Economics of Best Buy

One of the fortune 500 companies in our society is outflank debase. beaver subvert is hotshot of the largest consumer electronics retailer fraternity in the United States and Canada. There are many ingatherings Best Buy distributes, such as computers, computer equipment, video and audio products, refrigerators, coffeemakers, compact discs, video games, videodisc and VHS movies and players, CDs, computer computer software, cameras, cell phones, and satellite systems and so on. In addition, their customer service is very helpful and has improved throughout the years.The Geek Squad is one of their forms of customer service they provide and they offer various computer-related services and accessories for residential and commercial clients. Best Buy didnt always flummox these products and services available. They are an industry that changes with the times. They supply products that are in high demand by the consumers. Best Buy was started in 1996 by Richard R. Schulze and his b usiness partner James Wheeler. It was before known as Sound of Music and the first storage was located in St. Paul, Minnesota.In 1983, the companys name was changed to Best Buy and the first store named Best Buy was located in Burnsville, Minnesota. By 1984, there were only 8 Best Buys in the Midwest, but by 1987 the routine tripled and their sales and earnings were at a high $239 meg and $7. 7 million respectively. And since they have money to spend, they increased their warehouse size and products. In 1985, Best Buy went public and then two years later they were listed on the New York Stock Exchange. By 1988, sales had doubled to $439 million, but net earning declined 64%. despite the net earnings declining, receiptss were still increasing well into 1989. Also, in 1989, Best Buy launched its Concept II stores with bigger show rooms, fewer sales multitude and more self help product information. From 1992-1993 Best Buy had the best financial performance in the companys 27 year report with an increase in revenues and earnings. Fol unhopefuling this, 38 new stores were opened up. By 1997, Best Buy became the industry leader. This caused net profits to jump to $94. 5 million and revenues to jump to $8. 36 billion and for their stock to increase to $36 per share.In 1998, Best Buy created an online music store and in 2000 they expanded it and it offered more then music, it offers DVDs, consumer electronics, computers, softwares and games. Having a website made Best Buys income grow even more. By 2001, profits increased 14%, revenues rose to $15. 33 billion. Despite the recession in 2001, Best Buy bounced back the following year with $570 million in profits and $19. 6 billion in revenue. And by 2004, revenue reached $25 billion and net income rose to $705 million. Best Buy is a publicly traded corporation.A publicly traded corporation is the style of many companies in the United States, europium and India. They are liable, taxable, have legal rights that an individual citizen would have, they can sue and be sued and mustiness establish a paperwork identity with state and/or federal governments as required by local laws. When it comes to liability, public corporations have limited liability which means a partner or investor cannot lose more than the amount invested and the investor or partner is not ainly responsible for the debts and obligations of the company in the event of bankruptcy.For taxes public corporations are taxed twice once for revenue for the corporation and once for personal income for the shareholders. Best Buy is the type of company that always stays up to date with the latest technologies which keeps the consumers coming back and interested. They also have every product on the floor when you walk in so the choices of products are endless and you never have to wonder if there is more. In addition, they base their stores on low pricing and efficiency in operation this explains why Best Buys industry has grown so much since 1966.Mostly every corporation deals with competitors. The biggest disputation Best Buy faced was electrical circuit urban center. They were competitors because they were the top two retail chains for electronics. Eventually Best Buy took over and put locomote metropolis out of business. Why? The answer is because Best Buy does a ruin job of utilizing marketing through brand recognition, incentives and customer service. Best Buy has gotten a carry on better at putting the customers first and helping them in any way they can and Circuit metropolis has had many problems with keeping their customers satisfied.Also, Circuit Citys problem is they arent competitive they keep losing money quarter after quarter. Even their stock dropped from $22 to $3. 83. Why is Circuit City losing money? Its because they arent updated enough with the latest technologies analogous Best Buy is. Also, whatever Circuit City has Best Buy already has and better so plurality want to go to Best Buy f or that reason. In addition, Best Buy offers services such as computer service and fight and home theater installation, which makes Best Buy different from Circuit City and other fortune 500 companies.Before Circuit City went out of business, there have been reports about how Best Buy would benefit from reduced competition. There was an estimation of a $12 million increase in revenue if Circuit City wasnt in business. In addition, more suppliers will be forced to sell their products to them whether they want to or not. For example, if Best Buy demands for better terms on Sonys big screen LCD TVs and if Sony doesnt like the terms they have nowhere to turn to. Every company uses and must use adverting in order to gain popularity and peoples interest.Both Best Buy and Circuit City use advertising, but they both advertise in different ways. Best Buys strategy is aggressive advertising and competitive pricing and pursuit of cost saving strategy. There are third messages they portray in their TV advertisements, they are you can trust us to always have your best interests in mind, we have a unique betroth on how technology and entertainment can make your life better and you can always expect to find great prices. For example, their commercial titled adjust Stories focused on Best Buy employees telling their true stories on how they helped customers.As the years go on advertising becomes ignored because people dont trust the misleading ads so, to fix this problem Best Buy recently featured their customers comments from online product reviews and product ratings in their nationwide sunshine newspaper circular. This helps because potential customers will most likely trust people who have already bought something from Best Buy then the Best Buy salesmen. This institutionalise of advertising is called Bazaarvoice and it is very affective and it is the future of advertising.In addition, Best Buy has advertisements that highlight key entertainment groups like MGM Studi os, Activision, Sega and Rock Band which showcase the enjoyment people are acquiring from these products and this makes people want to have these items because everyone likes to have fun and enjoy themselves. The problem with Circuit City is they never did anything like Best Buy. Circuit City never changed its ways and products so they never adapted new advertising methods like the Bazaarvoice. In addition, since they never update their inventory onsumers were probably never interested in their ads because Circuit Citys products were outdated. Circuit City never got into selling video games and they never sold any thriving companies products like Apple Computers. Also, Circuit City never improved their website and the internet is used a lot now to sell products so if they are not up to speed with everyone else people will loose interest in their store. In addition, Circuit City stopped selling appliances which can stop a lot of people from buying from you.My prediction is that Best Buy will continue to prosper in the future for many reasons. One reason I figure this is because their Revenue is $20. 9 Billion. Also, their price per stock is $54. 15 (a 138% change in stock price) which is very high compared to their competitor Circuit City which is $3. 83 per stock. Best Buys market cap is also $18. 6 billion. In addition, there are 750 Best Buy stores throughout the United States and in Canada. As you can see, Best Buy makes a lot of money and the more money a company has the more successful they are.So, if Best Buy keeps square(a) the customers, updates their products and basically just changes with the times then I dont see a reason for how they will ever go out of business. tempt Cited Best Buy Co. , Inc.. 2010funding universe. 5/7/10. Best Buy. Company Profiles for Students. 1999ed. Best Buy Launches New Holiday Advertising Campaign alignment with Major Entertainment Groups Highlight Customer Experience. 2002Business Wire. 5/7/10. Best Buy Using Reviews in Advertising. 2010Bazaarvoice Inc. 5/13/10. Best Buy. 2010Mahalo. com inc. 5/7/10.Coleman,Quentin. Public Corporation Information. 2010eHow. 5/11/10. Hamilton,Anita. Why Circuit City Busted, While Best Buy Boomed . 2010Times Inc. 5/13/10. January and February Best Buy Advertising. 2010Barry Judge CMO of Best Buy. 5/11/10. Muller,Turley. Best Buy Will turn a profit from Reduced Competition. 2008Seeking Alpha. 5/7/10. Peterson,Matthew. Circuit City Vs Best Buy Marketing Why Circuit City Failed and Best Buy Won 2010EzineArticles. com. 5/13/10. Watson,Julie. Best Buy vs Circuit City. 2006Forbes. com inc. 5/13/10.