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CIM Assignment Cover Sheet

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Part I: Choose a firm facing serious strategic challenges to day (and not discussed in class). Identify and discuss for this firm: 1. What are the three main strategic issues the company is facing? Best Buy is a computer & electronics retail company with a market cap worth of $13. 5 Billion. It was founded in 1966 in the United States and its CEO is Hubert Joly. It provides consumer electronics, home office products, entertainment products, appliances and related services1. The company is threatened because of the emergence of its competitor: the giant Amazon.

Hubert Joly, the new Best Buy’s CEO, came in the crisis period and he is trying to rescue this company. The three main strategic issues that the company is facing are: – Growing sales and revenues : Best buy has the difficult task to find a way to increase the sales in order to grow its revenues and avoid bankruptcy. It did a notable development since the coming of the new CEO Hubert Joly2 who saved the company from the same destiny than Circuit City or Future shop, yet, the company should make more efforts to perform very well comparing to its main competitors: Amazon and Wal-mart. – Staying competitive :

The concurrence in the retail market is extremely rude and aggressive. While the giant Amazon is making a big turnover from online shopping, Best buy’s profit from online sales isn’t enough and doesn’t compensate the bad sales from Best buy’s stores3. Furthermore, Best buy has to outstrip the showrooming effect that is making profit to other concurrents who are taking advantage from Best buy’s stores. In fact, customers go to Best Buy’s stores to see and test the product that they are interested in, and then they buy it online from other companies profiting from lower prices and customers’ feedbacks.

– Improving the customer services : If there is a royal path for the company to succeed, it will be through their customers’ satisfaction, so that they can buy again from Best Buy’s platforms. Many customers now find the after sales 1 http://www. forbes. com/companies/best-buy/ 2 http://bourse. lesechos. fr/infos-conseils-boursiers/infos-conseils-valeurs/infos/best-buy-n-attend-pas-de-hausse-des-ventes-l-action-chute-1025147. php 3 http://bourse. lesechos. fr/infos-conseils-boursiers/infos-conseils-valeurs/infos/internet-ne-sauve-pas-les-ventes-de-best-buy-994728.php services horrible4, they can’t find assistants in the stores to give them information about the products or to recommend good products. As for the internet, they can buy a product but it is not available for shipping! 5 While Amazon offers shipping for all the products and within few days… This is a real issue to fix in order to give the customer an incredible personal shopping experience.

2. What three strategic recommendations would you make to management to ensure the future success of the company?

The three strategic recommendations that I would make to management in order to ensure the future success of the company are, in priority order: – Hire talented people who will take in charge the improvement of the IT infrastructure: the website should be simple and easy to surf on, the online shopper have to find easily the product he wants without big text blocks between the products. Best buy has to reinforce its online presence by giving attracting promotions and reinventing the website shopping experience, especially as customers are increasingly buying online.

– Allow delivery to several destinations in the world: nowadays, if any international shopper wants to buy online from Best Buy, he has to ship them up to a US address or pick them up in a US store, which deprives Best Buy from a big market share from other countries

– Hire salespeople that would give assistance to the customers in the stores and improve the after sales services. Besides, Best Buy shouldn’t be making bigger efforts in selling DVDs and CDs, it is useless because this market is getting dematerialized and the physical sales keep decreasing.

3. How does the macroeconomic and competitive context affect management’s margin for maneuver? An aggressive concurrence weighs on the market in which Best Buy is operating. Big brands like Amazon, Wal-mart, Apple, Target, Samsung…etc launch promotions and big deals with high determination to gain the biggest market share, especially as the holiday season is on its way. The biggest competition actually concerns the online sales to which the companies try to attribute the lowest price in order to attract more customers.

In fact, many companies have adopted the Price Match Guarantee strategy to drain more sales7. 4 https://www. youtube. com/watch? v=Yiyxu6Mh_6g 5 http://www. fool. com/investing/general/2014/01/21/best-buy-better-fix-these-3-issues-right-now. aspx 6 http://www. bestbuy. com/ 7 http://www. forbes. com/sites/greatspeculations/2015/10/19/best-buy-could-be-in-for-a-tough-holiday-season-as-competition-rises/ The graphs below are retrieved from Yahoo Finance and show a comparison between Best Buy and some of its competitors like Amazon and Wal-mart.

We can see clearly that Best Buy is outdone by those companies and has to make bigger efforts to gain more profit. 8 8 https://fr. finance. yahoo. com/echarts? s=BBY#symbol=BBY;range=1d Besides, many online platforms are profiting from Best Buy’s physical stores to do the showrooming, while Best buy isn’t taking advantage from its big stores network and their proximity from the customers. 4. Why do you think that the company has not already implemented your ideas? How easy do you think it would be to implement each of your strategic recommendations?

The company has not yet implemented my ideas because it’s aiming currently to cut the costs by closing many stores and firing many employees, in order to afford more money to the online operations investments and other costs9. This is the reason why Best Buy can’t hire people at the moment, which is a good idea in the current situation. Concerning the shipping to other countries around the world, it involves supplementary investment and logistics. Therefore, maybe the company now is trying to focus on its domestic market and don’t think about being open to other countries until the financial situation will stabilize.

http://bourse. lesechos. fr/infos-conseils-boursiers/infos-conseils-valeurs/infos/best-buy-reorganise-son-reseau-de-magasins-au-canada-1041276. php Part II : Questions based on the group project 1. Based on the group’s solution, what are the three primary key factors of success for this venture? The three primary key factors of success for this venture are: – Quality of the product : Since this venture will be selling a product (bottles of wine), it should meet the expectations of the customers and should be of a good quality so that they can buy it more times again.

In the brand recognition plan, we decided to organize fairs with tasting sessions, as we intend to give away 40. 000 bottles of Pinot Noir during two years. This strategy will give proof to the potential customers of the quality of the product. – Partnership management : The activity of the venture will depend essentially on its distributor partners. We decided that we will implement a B2B distribution, so we have to find distributors that will sell our products in their stores. The contracts with the distributors should be clear and covering all the details, in order to avoid misunderstandings.

A good relationship with the distributors should also be maintained. The venture has to sign also other partnerships with other brands, like cheese or bread brands, in order to give more attraction to the Pinot Noir and raise high awareness about it. – Marketing and business model : This venture must bring a strong business model able to generate great revenues and outclass other wine’s brands. It should identify clearly the profit targets and implement all the strategies, investments and marketing plans to reach the objectives.

By establishing a marketing strategy, the venture would know how to locate customers and attract them. It should strengthen its image as wine brand with high quality and commitment to satisfy its customers. 2. What will be the major challenges or stumbling blocks this venture may face? In my point of view, the major challenges or stumbling blocks this venture may face are: – Concurrency: The venture should be eager to outdo its competitors and to increase its sales. The price of the Pinot noir wine should be well thought and affordable to a large majority of the society.

– Sustainability: the venture should gain the trust of the customers and attract more ones in order to increase its profits. – The venture should conquer the market and have a big market share. – Another challenge is to reach the number of people that we fixed for our brand recognition campaign:

Fairs : 1 million visitors ? Press : 5 million readers ? Events : 100 trend makers – Advertisement: how this venture does the marketing will condition strongly the attitude of the customers. The advertisement should be clever, attracting and original. It should also be linked to the French wine culture to give it a better context.

3. What would you do differently to improve the company’s chances for success? In order to improve the company’s chances for success, I would bet much on the marketing. A whole story should be created around the Pinot noir wine so as the customers can identify to the product and make it an integral part of the dining table and the parties. The venture should communicate better and in different ways, it should focus on the feedback of the customers and improve its public relationships.

Inviting public personalities to advertise about the pinot noir brand wouldn’t be a stupid idea! I would also give a big attention to the selling process in the distribution stores in order to give to the customer the best shopping experience ever and make him want to come back again. For that, I would hire very charismatic people who will assist the customer, give it all information about the pinot noir wine and recommend it. Finally, having a parallel existence online would increase the company’s chances for success. The venture should create a website and reinforce its marketing strategy in the social networks.

It could also create an online shopping platform to satisfy all the customers.

4. How was the group work managed? How could you improve the management of group work in the future? In the first work session, one of the members of the group came with an idea and didn’t let time to the whole group to think about their ideas. We just discussed and improved his idea, on which somehow everyone agreed, but we could find a better one if only we took a brief time in the beginning to think about it. So, we can say that there was one person leading the group.

However, in the 2nd work session, he tried not to rush and suggested to do a brainstorming so that everyone in the group can contribute with his ideas. The atmosphere of the group work was pretty serious, we talked the whole sessions in English and we were focused on our tasks, which I found really fruitful. In the final session, our group leader was a little bit stressed and nervous, he had always a critical view about our ideas and wasn’t satisfied by our time management. As far as I’m concerned, I wasn’t comfortable talking about wine since I don’t drink it, I don’t know how it tastes and I can’t understand how the others feel about it.

However, I managed to adapt to the situation and I didn’t let this religious concern hinder my implication into the group project. On the contrary, I tried to be active, to discuss ideas and to participate in the elaboration of the brand recognition plan. The experience was intensive and rich. It was the first time that I did a Pecha Kucha and I found it really interesting and stimulating. In the future, the group work should be improving its time management and try to answer the questions without sticking to the details that make us waste a lot of time. We can add some humor in order to break the barriers between the group members.

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