Best buy in china case study. Why Best Buy Failed in China 2022-10-13
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Best Buy is a well-known electronics retailer with over 1,000 stores in the United States and Canada. In 2006, the company made the decision to enter the Chinese market by opening a store in Shanghai. This was a significant expansion for the company and marked its first foray into the Asian market.
The Chinese market presented a number of unique challenges for Best Buy. One major challenge was the fact that Chinese consumers were not as familiar with the Best Buy brand as consumers in North America. In addition, the Chinese market was already saturated with electronics retailers, making it difficult for Best Buy to differentiate itself from the competition.
To overcome these challenges, Best Buy employed a number of strategies. One of these strategies was to focus on building relationships with customers. Best Buy recognized that Chinese consumers place a high value on personal relationships, so the company made an effort to create a friendly and welcoming atmosphere in its stores. Best Buy also invested in training its employees to be knowledgeable about the products they were selling and to provide excellent customer service.
Another strategy employed by Best Buy was to offer a wide range of products and services. The company recognized that Chinese consumers were looking for a one-stop-shop for all of their electronics needs, so it made sure to offer a wide range of products, including smartphones, laptops, and home appliances. Best Buy also offered services such as repair and installation to further differentiate itself from the competition.
Despite these efforts, Best Buy struggled to gain a foothold in the Chinese market. The company faced intense competition from local retailers and was unable to achieve the same level of success it had in North America. In 2011, Best Buy announced that it would be closing its store in Shanghai and withdrawing from the Chinese market.
While the Best Buy case in China was ultimately unsuccessful, it highlights the challenges that companies can face when attempting to expand into new markets. It also illustrates the importance of understanding the local culture and customs of a new market, as well as the need to differentiate oneself from the competition in order to succeed.
Best Buy in China
By using a multi-domestic strategy, the management seen in the greenfield approach will be more similar to that of acquisitions Anne-Wil 2002. Prod : 909A16-PDF-ENG Best Buy Inc. Being first international company in retail segment gives advantage to earn profits and create efficiency Kotler, 1997. As stated by Montlake 2006 , bargaining is a way of life in China. Marketing Today: Branding for Digital Marketing and Social Media. SOCIAL Opportunity for BBI for establishing its brand in strong position on customer mind.
Best Buy , the largest retailer of consumer electronics in the United States, acquired five stars, the third largest retailer of home appliances and consumer electronics in China in May 2006, the address Best Buy gives his opinion on the choice of the brand. COSTLY TO IMITATE: the resources are costly to imitate, if other organizations cannot imitate it. RARE: the resources of the Best Buy Inc Dual Branding in China company that are not used by any other company are known as rare. Problem Identification According to the China Daily on March 21, 2011, Jiangsu Five Star Appliance continued to expand. High savings rate among middle income group.
Best Buy Failure in China (International Business) Free Essay Example
Influencing young customer segment in Tier 1 market. Global competitors entering the market. Although it may be unlikely, I believe the only possible way Western-based online shopping would infiltrate China would be through Amazon. The Renew Blue strategy has a focus on value proposition, with the main focus on after-sales services along with competitive pricing. Excerpts Background Note Best Buy's history dates back to 1966, when Richard Schultz Schultz and his partner opened an audio specialty store called 'Sound of Music' at St. Liberalization in Chinese retail market from 2004 Reduction in entry barriers like compulsion of domestic partners. The Chinese do not penny-pinch and save because they like to, but because they have to.
One of the reasons for the success of the store was that its site was chosen when Wang Jianguo served as Best Buy global vice president. Hence, BestBuy needs to focus on its great customer service and incredible prices to pull consumers away from the competition Cavallo, n. International business requires you to recognise and understand the cultural differences between countries. Entering the Chinese market will require multinationals to recognise and understand the cultural difference between their homeland and the Chinese market. Nicole Foster MKTG 411 January 29, 2018 Best Buy Case Question 2 Best Buy saw a substantial market opportunity in China, with a population of 1. Best Buy made certain assumptions based on their experiences in the US.
How Best Buy Tackled China's Middle Class Through Trial and Error; Jiangsu Five Star
The option has a sense of deja vu because, when it first stepped out of its home turf in January of 2002 by acquiring Future Shop, the largest consumer electronics retailer in Canada, Best Buy was facing a similar dilemma. Some of these problems may include the following, along with various tools that can be used to identify and analyze these problems. Reducing cost using technology. This solution includes: A Word File BestBuy is currently facing cutthroat competition in the electronics market. Reference List Adam, M.
Powers of Suppliers Increasing domestic electronics suppliers. Threat of Substitutes There is not an imminent threat of substitutes when it comes to consumer electronics, however, there is definitely a marked threat of substitutes in selling channels such as those selling on online platforms versus those selling in-stores. Big market for imported product. Procedural delays to grant permission. In the United States, Best Buy defeated the second-largest retailer Circuit City, which used a consignment model, similar to Gome and Suning in China. Best Buy missed its window for rapid development, and perhaps had no time to think about how to enter more deeply into the Chinese market because it was struggling with strong competition and high land prices in first-tier cities like Shanghai.
Developing and maintain relationship with established suppliers. Best Buy is a multinational retailer of consumer electronics from the United States and operates in the United Kingdom, Canada, Turkey, Mexico, China as well as its home country. After being in the Chinese market for five years, the company only managed to open nine stores, capturing less than one per cent of the Chinese market as according to analysts. Products sold at Best Buy stores were mainly foreign. Whereas, the opportunities and threats are generally related from external environment of organization. Key strategic findings Analysis tool Key findings Strategic Implications on BBI PESTEL Analysis Huge differences in living standards. Managed by Best Buy, Five Star has expanded slowly the number of stores has only grown to more than 160 from nearly 140 in 2006.
Best Buy Inc Dual Branding in China Case Study Solution and Analysis of Harvard Case Studies
Proposed Solutions There are huge cross-cultural differences between the US and China. For example, the firm chose to own and manage operations for entire showrooms instead of renting out space to individual manufacturers like most Chinese retailers. Require to restructure its cost base to suit by sourcing its materials from China to satisfy the cost conscious needs of small towns and cities. Why do these firms want to take the multinational route? Well versed with new innovative technology. Manufacturers and distributors cater to the needs of consumers with the collaboration of the entire industrial chain.
There was no evidence of cannibalization, the single largest risk in dual branding. However, imitation is done in two ways. CIA, 2010 MOST IMPORTANT Need for appropriate market segmentation to target specific people and Chinese province. Therefore, it is necessary to block the new entrants in the industry. The buyer power is high if there are too many alternatives available.