1.

About BEST BUY

- In 1966, founded by Richard M. Schulze and business partner with the name
“Sound of Music”, stone in St. Paul, Minnesota.

- An international retailer of consumer electronics, mobile phones products,

electronic appliances, computing and other electronic related services.

- In 1983, Sound of Music board of directors approves a new corporate name, Best
Buy Co., Inc.; Best Buy opens its first superstore in Burnsville, Minnesota.

- TODAY…… + Acount for 19% of the national market

- + Are operating in Mexico, Canada, China, Turkey and the UK

2. The situation of the case

- The rise of China has matured into hope for the entire consumer electronics
industry. The country’s 1.3 billion consumers and their fast increasing buying
power has transformed China into the world’s largest consumer electronics
market, a market opportunity that multinational giants cannot afford to neglect
(Chen&He 2005)
- Best Buy was just one of the many multinational retailer companies that tried to
enter the Chinese market.
- In 2005, opened a sourcing office in Shanghai. In May, 2006, invested $108
million to obtain a majority stake in Five Star – a Chinese electronics chain.
- Soon after in December 2006, the company used the greenfield mode of entry and
opened its first “Best Buy” store that followed their own US business model in
Shanghai’s busy Xujiahui shopping district.
- The company later opened another 8 stores, which increaseed the total number of
“Best Buy” store in China to 9.
- According to the China Daily on March 21, 2011, Jiangsu Five Star Appliance
continued to expand. However, Best Buy’s expansion was slow and was not
running as smoothly as anticipated. “ The multinational brought in a Western
business model and it failed to sufficiently attract the Chinese clients and
customers” said Chen Can, a senior analyst from Analysis International (China
Daily 2011). Best Buy closed all wholly owned brand stores in China because of
its poor operational management.
3. Answer the question in the book
 What were Best Buy’s points of parity and points of difference in China?
- Points of parity:
- Points of difference:
+ Imposing a US business model, Best Buy intended to convince Chinese
customers with helpful and dependable service in clean, pleasant outlets.
( focus on mid and high-end consumers). High - pricing strategy was applied
because of elevated services and it was thought to become it’s comparative
advantage.
+ Employing its own in-store people to offer non-biased service to customers.
Not hiring local talent that knew how to be successful in China. Rather,
intending to create talent that knew how to be successful in the US.
+ At the Best Buy stores, customers could try out the products and employees
helped them to decide on the products that would suit their needs...
+ Best Buy chose to charge customers for its services instead of providing
free value-added service after they purchase products as retailers in China
usually provide. Unlike Gome and Sunning, this company adopted fixed price
policy so the buyers can not negotiate with the salesperson to get a discount
there.