1. What were the strategic challenges facing Best Buy in 2012?

Why was the company finding them

hard to respond to?

In 2012, everything seemed to be going wrong for Best Buy. CEO Brian Dunn announced that he would
close 50 big-box stores in the United States, downsize the remainder by 10%, and cut $800 million in
costs by March. A month later, the CEO had just resigned after admitting to an improper relationship
with a female employee. Employee engagement seemed to be in a poor management. In June, Schulze
stepped down as chairman after acting inappropriately by not telling them of the allegations against
Dunn. In August, Hubert Joly took over as CEO. At the time, he was the CEO of hotel, cruise ship, and
restaurant company Carlson. According to Wedbush Securities analyst Michael Pachter, the lack of
experience in retail makes him unqualified. After that, company’s share price fluctuated more than 10%
at $18.19.

2. What did Joly see as Best Buy’s key strengths and weaknesses? Do you agree with Joly’s initial
diagnosis?

CEO Hubert Joly argued that Best Buy had some key strengths like being the market Leader in North
America. At that time, it served a large customer base that includes 40 million active and 75 million total
members in the loyalty program. Customers described its service proposition as unique and compelling
which provides a wide scope, unbiased advice, and competitive prices. Multi-channel service particularly
store-based and internet retailing builds a stronger relationship with customers. Engineers worked on
the main Best Buy mobile app, as well as Geek Squad and iPad apps, to develop the omnichannel
customer experience. Meanwhile, Joly recognized Best Buy’s weaknesses particularly the decline in
market share caused by sudden changes in channel and market mix. Also, the failure to capitalize on
online market space, low customer satisfaction ratings, poor price perception, despite competitive
prices in important categories, the error of continuing to open stores during the financial crisis of 2007–
2009, and poor international performance. These challenges triggered declines in comparable-store
sales and operating margins and a decrease in the share price. We agree with Joly’s initial diagnosis
about the performance of the company that these problems are the results of their own decision
making.

3. Do the Renew Blue Goals address the issues? Which initiatives in the Renew Blue made a strategic
difference

The Renew Blue goals addressed the issues in some sort of way. Among the initiatives, “Attract and
grow ‘transformational leaders’ and ‘energize our employees to deliver extraordinary results’”
made a strategic difference. Effective leaders have the ability to motivate their team, manage and
delegate responsibilities. It made a big change when Shawn Score, the new head of retail stores,
outlined the opportunities for improving the company’s performance. Employee engagement drove a
7% difference in comparable-store sales. The improvement of multi-channel product and service
delivery, display of leading-edge technologies for early adopters, and vendor support was the result of
good decision-making and leadership.
4. What advantages does “multi channel” retailing offer Best Buy?

5. Has Joly done enough? How well is Best By doing compared to Amazon in 2017? Is Building the
New Blue a game changer?