Operation Management of Best Buy Essay Example | Topics and Well Written Essays - 500 words

Operation Management of Best Buy - Essay Example However, in a global restructuring program, the company closed its Shanghai headquarters in 2011 plus other nine stores (Zhihao, 2012). Despite being seen as a saviour, after other electronics retail companies that had failed, Best Buy was forced to shut down operations because of several reasons. According to Baijia (2013), the company operated on small scale. As such, it could not take advantage of economies of scale aimed at lowering costs. Additionally, the company failed to strike a balance between lowering prices while at the same time providing high quality services. This meant that despite offering low prices on its products, these products did not satisfy customer needs. As such, many customers were dissatisfied with the product quality hence many preferred those produced by rivals. With fewer customers using its products compared to competitors, there were reduced profits. Furthermore, there was an unsuccessful strategic adjustment in the United States hence forcing the company to shut down its branded stores in 2010. After the shutdown, only outlets branded Five Stars were still in operation. The Five Sta r brand was the one that people in China recognized more than Best Buy branded stores, hence the need to leave it in operation. Additionally, the Five Star brand had been in operation for longer compared to Best Buy stores in China (Zhihao, 2012). The numerous challenges forced the Company to shut down its China stores in order to focus on an expansion plan in areas that were deemed more profitable. Focus was on areas like the United States of America which were viewed as being profitable with more growth opportunities (Bloomberg News, 2011). The failure of Company to do well in China can be attributed to its inability to fully understand the Chinese market. Whereas its target market was the middle class, it was unable to judge what these shoppers were interested in buying.