Best Buy Case Study

Register to read the introduction… Overall profits have to be looked at deep within the financial statement of any company, but the bottom line always remains the bottom line. Within Best Buy, we see that the company's total liabilities are 60% of total assets. Liabilities have increased from March 2003 at 177,000 to February 2004 at 765,000(Quotes & Info- Best Buy Co Inc (BBY)). This puts their liabilities at a high risk for investors. Their top competitor, Circuit City, holds only 30% liabilities to assets. This creates a big challenge for Best Buy Co., Inc. to overcome. As the financial forecasts decline in profit and shares tend to drop, investors will look for new investments. Some believe that one of the major causes for reduced profits is that expansion and remodels that are currently underway. These remodels, which are designed to target specific consumer groups, are eating profit faster than it is being made. Several analysts believe that this expansion program is causing great risk for Best Buy Co., Inc. Although the profits have declined cash flow is at steady hike. With only a small portion of cash flow being used for the expansion plan Best Buy Co., Inc. has opted to take part in some what of a trend of purchasing back its own stock. Companies believe that this is the best way to rid them of the excess cash. Not only does it benefit the company, but it also gives high returns to its investors. The process reduces the number of outstanding shares and by doing so; it increases the prices per share. Best Buy Co., Inc has a current buyback program authorized to use 1.5 billion for repurchasing its stock. Recently Best Buy Co., Inc. decided to phase out their mail-in rebate program. The phase out decision is a result of multiple consumer complaints nation wide. The mail-in rebate program was something that Best Buy Co., Inc. had worked into its promotional flat form to compete with competitors. Consumers are aggravated about paying higher prices in the stores and having to mail in receipts and proof of purchases in order to request the rebate. The waiting game then begins for several weeks until the rebate is received and at times, it can be hundreds of dollars. The phase out process will take place over approximately two years in order for the vendors to make necessary changes. Best Buy Co., Inc. is hoping to come up with a phase out plan that will not give competitors an upper hand. Best Buy's marketing team is always focused on the consumer. One of the biggest challenges they deal with is the promotional platform. The strategy has always been one that concentrates on the consumers' needs and wants, and as with most companies how to one up its competitor. With mail-in rebates on its way out Best Buys has directed its promotional focus to the …show more content…
It is not a store strictly for teenagers, or one strictly for adults; it welcomes all. However, one major age group is being overlooked—children. Best Buy should include a section of their store dedicated to children's electronics. This section would be selling the newest video games, mini televisions, child sized computers and radios. Like everything else in the Best Buy store, these devices and electronics would be out on display for the children and adults to look at; the only exception is that they would be placed at a child's height for viewing. These days, it is not uncommon for elementary school children to have their own computers and cell phones. Therefore, overlooking such a key demographic seems almost ridiculous. Best Buy could collaborate with local theme parks to be used a special promotional offers. For example, for every major purchase over two hundred dollars purchased from the children's section, the customer would receive a free children's ticket to an amusement park of their choice. This is a win-win situation for the theme park, Best Buy, and the consumer. Children would not be going to theme parks alone; therefore, the theme park would still be gaining the admission of the adults taking the child, not to mention the food and souvenirs purchased. More products would be sold in Best Buy, and the customer would once again, feel like they are getting more for their