advantage? 2pts
5. Suggest some recommendations or solutions to Best Buy to improve its competitive
advantage. 2pts

Notes:
 Copy/paste the phrases from the text is not acceptable. You must use your own
words.
 Using the terminology developed in the course of strategic Management is highly
valued.
 ANSWERS
Q1

Strength Weaknesses

 Best Buy's operational framework,  A decline in its profit margins,

which prioritizes the needs and which may be attributed to price

preferences of customers, is pressures and economic

characterized by a client-centric difficulties.

approach.  The company's long-term debt has

 The firm boasts a diverse increased substantially.

assortment of consumer  The escalation of inventories and

electronics, home office items, and accounts receivable may give rise

associated services within its to possible hazards for financial

product portfolio. losses.

 Best Buy has engaged in

geographical expansion by means

of acquisitions, augmenting its

market reach on a worldwide

scale.

 The firm has a diverse brand

portfolio.

Opportunities Threats
  The potential for global  Increased e-commerce competition

development.  Price wars

 Technology breakthroughs  Economic uncertainty

 Ability to effectively reach various

client groups by using its diverse

brand portfolio

Q2

Best Buy has strategically adopted a competitive strategy that may be most accurately

characterized as a "Differentiation Strategy." The underlying reasoning for this strategic

decision is based on a significant transition from a cost leadership approach to one that

prioritizes product differentiation. This change highlights the organization's dedication to

differentiating itself in the market by providing distinctive offers and services.

The implementation of a customer-centric operating model is a key component of Best

Buy's differentiating strategy. This entails a purposeful emphasis on comprehending and

attending to the unique requirements and actions of diverse consumer groups. Best Buy

endeavors to position itself as a source of customized and value-enhancing services by

adapting solutions to cater to individual consumer needs.

One crucial factor that bolsters Best Buy's differentiating approach is the extensive range

of brands it offers. The organization has carefully cultivated a portfolio of brands, such as

Best Buy, Best Buy Mobile, Geek Squad, Magnolia Audio Video, and others. The wide
range of brands within Best Buy's portfolio allows the company to customize its offerings

and services to meet the distinct interests and lifestyles of various consumer groups.

Moreover, Best Buy places considerable importance on the training of its staff. The

organization employs comprehensive training programs to guarantee that its team has the

necessary skills and knowledge to provide customer care that is rooted in expertise. The

dedication to providing informed support significantly enhances the overall satisfaction

of customers in accordance with the principles of a differentiation strategy.

Best Buy places a significant emphasis on prioritizing the in-store purchasing experience,

acknowledging the lasting significance of face-to-face encounters, especially within the

domain of big electronics. In light of the increasing impact of e-commerce, the

corporation acknowledges the prevailing customer inclination for tangible interaction and

experiential engagement with goods. Best Buy prioritizes the maintenance of a strong

physical presence and allocates significant resources to advertising efforts. This strategy

effectively attracts consumers to visit their locations, ultimately boosting the overall

quality of the in-person shopping experience.

Q3

Best Buy implements numerous main functional methods to enhance its overall

competitive differentiation strategy. These approaches aim to boost consumer

satisfaction, streamline business processes, and fuel expansion. Let's take a look at how

effective these methods have been.

Best Buy places a premium on having a staff that is both well-trained and well-versed in

their respective fields. The company's dedication to educating its staff well means that it

can provide its clientele with in-depth product descriptions, technical assistance, and

expert advice. Because it improves the client experience and builds trust, this knowledge-

based service strategy is in line with the differentiation approach. When clients get

helpful advice from qualified employees, they are more likely to make educated buys.

Best Buy's competitive advantage may be traced, in part, to the strategy's success, which

is shown in the company's overwhelmingly favorable customer reviews and ratings.

The company's varied brand portfolio is an additional strategic component. In order to

meet the demands of their target demographics, different brands provide a selection of

goods and services that are specifically designed with those groups in mind. Best Buy's

client base and income have grown because of this approach. It enables the firm to

successfully engage a wider customer base and secure a greater slice of the consumer

electronics industry. Best Buy's expanding brand portfolio and successful targeting of

niche markets are signs that this approach is paying off.

In addition to its online presence, Best Buy values its brick-and-mortar stores for the

unique experiences they provide its customers. Despite the rise of internet shopping, the

corporation acknowledges that many consumers, particularly those shopping for large

items, still prefer to do their purchasing in person. The company's marketing initiatives

aid in bringing customers into its physical stores. The fact that the corporation has so

many brick-and-mortar stores despite the rise of online shopping is indicative of the

effectiveness of this approach.

Q4

Like many other consumer electronics firms, Best Buy faces a number of obstacles that

might jeopardize its competitive edge. These difficulties cover a variety of problems:

First off, the rise of massive online retailers like Amazon.com has made the consumer

electronics industry more competitive. The reduced operational expenses of online shops

allow them to provide comparable prices, which might put Best Buy's consumer base in

danger. The organization has to continuously modify its tactics to effectively navigate the

internet competition and stop its market share from declining.

Second, Best Buy has ongoing challenges due to the rapid advancement of technology in

the consumer electronics sector. It's critical to keep up with emerging trends and make

sure that the company's product line meets changing consumer needs. In the fast-paced

market, failing to do so might result in a decline in competitive advantage and a loss of

relevance.

Thirdly, Best Buy must be flexible in response to the ever-evolving environment of client

preferences. As consumer preferences change, the business has to modify its products to

fit the newest styles. For example, strategic changes to product offerings and marketing

tactics may be necessary in response to the growing demand for sustainable and eco-

friendly goods.

Moreover, Best Buy has difficulties in its efforts to expand internationally. The process

of entering foreign markets brings with it challenges relating to cultural norms, legal
requirements, and competitive environments. Continued work and strategic planning are

necessary to maintain a strong presence and guarantee growth in these sectors.

Finally, effective inventory control and supply chain management pose significant

difficulties for the consumer electronics sector. It is a difficult task to maintain inventory

levels in response to demand fluctuations, especially during new launches and seasonal

changes. There is a significant chance that Best Buy would overstock or understock,

which might result in losses for the company and reduce its competitive edge. Resolving

these issues successfully is essential to the business's long-term success in the dynamic

consumer electronics industry.

Q5

Best Buy might take into consideration putting the following suggestions and fixes into

practice in order to strengthen and reinforce its competitive position in the consumer

electronics market:

First, working with manufacturers to create exclusive items that are only accessible at

Best Buy may help you strategically concentrate on distinctive products. These exclusive

offers may attract clients who are actively looking for unique goods and experiences

(Forbes, 2023). Putting resources into employee training shows up as a critical step in

keeping a highly qualified and informed team. Regular training programs may guarantee

that staff members are up to date on the newest goods and services, as employers

recognize the critical role that workers play in providing outstanding client experiences

(Kumar & Pansari, 2016).

Best Buy may invest in a more user-friendly and better e-commerce platform to increase

its online presence and compete more successfully with online giants like Amazon. This

means making certain that customers have a flawless online shopping experience, tailored

product suggestions, and attentive customer service (Wagner III & Hollenbeck, 2020).

Customer loyalty may be increased by enhancing the online purchasing experience using

data analytics and artificial intelligence.

It is advised to do a comprehensive analysis of the foreign growth plan, with an emphasis

on enhancing the effectiveness of overseas outlets. This entails assessing markets in

which Best Buy may gain a more substantial presence and taking into account possible

divestitures in less lucrative areas (Wagner III & Hollenbeck, 2020). Best Buy may also

make its customer loyalty program stronger by providing alluring prizes and incentives.

This strategy seeks to promote client brand loyalty and repeat business. Customizing

incentives and offers may improve the loyalty program's efficacy and attractiveness.
 References

Forbes. (2023, April 17). 16 Ways To Maximize Your Competitive Advantage And Drive

Growth. https://www.forbes.com/sites/forbesbusinesscouncil/2023/04/17/16-

ways-to-maximize-your-competitive-advantage-and-drive-growth/?

sh=bed431b5384f

Hoffman A. N. (n.d.). Case 22: Best Buy Co. Inc. (2009). Sustainable Customer

Centricity Model?

Kumar, V., & Pansari, A. (2016). Competitive advantage through engagement. Journal

of marketing research, 53(4), 497-514.

Wagner III, J. A., & Hollenbeck, J. R. (2020). Organizational behavior: Securing

competitive advantage. Routledge.