"Best Buy Doing a Turnaround Again" case study (page 651-652)

Please answer this question:

Q1. What should the IB manager do?

Cases BUY Best Buy Doing a Turnaround Again Best Buy Co. Inc. is an American multinational consumer In addition to immediately selling its European electronics retailer headquartered in Richfield, Minnesota stores, Joly trimmed staff and promised to revive The company was founded by Richard Schulto and James sales by using omnichannel retailing. The simple but Wheeler in 1966 as an audio specialty store called Sound powerful idea in omnichannel is to reach customers of Music. In 1983, Sound of Music was rebranded to Best wherever they are in a store, online, or via their Buy after having achieved $10 million in sales in its seven smartphones and use technology to turn costly stores stores to place more emphasis on consumer electronics into an advantage. For example, Joly added a "Store From 1983 to about 2012, Best Buy was an American suo Pickup" button to Best Buy's online shop because cess story, achieving $1 billion in sales in 1992 in a short many shoppers like to browse and pay online, but pre period of time and entering its first international location fer to pick their consumer electronics in person. They in Canada in 2001 by acquiring Future Shop Ltd. More just had no way of doing that before. The omnichannel sales followed after entries into China, Puerto Rico, became the turnaround strategy for Best Buy in United Kingdom, Mexico, and Turkey. 2012-2013 In this period (2001 to 2009), Best Buy was named Fast forward to 2018, and Best Buy has just closed "Company of the Year" by Forbes magazine in 2004, 250 brick and mortar stores in the United States. These "Specialty Retailer of the days, the international Decade by Discount Store posure of Best Buy is only News in 2001, ranked in the in Canada and Medicos all Top 10 of "America's Most other international engage Generous Corporations by ments have been divested Forbes in 2005, and made or closed. At the peak. Fortune magazine's list of BEST Best Buy's International "Most Admired Compa operations accounted for nies in 2006. The retail about 17 percent of its re- model that Best Buy had enues. So, while compe- created seemed to be on the Dies such as Walmart see upswing, and customers their international opera flocked to the stores to tions as a key growth drive check out new gadgets and especially in emerging mar purchase products. Then, Aksts/Shutterstock kets, Best Buy strategically Best Buy's expansion, basi decided to concentrate on ness model, and interest among customers declined in only the North America region for Dow (Canada, Mexico just a few years. and the United States). As a result, Best Buy closed its operations in the United With these measures in place, after declining revenues Kingdom, China, and Europe between 2010 and 2012, for several years. Best Buys an upswing in 2018 that and appointed Hubert Joly as its CEO in September 2012. the company hopes will continue. Also, Best Buy was Best Buy had annual revenues of about $29 billion in ranked as "The Most Sustainable Company in the United 2012, but Joly turned around the company in such a way States" by Barron's in 2019. In addition, the company that its 2013 saw $45 billion in revenue, an amazing ranked among the Top 100 in the Fortune 500 list of the increase of 55 percent in just one year. Joly did this, in largest corporations in the United States by total reverse part, by quickly issuing a five-point manifesto to revamp Some of it has to do with the omnichannel carryover the Best Buy brand, known as "Renew Bloc effect carrying over from when the 2012 turnaround me Reinvigorate the customer experience sures were implemented. One idea was even to use it existing store infrastructure as distribution centers, in Attract transformational leaders" and energize addition to being retail stores. employees Joly stayed on as CEO until 2019 to see through much Work with vendors to innovate and drive value of the downturn and turnaround for Best Buy in the Increase the company's ROIC by growing 2017-2018 period. On June 11, 2019, Corie Barry took revenue and efficiency over as CEO, after having previously served as Chief Make the world a better place through recycling Financial Officer and Strategic Information Officer of efforts and giving people access to technology Best Buy Mike Mohan was elevated to President at the . . 652 Cases same time, keeping his previous title of Chief Operating Siret Journal September 17, 2017. Ben Tobin, Best Buy Officer as well. This leadership change came after Best Nas Cole Berry as New CEO, Will Replace Hubert Joy." Buy launched a new growth strategy in which Joly shifted USA Today, April 15, 2019 Best Buy's focus from short-term problem solutions to long term investments that would help the company com Case Discussion Questions pete more effectively with Amaron and other rivals. 1 In the process, Joby-at the time on his way to becoming Chair of the Board at Best Buy-aid that "Stores are a great asset." In making the Joly to Barry move, Best Buy an nounced it was doing so to provide leadership continuity as the company continues to create its strategic growth initia tives." "Tam so proud of the strategie, financial and cultural transformation we have achieved." Joly said in a statement and with Best Buy well positioned for continued growth well into the future, now is the right time to begin a leader ship transition." "Today's technology and consumer land live scape creates tremendous opportunities for Best Buy to further expand and deepen relationships with our customers and employees, while continuing to deliver shareholder ty value. * Barry said when the CEO change was amounced Sources David Trainer, "Best Buy Rising from Ashes to Lead New Retail Paradigm. Forber, June 7, 2018: Michael Pagead. Best Battles Back Online, MIT Teobal Review November 20, 2013; Sharon Bailey, Best Buy Reconsider the International Operation Market Realist, January 21, 2015: Khadieeja Saldat Best Buy Sets Five-Year Plan for Sales and Containe The C ser and Press Relently Co. lo. O