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highest annual growth each year. This could be mainly due to the fact that the company carries a large selection of household and outdoor appliances for the consumer.Question MarksCompanies that exist within this category have relatively high growth prospects, but low market share. They often have the worst cash characteristics of all categories because high demands and low returns occur based upon the worsening market share. During first half, the company cut overall marketing spending by 26% and cut back TV spending and marketing strategies (Zimmerman, 2013). Sales fell short of analysts' estimates in the period ended Aug. 2, declining 4 percent to $8.9 billion for a 10th straight quarterly drop (Buchta, 2012). According toKantar Media, In the first half of 2014, overall measured media spending fell 26% to $116 million, compared to the first half of 2013, during the same period, TV spending plummeted
69% to just $17 million (Khanfar, 2011), which is a surprisingly low figure for a marketer as dominant and notable as Best Buy Inc.DogsGaming and entertainment accessories are both best Buy’s products that hold generally low market shares. Appendix G shows that Best Buy had a decrease in market share of about 12% than that of its previous years. Due to these product categories low market share and relatively low profitability, along with its lapse in annual revenue being directly reflected by these decreases, one can conclude that these products belong in the dogs category of this analysis. Competitive Forces AnalysisBest Buy’s direct competitors are Apple Incorporated, WalMart, Target and Radio Shack, while its indirect competitors are EBay, Amazon, and HHGregg. Although the company has beenthe leading electronic retailer in the world today, the retail industry still operates in the midst of acustomer revolution. Consumers are now seeking a more integrated shopping experience across all channels and expect retailers to deliver this experience (Zimmerman, 2013). The key drivers of this customer revolution are the rapid adoption of mobile devices and digital media that now comes equip with the latest shopping and browsing apps.Threat of Entry. In the market where Best Buy operates, entry and exit barriers are rigid because of the large investments that are required to initially enter the market, as well as the difficulty in liquidating big business that see success within their industry (e.g. estate cost, cost per share). According to Best Buy’s FY 2012 financial statements, the firm spent $766 million in capital expenditures on 300 new stores, remodeling projects to existing stores, and upgrading its information technology infrastructure (Buchta, 2012). The amount of initial investment to open a
large electronic retailer is well over $15 million, which is significant enough to deter new entrants from emerging in the marketplace.Power of Suppliers. The industry’s revenue relies heavily on the major supplies within its core infrastructure. Suppliers in the industry are subject to influence by large volume buyers within the marketplace. Best Buy leverages its position as a share leader for electronics with its suppliers. The company’s product teams can influence product and development design (Kenney,2011), as well as carrying exclusive items in special arrangement with suppliers. For example,