Does Best buy fail in China? Mei Meng( Melody): 311066615 Xilin Wang(Lin):310071992 Yizhuo Wang( Bill):311289959

Outline Company profile Does it fail Problems Failure diagnose Possible solutions

Best Buy review 2003, the first office in Shanghai 2006 May, acquire shares of Five Star appliance 2007 January, the first brand store in Shanghai 2011, announced to close the 9 branded stores in China

Five forces model Existing competitive rivalry between supplier- strong GOME, SUNING Threat of new market entrants- strong Circuit city of USA, Yamada and Island appliance from Japan Bargaining power of buyers- strong Little differences in products, prefer more familiar and local brand Bargaining power of suppliers- complex Threat of substitute products Easily to be replaced by appliance department of stores, supermarkets and shopping web sites, such as TAOBAO, EBAY and 360buy

SWOT model Strength Good customer service, good quality, rich management experience in Europe Weakness High retail price and cost, weak market share Opportunity Foreign brand effect, new categories Threat Strong local competitors and new entrant, little familiarity with local customer, cultural difference

Key issues 1. Slow expansion strategy Primarily open stores by acquiring the real estate, not renting and leasing Before fully expanding, the main domestic competitor, Suning & Gome had controlled China market

2. Lack of retail experience and research in China Environment change, culture difference, product preference Price too high, focus on product diversity rather than brands and quality

3. Lose location advantage Local competitors have dominated valuable location, and set up barriers to Best Buy

Other Problems Local political issue :examination and approval issue by Chinese government Lack of supplier relationships and network support Low- efficient communication system between China and US headquarter

Solutions 1. Change the expansion strategy Open the new stores in small cities rather than big cities Rent stores rather than acquisition 2. Offer free high quality after-sale services 3. Reposition of price strategy 4. Strengthen local supplier network

Any Questions? Thank you!