Best Buy Porter's Five Force Model

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Best Buy and the use of Porter’s Five Force Model

Threat of Substitution. Best Buy is the largest consumer retail industry that represents the world’s electronics manufacturers. In choosing a point of sale, buyers will preferably be guided by its availability and remoteness, as well as the availability of a wide range to find the desired product surely. When deciding on the purchase of one or two expensive electronics products, neither institutions nor individual consumers are sensitive to a slight change in the price for them, since the purchase is planned. Thus, the company develops a land store network in parallel with online sales and offers favorable warranty and maintenance terms to increase the cost of switching for consumers and consolidate their loyalty.

Threat of New Entry. The market of land retail trade is not attractive to new market
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A high degree of competition characterizes the consumer electronics market both in pricing policy and in the application of various business models. This is due to undifferentiated goods. Given that the assortment of products in stores of different large companies is practically the same, they are forced to compete on pricing, service level, and brand name. Profit in the market is generated through turnover. Given that, Best Buy demonstrates the high flexibility of the supply chain. With the saturation of one market and a steady decline in demand in the segment, Best Buy quickly adapts the range or closes a non-profitable point of sale. Turnover also depends, for the most part, on manufacturers, which reduce the life cycle of the product through the release of new models.

The main competitors of Best Buy are Walmart with their traditionally low prices, Apple, and Metro AG. Despite the policy of acquisitions from Best Buy, the market, nevertheless, is quite diversified. The above companies only own 26.3% of the world market, while the rest belongs to small retailers, including online

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