Best Buy the Company That Research Paper

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Part II. The company is traded on the New York Stock Exchange, under the symbol BBY. Best Buy had its initial public offering (IPO) on Nasdaq in 1985 but migrated to the NYSE in 1987. A chart of the company's stock over the past four weeks is as follows:

Source: Yahoo! Finance (2013)

Short-term movements in share price are mostly relevant to day traders. Most investors hold the stock much more than four weeks. The stock has fluctuated in value over the short run largely because the broad market has done the same, albeit with less intensity, but with beta of 1.48 Best Buy is expected to be more volatile than the broad market.

Best Buy is neither a conglomerate, nor a subsidiary, nor a multinational enterprise nor a holding company. It is primarily a domestic corporation, with a few international subsidiaries. Three-quarters of its business is domestic. As noted, Best Buy does not produce anything other than value-added service. It sells consumer electronics made by other companies. Those other companies are its primary suppliers, and include Apple, Samsung, Sony, Hewlett-Packard, Toshiba and wide range of other companies. The suppliers do not usually utilize just-in-time systems, but Best Buy does try to keep its inventory to manageable levels. It works with key suppliers mainly to ensure availability of goods, especially during key times of the year. With respect to buyers, these are consumers. Best Buy typically seeks to win consumers with a value-added service platform and a comprehensive range of goods.

3. Outlook. Best Buy remains competitive, but has had to deal with some issues related to writedowns and a sluggish business environment. Its revenues have fluctuated over the past few years and are at a lower than average level. The company's asset base has shrunk over that period as well, indicating some changes in its asset mix over the past few years as well. However, it should be noted that cash flow from operations has remained strongly positive over the entire five-year period -- in fact is was highest in FY2012, the year when the net loss was biggest.

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The key will be to stabilize the company with respect to further writedowns, as they reduce the value of the business. Hopefully, with a successful and stable business, this company can continue to do well and see its stock price increase.

The competitive environment is not expected to change significantly. There are threats from many different competitors, but clearly Best Buy has carved out a niche for itself, and this is to its benefit. There are few credible direct threats to its business, but there will continue to be threats from existing competitors. Best Buy needs to continually communicate the benefits of its service offering to consumers, especially as key suppliers continue to promote their own online retail channels. However, it does not appear that there will be a dramatic change in the position of the competitive environment for Best Buy in the short run.

Overall, the outlook looks decent. There is going to be a modest economic recovery over the next few years, which should help Best Buy. The company is also in a position to benefit from any breakthrough products in consumer electronics. Best Buy is also going to be continue to focus on international growth. However, it remains to be seen what the new leadership team is going to bring to the company. The two top officers are not from this industry, so it will be interesting for shareholders to see whether their ideas are revolutionary or insane. There is definitely a "wait-and-see" element to this company given the changes at the top.

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