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SWOT Analysis of Best Buy

Info: 640 words (3 pages) SWOT Example
Published: 2nd Nov 2020

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Best Buy has a strong market presence after its major competitors such as Radio Shack declined (Prange, 2016). Reports show that Best Buy made profits of $39.49 billion in 2015 (Prange, 2016). Huge profits are an indication that the company is financially strong. Additionally, Best Buy has good working relations with suppliers such as Apple, which facilitates the operations of its supply chains (Hess, 2017). In 2015, Best Buy was second after Apple stores for selling the highest number of Apple watch. Best Buy has been strong in the market for long by ensuring that customer needs are met accordingly, which facilitates the development of customer loyalty (Gonzalez, Arrondo & Carcaba, 2017).


As Mehra, Kumar & Raju (2017) note, Best Buy largely depends on credit suppliers. Most bought are paid for after the items are sold. Sometimes Best Buy does not manage to sell all products and end up paying the suppliers for obsolete goods. Furthermore, Best Buy also relies a lot on selling goods physically yet the e-commerce sector is rapidly growing (Grunig, 2017). Additionally, Best Buy depend on selling goods perceived to be luxurious (Nguyen, 2017). In the case of economic downturns, people will reduce the consumption of luxurious items, and the company is likely to suffer huge losses. Additionally, Best Buy is financially strong however its profit margin is relatively low (David & David, 2017). In 2016, Best Buy recorded a profit margin of 1.92% which is relatively low.


According to Hess (2017), the computer and electronics retail sector is growing due to technology and Best Buy will be in a position to increase its sales volumes. Additionally, due to a high market growth rate, Best Buy has the opportunity to put up new stores for more customers. New smartphone models and designs are flooding the market, which increases profitability. Furthermore, Best Buy sells premium products such as Apple phones, which are costly but contribute to the company's revenue (Mehra, Kumar & Raju, 2017). Moreover, major competitors such as Radio Shack that were a threat failed, which gives an opportunity to Best Buy to increase its market share. Best Buy should, therefore, come up with best strategies to ensure it lasts longer in the market


Although Radio Shack disappeared, new and fiercer competitor such as Amazon has risen, which take advantage of youth preference to online shopping (Prange, 2016). Additionally, due to their low operating costs, online competitors can give discounts on products (Hess, 2017). For example, Best Buy spends a lot on wages paying workers in the various stores compared to e-commerce companies that have limited employees (Gonzalez, Arrondo & Carcaba, 2017). Huge discounts by competitors is a threat since Best Buy will also be forced to lower its prices, or it will end up losing customers to its competitors. Besides, online products are perceived by many to be cheaper than those sold in stores (Grunig, 2017). People are more likely to imagine that Best Buy's products are costlier when compared to those that Amazon sells online.

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