Porter's Five Forces

Bargaining Power of Customers: Low because customers who purchase from Best Buy generally don't purchases 10 of the same product at a time. Products purchased at Best Buy are a smaller percentage of one's income, unlike purchasing a house or a car. Consumers do not control what products get produced and at one price.

Threat of Substitutions: Few substitutions because it depends on the product the consumer wants to purchase. Best Buy can be the best option for some products but for others, some people may find it cheaper to purchase from Amazon or eBay.

Bargaining Power of Suppliers: High because they only purchase from major manufacturers such as Sony, Toshiba, Samsung, LG, Panasonic, etc. Best Buy has no other choice but to purchase from these manufacturers.

Threats of New Entrants: Low even though there is a potential pool of entrants that is large because there is numerous online electronic retailers.

Rivalry: HIGH. Walmart is one of Best Buy's biggest rivalries because they also do price matches. Walmart is already known to have the lowest prices but if they don't, they will give you the difference on a gift card. Best Buy just lowers the price of the product and that is what you pay. Customers who want to purchase more advanced electronics or who are still unsure of what specific product they want might want to go to Best Buy because their team of experts may be more knowledgeable than the workers at Walmart.


Strategy & Focus
Industry-wide focused differentiation.

Switching Costs
Medium-High.
Depending on the customer, switching costs can range from medium to high. If a customer knows what they want, they can really purchase it anywhere because they don't need someone who is knowledgeable about the product. They can even order on websites such as Amazon.com.
Some things that Best Buy offers that keep their customers loyal and happy are: Blackjack protection, Rewards Zone card, Best Buy credit card, online shopping, and ordering online with in-store pick up.

Type of Information System

Best Buy is a company which uses an Inter-enterprise Information System.

Causes:

• There are two or more independent organization: that are working with the same information: This is not just because Best Buy works in many different countries, also it is because Best Buy works with many other retail stores. 
• There is a Mandatory training: Like in any other corporation, there is a basic training for all new employees, and also there is constant trainings to current employees.
• The Solutions to problems require cooperation: If there is an issue with an specific product that arrive to a costumer, and that product was acquired in retailer store, should be a communication between the retailer store ans Best Buy to solve the customer’s problem.

Departmental Applications:

This are different departments that are working at Best Buy and those who may be a silos’ information problem, and cause a duplicated information at the same time. 

• Sales and Marketing: Customer management, Sales forecasting, Product and branch management, etc.
• Operations: Order management, Inventory, etc.
• Customer Service: Order tracking, Account tracking,Customer support, etc.
• Human Resources: Payroll, Planning, Management, etc.
• Accounting: Financial reporting, Budgets, Accounts management, etc.

Business Process Re-engineering:

Best Buy like any other company has a CRM system, like we mention above with the Rewards Zone Program. All of those benefits, has to have a data base where all the information about the client and the kind of rewards are been manage.

Best Buy not just implement CRM system, it also implement ERP, where CRM it is included too. Here are integrated Human Resources management, Sales management, Customer support, etc.

Challenges of Implementing a New Enterprise Systems:

• Collaborative management
• Requirement gaps
• Transition problems
• Employee resistance

Sources of System Costs:
Hardware-Registers, Printers and computers
Software- The software they use for these hardware (Registers, Printers and computers)
Data- Inventory management, Ordering
Procedures- Maintenance and sales
People- Labor costs, initial employee training and Geek Squad

Operating Systems:
Macintosh
Windows

Safeguards

Technical Safeguards

• McAfee
• Norton Security
• Webroot SecureAnywhere
• Titanium Maximum Security

Data Safeguards

• CashStar
• preserves integrity and security of personal information

Human Safeguards

• Employees at the management level
• Background check
• Drug test
• All employees
• Intensive and detailed training

Interview with Mike Rubino

April 7, 2012

1. What do you think makes Best Buy most appealing to its customers?
• There are multiple things that make Best Buy appealing:
1. Always has the newest products available
2. Employee Knowledge
3. Good Customer Service
4. Able to demo and play with products in store
5. Services and Geek Squad
6. Keeps our customers connected.

Just to name a few.

2. How long have you been the general manager for this Best Buy location?
• I’ve been general manager at the Howell location for a year. Since April 2011.

3. Do you think Best Buy is honestly the best competitor out there?
• Yes. I do believe that Best Buy is the best competitor out there, not only because we have all the latest software and products, there is constant employee training (E-Learning’s) going on year round so our employees stay up-to-date on all products, and also to cross-train employees is a huge focus for our store especially for the changes to come. We offer price matches to other retailers and our finance is among the best in retail.

4. What brand of software do you use?
• As a company we use NIKU and Oracle for software and IBM for Hardware.

5. What system do you use for scheduling?
• Time and Labor Center (TLC) allows Leadership – anyone with access – to go in an edit shifts, make and publish their actual department schedules, and accept or reject any requests that their employees put in. It also is what every employee must go through to punch in and out of work. It allows them to do shift trades, request off, and makes changes to your availability.  Every employee also must acknowledge their hours every week in order to get paid. 

6. How are you using IS to enhance performance?
• We use a MATRIX system that breaks down the company’s numbers piece by piece – daily there are department goals, store goals, and company goals.  We even break it down to individual employee tracking.  Every department has their own trackers and goal sheets to follow.  In MATRIX there is a performance tab - you can go in by specific departments or a store as a whole and look up to see exactly how you are doing (ex. What you’re selling the most of, what areas you need to improve more in, and our standings as a district, etc.).  It usually updates every hour.
• We also keep track of employee sales by plugging your numbers into the Point of Sale (POS) system when ringing a customer up.
• IS keeps everything organized, easy to access, and easy to read. You know exactly what you need to improve on and you are compared to the rest of the stores in the district so we know where we stand.  There are monthly meetings for the bottom 3 performers (store-wide) to meet and decide how they can enhance performance as a store.
• It brings awareness to the employees.
• Keeps everyone as a company up-to-date.

7. What are some of your Company strategies?
• Sales Excellence  
1. includes the ability to cross sell.
2. Target your ideal customers

Among many other things...

• TRUST

• Thank the customer for coming in
• Respect
• Understand
• Solve Together
• Thanks again
  
  

8. How long have you been with Best Buy as a company?
• 11 years
  
  
9. Have you been a General Manager at any other stores?
   • Only one other store, Holmdel.
     
     
   10. How do you market locally?
   • There is always an ad in the newspaper every week, our sales go from Sunday to Saturday.
   • We also have coupons for The BP Weekly, a local paper in Lakewood, NJ.  It is a way to drive some more traffic in the store.
   • Commercials.
    
   11. What would you recommend a customer doing when they need troubleshooting?
• Products come with a 30 day tech support option where you can call 1-800-GEEKSQUAD (1-800-433-5778) to walk you through any troubleshooting problems.
• There is a  NEW 30 day return policy on all products and services with no restocking fees.
• Customers can go online to bestbuy.com to look up product features and reviews to help the them out.

12. What type of ordering system does Best Buy use?
• Order Management System (OMS)
1. Can order from the warehouse or any other store ANYWHERE that has the product available.
2. Track the order at anytime
3. More convenient system for customers… “We are never out of stock on anything”
4. The store that orders it gets the credit. If we are out of stock on an item doesn’t necessarily mean we have to lose out on the sale.

13. How are information systems used to cut costs?

• Best Buy as a company has recently announced that they will be closing 50 U.S stores so they could focus more on the smaller format stores.  With that, our store is not closing, it’s not the busiest of stores, but we have just found out that we are going to become a community store. I really don’t know much about it yet but it from what other GM’s of other community stores say, I hear it's fun. Best Buy will be going through a lot of changes as a company in the next few months.   We are going to possibly be cutting some positions and unnecessary labor and doing so will help the store and departments bonus more. We won’t know much until the changes in the corporate office are final.
• These changes should help lower the company’s overall cost structure and produce 800 million dollars by fiscal 2015. 

14. Do you use social networking?

• I would really like to get a little bit more involved with social networks as a store but we do have a Facebook page that gets updated with store offers and weekly deals.
• We are really involved with email. We use Microsoft Outlook. We send emails throughout the day. Constantly are checking emails. It’s how we, as a store, are connected.
• ShopKick - an app that allows you to earn points everytime you enter the store and even by scanning certain products.  Points are redeemable and customers are able to use them towards anything in store or online. 

15. Do you use any outsourcing?
• Yes we do we have:
1. The HelpDesk - any problems with registers or scanners
2. Bridge - helpline employees can call for just about anything they are having problems with.
3. IBM - a lot of times IBM will come in and take care of technical issues.

Recommendations:

Improvement for Customer Service in store
Telephone service, transferring calls
Unique advantage of seeing physical objects, unlike Amazon
More mandated training for their employees
Provide customers with best products not more products (Quality vs. Quantity)