1. Does Best buy fail in China?
Mei Meng( Melody):
Xilin Wang(Lin):
Yizhuo Wang( Bill):

2. Outline
Company profile
Does it fail
Problems
Failure diagnose
Possible solutions

3. 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

4. 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

5. 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

6. 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

7. 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

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

9. 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

10. 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

11. Any Questions?
Thank you!