HUM101 Mod 8 PP Opt 1
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Jan 9, 2024
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HUM101 Module 8 Portfolio Project Option #1
How Can Best Buy Stay Relevant as a Consumer Electronics Retailer in the Future?
Callen E Lowe
Colorado State University – Global Campus
HUM101-2
John Battaglia
11/25/2020
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How Can Best Buy Stay Relevant as a Consumer Electronics Retailer in the Future?
Introduction
The growing popularity of online purchasing as well as the vast amounts of success Amazon has had, has most certainly hurt Best Buy as a company. Their willingness to adapt to the new normal has helped them stay as relevant as they are and continue to hold the title of the largest consumer electronics retailer in the United States. What does the future hold however? Amazon continues to dominate and crush out its competition, and gain more and more of the market share. I would like to look at Best Buy from a critical reasoning lens and analyze what they could do as a company from their upper management to stay relevant and contest with the likes of Amazon and Walmart. In this project I will give a brief history/background of the company, briefly define what intellectual standards are, discuss how they play a role with this topic, cover a few of the standards that I believe could make a large impact on Best Buy, engage with my own assumptions and/or opinions around this topic, briefly discuss scholarly sources (what they are and how they continue to help me with this topic), and lastly draw a conclusion in order to determine what Best Buy can do to stay relevant as a consumer electronics retailer in the
future.
Company Background
Founded in 1966 by Richard M. Schulze, Best Buy quickly became one of the biggest consumer electronics retailers in the U.S. The company started out as an audio component retailer (The Sound of Music) all the way up until the early 1980’s. Wanting something more out
of his company Schulze claimed “the lights began to turn on” and he came to realize that the future of the company depended on opening up the product line even further, introducing VCR’s and appliances Biemesderfer (2020). The company has been successful for the past 50+ years
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and shows no sign of stopping. MacroTrends (an analytic website for the SEC and New York Stock Exchange where Best Buy is registered) reports twelve of the past 20 years have all been in the green profitable and the remaining 8 years that were red/negative have been made a wash from the “green” years. It hasn’t all been success and a cookie cutter path to become the leading consumer electronics retailer in the country however. Best Buy, and its sub company Geek Squad, has faced bankruptcy, transitioned its business models and company values, a few changes in the rank of CEO due to sexual misconduct allegations, and has done battle with the growth in popularity of online retailers.
Intellectual Standards and How They Play A Role
Elder & Paul (2013) teaches us that intellectual standards are standards that further good judgement and rational understanding. They are essential for the minds on-going awareness and assessment of the strengths and weaknesses in personal thinking and in the thinking of others. Furthermore, the authors break down these standards into 10 key categories, clarity, accuracy, precision, context, relevance, depth, breadth, significance, logical, and fairness. If we as a society
utilized these particular standards on a regular basis, our critical reasoning would improve. For Best Buy, the issue for me, is if they don’t utilize these standards at a corporate level,
then they too could be on the brink of closure and bankruptcy. Now to many, this wouldn’t matter, but my adoration for the company and basic want of shopping in their store lead me to analyze them critically. Best Buy closing would also hurt my community in a grand way, in my local city, we have but one Best Buy, they are the only brick and mortar resource for purchasing most consumer electronics, should they be closed it would cause a significant amount of people to either purchase online or driver many miles to reach another establishment.
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For the course of this project, I would like to focus on a few key standards (accuracy, relevance, logical, and fairness) and how they play a role in upper management. My assumptions
are that if the leaders circle is utilizing great critical reasoning skills, the company will be ethical and perform better than a company with lower standards and ethics. Hicks (2016) essentially states that when people cluster or coexist (such as a business) dignity can either thrive or perish. Best Buy has moments of both. With CEO Bryan Dunn, the company was on the brink of bankruptcy and he wasn’t willing to accept that he needed to steer the ship in a different direction or face the consequences. With his departure in 2012 and Hubert Joly (former CEO of Carlson, a global hospitality and travel conglomerate) taking over, the company did a complete turn around and continues to thrive.
Accuracy
The first standard that could help Best Buy stay relevant in the future is accuracy. Is the information being cascaded upwards accurate? Skewed data could lead to business decisions being authorized that otherwise might not have been, for the better or worse of the company. Accuracy is also concerned with and associated with truth. Accuracy eliminates any distortion there may be regarding correctness. So, having members of the board who report accurately and put a focus on accuracy will help Best Buy maintain a truthful image in the eye of the consumer, which in turn leads to more sales.
Relevance
The second standard to discuss is relevance. This particular standard is two-fold for me. Is all important information being delivered? As well as, is the information being provided actually relevant? What is meant by relevant information (stock prices, what technology is trending, on a global scale what products related to tech are being purchased, and competitor
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information). Having this information at any given time should not only be a standard but should
also be analyzed in order to utilize the information for the betterment of the company. Having leaders in place that understand what information to push upwards (and downwards) on the corporate ladder could help maintain Best Buy as a relevant source for technology needs and wants.
Logical
Thirdly, we arrive at the logical intellectual standard. This standard asks us to ensure everything fits together and makes sense for the bigger picture at hand. What is the driving force behind the logic of Best Buy’s business decisions? In terms of Best Buy, is there a flow and consistency in the information being given to the higher ups. If any pertinent information is missing or lost in translation than the business could ultimately suffer, too many wrong decisions
from illogical information could lead to the doors closing permanently.
Fairness
Last, but certainly not least, is the standard of fairness. Fairness is associated with considering alternative points of view regarding the issue (or in this case the company). Only considering one point of view is self-servicing and/or one-sided Singleton & Rudy (2020). For Best Buy is the company being fair to the consumers as well as the employees? Does the company provide a fair wage to the staff? Does management (upper and lower) critique in a fair manner to inspire line level employees, or do they critique to demotivate? Having worked for the company for a little over ten years as a Geek Squad Manager, I can say that the company did put importance on fairness. The pay was very competitive and more than a bare minimum living wage. The company also stresses “coachings” which are done in the moment after a sale with a client to discuss how it went, what could have been done better,
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or how well the associate handled the client. Best Buy also employs a weekly – monthly – quarterly – and annually “one on one” with each associate. Weekly covers the previous weeks sales information, for the associate only. The monthly one on one you discuss the sales of the associate and their respective department. The quarterly discussion goes over the sales for the associate, their department, and adds in store performance. Lastly, the annual appraisal one on one covers, the associate’s sales numbers, their department, the stores performance, and adds in how the company is performing along with providing the associate with a raise. This creates awareness to performance and puts a little pressure on the employee to do their best, but also allows them to see how their performance bleeds up in a fair, logical way to affect the company overall.
My Assumptions
Some of the key assumptions I had drawn before doing research around this topic was that Best Buy could stay relevant by putting more of an emphasis on their own website (
www.bestbuy.com
). Current projections on average Best Buy reports 5% to 10% market share (along with close to $8 billion in sales) of all online tech purchases according to ecommerceDB (2019). Although, that is quite a considerable amount, I personally assumed that they could have a much larger market share by doing online only promotions, offering products that are only available online, provide faster shipping (as I am sure some of Amazon’s success is due to one to
two-day free shipping). Along with that I assumed that Best Buy could also put forth more effort on their iOS/Android App. The same assumptions from the website could apply here as well.
Another assumption I had made on this topic, is there currently enough stores/locations to
fulfill the needs of everyone? Currently, Best Buy, has a little over 975 locations and continues to close some facilities while opening others. This sort of action really throws Forbes and Wall
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Street Journal through a loop. Upon closer inspection, Best Buy rents all of their buildings and tends to stick to a ten-year lease. So, as the lease comes to an end and the rent price goes up in order to renew the lease, Best Buy closes that location and opens another store to keep costs lower. This is both a good and bad business practice in my opinion. Good because it keeps rent consistent and lower, bad because they then either have to transfer their associates or let them go entirely (not to mention the cost to renovate a new building when opening a new site).
Scholarly Sources
Scholarly sources, also knows as peer-reviewed, are written by academics and other experts and contribute knowledge in a particular field by sharing new research findings, theories,
analyses, insights, news, or summaries of current knowledge. They can be both primary and secondary research and can come from many different formats, such as, books, magazines, websites, forums, articles, and libraries. There can however be a distinction between the two, all peer-reviewed sources are scholarly, but not all scholarly sources are peer-reviewed, summarized
from the University of Toronto Library (N.D).
With that being said, I found great success in researching this topic by utilizing scholarly sources around the metrics and numbers involved with Best Buy profitability. I tend to rely upon facts and it is easy to not only interpret, analyze, understand, but trust numbers as well. It would be very difficult for Best Buy to report to Wall Street or the SEC askew profits or numbers. Along with that, I found some sources could also not be trusted, even if they seemed like a legit scholarly source. Upon reading further into the articles, you could see some bias showing and the
depth of opinion over knowledge/fact.
Within my research, utilizing scholarly sources, I have learned that Best Buy is willing to
do what it takes to stay on top and adapt to the ever-changing market. Best Buy focuses on
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providing a world class customer experience while having the latest and greatest tech under one roof, they specialize in having a not only knowledgeable, but willingly helpful staff. You cannot get the same treatment from other brick and mortar business (such as Walmart) and you most certainly cannot receive face to face training/help from an online retailer. Scholarly sources helped guide me on where to go to field most of my critical reasoning questions when researching how the company could stay relevant in the future.
Conclusion
In conclusion, Best Buy has done well to adapt to every situation. The CEO resigning and
passing the leadership torch to Hubert Joly in 2012 gave a breath a fresh life into the company and his visions brought to life an entirely new way of thinking and providing a world class experience for both consumers and associates alike. Do I personally believe they can stay relevant with the rise of online purchasing platforms such as Amazon? Yes, I do. For me, there will always be a need to go into a brick and mortar establishment to see the latest and greatest, and to have hands on demo’s before purchasing, and with Best Buy’s price matching of Amazon there is little to no reason to play with the product in store then go home and purchase online. The company can (and hopefully) will continue to thrive for many more years to come due to the
critical thinking of its upper management staff and ability to adapt. Certain critical questions remain, what more could Best Buy do in order to gain market share away from Amazon? With Huber Joly passing the reigns off to Corie Barry in 2019 will his legacy still be honored? What could she bring to the table to keep large scale brick and mortar retailers relevant? Only time can tell.
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References
Biemesderfer, S. C. (2020) 3D Best Buy Co. Inc
Retrieved From: https://www.encyclopedia.com/social-sciences-and-law/economics-business-and-labor/
businesses-and-occupations/best-buy-co-inc
Singleton, J. & Rudy, J. (2020) The Intellectual Standards
Retrieved From: https://www.dentalcare.com/en-us/professional-education/ce-courses/ce551/the-
intellectual-standards#:~:text=These%20intellectual%20standards%20include%20clarity,
%2C%20logic%2C%20significance%20and%20fairness.&text=Accuracy%20is
%20concerned%20with%20the,may%20be%20regarding%20the%20truth
.
MacroTrends (2020) Best Buy Market Cap 2006-2020 BBY
Retrieved From: https://www.macrotrends.net/stocks/charts/BBY/best-buy/market-cap
Hicks, D. (2016) A Culture of Indignity and the Failure of Leadership
Retrieved From: https://link.springer.com/article/10.1007/s41463-016-0006-2
Elder, L. & Paul, R. (2013) Critical Thinking: Intellectual Standards Essential to Reasoning Well Within Every Domain of Human Thought
Retrieved From: http://web.a.ebscohost.com.csuglobal.idm.oclc.org/ehost/pdfviewer/pdfviewer?
vid=1&sid=65e73ef7-5813-41ba-97af-d2fda8ab41cb%40sdc-v-sessmgr02
Elder, L. & Paul, R. (2019) Elements and Standards Learning Tool
Retrieved From: https://www.criticalthinking.org/pages/critical-thinking-learning-models/704
eCommerceDB (2019) bestbuy.com Revenue Analytics
Retrieved From: https://ecommercedb.com/en/store/bestbuy.com
University of Toronto Library (N.D.) What Counts as a Scholarly Source?
Retrieved From: https://onesearch.library.utoronto.ca/faq/what-counts-scholarly-source
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