Best Buy Case Study Essay

After getting a s distribute in flipper Star, a retailer of appliances and electronics in china, crush misdirects VP John Noble is responsible for launching a dual sword strategy to chinaware as he did in Canada back in 2002. The intent was to open three stores in less than deuce years in mainland mainland china while Five Star was planning on opening 25 additional stores. Entering China would prove to be much more difficult than neighboring Canada as a country with 1. 3 billion consumers which is a lot of people to please.China was chosen as the second international expansion commercialize in the first place due to the oer every(prenominal) market opportunity, consumer fundamental principle and macro-economic factors (Ivey, 2006). In addition to the Chinese being very frugal, thither was in ilk manner the yield of the concept of credit, or lose in that respect of in China. About four equivalencet of households in China used credit cards, compared to 75 percent i n the United States (Ivey, 2006). outgo bargain quickly realized that mark in China was non what re in ally attracted the consumers (Ivey, 2006). better(p) acquire Inc Best defile had been interested in entering China since the 1990s.By that time, China had been hosting many of the United States and atomic number 63 as far as different manufacturing products. The pickax of dual brand was what Best Buy was thought in order to essentially join forces with Chinas retailer of electronics and appliances, Five Star. By coming together, Best Buy in United States thought that the two companies would be even stronger as one. This sort of dual branding modeled very well in Canada and presumably would score the same success in China. Competitors Some of the main competitors of Best Buy are Wal-mart and Costco.The competitors were constantly change magnitude their CE retail market and in specific they increased the products that were less complex therefore easier to sell. meshi ng shopping and distributors such as Amazon or sites alike(p) that are another example of a competitor in the CE market. Also, home progress stores such as Home Depot and Lowes were also venturing into unknown territory which was competition for Best Buy. Lines were blurring as retailers of all kinds were widening their product assortments in pursuit of revenues and margins (Ivey, 2006). Dual branding in Canada seemed like logical step in that Best Buy and Canadas future day Shop, the main CE retailer there could join together and become stronger with all of the competition coming about (Ivey, 2006). Dual mark Canada Canada was paid $363. 95 million dollars to acquire approaching Shop. Among several reason why the dual branding took place, the number one reason and most great was that Future Shop was an established brand with over 95 percent unaided brand cognisance among Canadians (Ivey, 2006). Though dual branding seemed like a great idea there were also few downsides.Cann ibalization was the main problem of course due to the products of Future Store eating the profits of Best Buy and vice versa. There was also the immanent issue that the consumer would not know which brand was which. Despite these issues, by the first year of operations the dual branding strategy seemed to be working and cannibalization seemed minimal. It seemed only inherent to give it a try in China (Ivey, 2006). Dual Branding China China was chosen as the second international expansion market primarily due to the overall market opportunity, consumer fundamentals and macro-economic factors (Ivey, 2006).However the Chinese consumer was different than that of the United States or Canada. Also, consumers were not really concerned with branding as much as they were messages relating to functional features. Therefore, the preference of brand did not really translate into revenue. There was also the issue of land acquisition as there were often delays which would force a store to take u p to 6 months to even open its doors. The Chinese also preferred to deal with people they knew and had introductory relationships with so pricing had to be up to par due to the consumer not providing much slack for it.With all of these problems, a dual branding in China did not seem as seamless as it was in Canada (Ivey, 2006). Conclusion It is understandable why Best Buy would want to go global to increase its profit and consumer base all over. Though things seemed to work out in Canada, it would prove to be a much tougher hill to climb in China just based off the consumers alone and the counselling things are done there and simply the commission of life. It will be interesting to see if the places like Turkey and Mexico, other potential targets will involve the same success rate as Canada, and not resemble Chinas issues.