Technology 

Databases and Data Warehouses

           In Data Processing, a file is a related collection of records and Best Buy uses a stretch of different types of those files. Some of them include costumer file, employee file, order file and some broader files like transaction, report or work files. All of those files provide valuable information for management and benefit the company. Best Buy by utilizing the data contained in such files, helps the company translate costumer insights into merchandising action. Operational databases make up the basic business intelligence of the company to create and ensure competitive advantage.  Best Buy uses OLAP model that is the manipulation of information to support decision making.

          

          Different databases like product and costumer are stored into one data warehouse and form business intelligence. Bet Buy manages their database with Oracle’s software relying on their real application clusters and oracle automatic storage management. Database administrator is responsible for the databases as well as for the data mining and received feedback info from different departments. William Levitte is Data Processing Executive at Best Buy Co. Inc. How they view these reports is through a system called MATRIX, which is a program which access is available to all managers and supervisors to help with business intelligence. This program gives a count of how many products are sold, when, to what types of customers, how much money was made for the day, week, month, year, and quarter.

          A data warehouse is logical collection information gathered from many different operational data bases used to create business intelligence that supports business analysis activities and decision making tasks. Best Buy Company won the data warehousing institute’s for its best practices in data warehousing award in the category performance management. Best buy won the award for its warehousing based business and vendor performance application. This warehouse provides web based and reporting capabilities to more than 2500 corporate and retail managers and also for external partners. Best buy data warehouse allows its users to view performance data, analysis on sales, inventory, advertising, pricing and all forms of problem area. The application facilitates increased efficiency in best buy overall business process. A data mart is a subset of a data warehouse in which only a focused portion of the data warehouse information is kept. Best buy has built a “business data mart” to use for customer analytics to focus on its business customer. This data mart helps best buy to target its customer groups and pick the right messages for each customer segment. For example, if one customer purchased a lot of items six month ago, and now purchases little, data mart helps to identify by doing deep drive analysis to discover differentiated groups with in its customers.

          Data Mining is “the practice of automatically searching large stores of data for patterns.” Best Buy uses data mining to analyze its customers buying trends and bases. The uses of data mining help Best Buy discover that women were being underserved. After that discovery, Best Buy put personal assistants to help female shoppers find the products that were on their shopping list. And the personal assistants would also give detailed information about the products they were interested in buying.  The software that Best Buy uses is Oracle. Oracle is a company that provides business software and hardware systems. Best Buy uses Oracle to “migrate data and applications from an acquired company's systems.” With the use of Oracle, Best Buy is able to get “full details of every point of sale transaction from every Best Buy retail store over the past two years.” Using Oracle requires fewer database administrator hours. This saves money and gives extra hours which can be put to use to develop new applications. The person who is responsible for this is Jeff Skochil, the manager of Oracle technical architecture. And he also receives help from Doug Reynolds, Information Services Leader.

Hardware

          Hardware “refers to any and all parts on, connected to, or about the computer that you can actually physically touch.” Some examples of hardware are mouse, keyboard and monitor.  Software is a collection of programs that gives the computer instructions on how to use them. Unlike hardware, software cannot be touched. They are three types of software. The three types are system, application and program software. 

                                                                                                                                            

          Best Buys sells Notebooks, Monitors, Printers, Desktops, Scanners and Fax machines, All-In-One, Mice and Keyboards, Memory, Speakers, Tablet PC, and Wireless Networking. Best Buy sells Best Buy sells many computer brands. The computers brands are: HP, Dell, Apple, Compaq, Asus, Gateway, Lenovo, Rain computers, eMachines, Lexmark, Sony, Alienware, Acer, Averatec, MSI, and ViewSonic. The types of computers that are sold at Best Buy are Desktops, Netbooks, All-In-One and Laptops. Michael A. Vitelli Named EVP, Customer Operating Groups is responsible for hardware and software. Mike is a graduate of Brooklyn College and a former CPA. As EVP of Customer Operating Group, Mike will be in charge of home solutions, entertainment operating groups, enterprise merchandising, PC mobility and Pacific Sales and Magnolia Audio Video.  

Michael A. Vitelli EVP, Customer Operating Groups

Software

          System software supports application software and controls how varies technology tools work together as we use our application software to perform specific information processing tasks. System software includes two basic categories: operating system software and utility software. Best buy sells Microsoft windows vista, Microsoft windows XP home, Microsoft windows XP professional. Best buy is selling now windows 7 home premium and windows 7 professional besides Mac os and other products. Fortunately, Linux is also a certain software package on the shelves of best buy for only $20.

          Application software is the software we use to meet our specific information processing needs, including payroll, customer relationship management, project management, training, word processing, and many, many others. Application software can be categorized as either productivity software or vertical and horizontal market software. Since June 2010 Microsoft office 2010 was available to consumer to purchase at all 1,081 best buy store locations in the U.S and online at Bestbuy.com.

Networks

          Best Buy uses both the internet and intranet. Intranet is guarded against outside access and is used only for employees with access to personal records, timesheets, and company information this intranet connects everyone from regular part time to the CEO. With this network Best Buys Stores are able to build business intelligence and make the customer experience better while increasing sales. 

Business Week

         The article we chose talks about how Best Buy, as a retailer, expects more consumer electronic retailers to follow Circuit City into the dust this year. Although Best Buy has struggled along with most retailers, the company is cutting cost to boost profitability and still opening new stores. Brian Dunn, CEO of the company says “despite the struggles Best Buy is actively scouting vacant Circuit City store sites…I take no joy in it, but I have every intention of capitalizing on the opportunity.” If Dunn's forecast holds, there will be even more carcasses for Best Buy to pick at in the coming months. As far as a list of stores expected to go under Radio shack is considered on the list because Radio Shack's core mobile-phone business has been eroded by the growth of retail outlets from carriers like Verizon and Sprint as well as by Best Buy's burgeoning mobile-phone business. Radio Shack also does brisk business in set-top digital converter boxes, but those sales are expected to dry up once the switch from analog to digital goes into effect later this year. “Best Buy's new leader said he's positioning the company "not just to duck and cover, but to come out of this and grow. There will be huge opportunities coming out of the back side of this difficulty." (BusinessWeek)

Kinds of E-Commerce Used

Electronic commerce (e-commerce) is commerce, but it is commerce accelerated and enhanced by IT, in particular the internet. E-commerce enables customers, consumers, and companies to perform powerful new relationships that would not be possible without the enabling technologies. E-commerce breaks down business barriers such as time, geography, language, and culture. Best buy is a click-and-mortar believer. Click and mortar refers to an organization that has a presence in the physical world such as a building or a store you can visit and also a presence in the virtual world of the internet. www.cfo.com/article.cfm.

Internet Business Model

There are nine major e-commerce business models that include B2B, B2C, B2G, C2B, C2C, C2G, G2B, G2C, and G2G. The most important of these models are business to business (B2B) model and business to consumer (B2C) model. Business to consumer (B2C) e-commerce occurs when a business sell product and services to customers who are primarily individuals. Best Buy uses the second model which is business to consumer. Best buy is registering with search engines, online ads. Best Buy advertises on yahoo, and Google sites. Barry judge, vice president of marketing for best buy.com says “we have a lot of early- adopter technology users, and our stores attract more tech savvy consumers to begin with, about 80 percent to 90percent of our core target is already on the web.

                                              

                                             

                                              Marketing Mix

          Marketing mix refers to the set of marketing tools that an organization uses to pursue its marketing objectives in reaching and attracting potential customer. Because Best Buy is mostly a B2C e-commerce its marking mix includes registering with search engines, online ads, viral marketing and affiliate programs. Best Buy is active in the social networking aspect as far as Twitter and Facebook community. They give out many special offers, coupons, and discounts for members that follow there pages and recommend others to do the same. Best Buy also participates in affiliate programs where places like Youtube advertise products that Best Buy exclusively sells to increase their share and profit.

Payment System

          Some of the payment systems used by Best Buy include financial cybermediary which partnered with paypal made it easy for their customers to buy their products over the internet through their website. Another payment system used is electronic check where customers can even come into the store and send money using their checking and savings accounts. The next payment system used is Electronic Bill Presentment Payment (EBPP), which is a system that sends bills over the Internet. This is used to so the customers can make payments on the Best Buy credit card instead of having to come into the store.

Differentiation Strategy

          Best Buy uses differentiation strategy because of their unique brands and services offered exclusively to their costumers. They strictly focus on costumer-centric model, which means “looking at an enterprise from the outside in rather than inside out – that is, through the lens of the costumer rather than the producer” (blogs.hbr.org). In effort to understand its costumers are, Best Buy took the time and have start selling solutions instead of products. Another thing that differentiates them from other companies are their exclusive brands such as Geek Squad, Insignia, and Dynex which are manufactured and sold at company’s retail locations.

Porter’s Five Forces

Buyer Power

 Best Buy has a low buyer power. To keep that buyer power low, Best Buy offers two credit cards. Best Buy Credit Card and Reward Zone Program MasterCard. The Best Buy Credit Card gives you an instant decision on approval, lets you shop in-stores and online. And no interest charge if full amount is paid within six months. The Reward Zone Program MasterCard allows you to use your card at Best Buy stores and everywhere else MasterCard is accepted. Points are earned each time you use your card. When your card accumulates a lot of points, prizes such as gift cards are presented. The gift card amount can range up to $250 and up. Another way to keep buyer power low is by offering many products in-store that many retailers do not carry such as 3d TVs. Best Buy also incorporates E-collaboration into their strategy. E-collaboration is the use of technology to support work activities with integrated collaboration environments, knowledge management with knowledge management systems, social networking with social networking systems, learning with e-learning tools, and informal collaboration to support open-source information. They do this by using social networking sites such as Twitter and Facebook to display theirs ads and featured sale items that many people are interested in.

Supplier Power

Best Buy suppliers power is high because of the variety of products from many manufacturers and other companies. Best buy is a big store with a lot of products, and most of them are not their own. The company sells a lot of different electronics gadgets, and offer a range of choices that will allow customer to accommodate their wants and needs. However Best Buy, therefore, can not dictate how much influence that suppliers have, because suppliers have the power to not send the company products if they feel as if Best Buy is not doing well selling their product. Suppliers can choose to send their products exclusively to their competitors and no longer sell to Best Buy. With this Best Buy creates switching costs and entry barriers by changing the prices on their products that they sell every week. They either match or beat their competitors and bring more people into their buildings. Supply Chain Management is simply a way a tracking inventory and information among business processes and across companies. Best Buy's supply chain approach, unlike others, is to focus less on cost and more on making sure the company is not missing opportunities to satisfy customers. Another approach is allowing frontline employees to influence the supply chain to meet local demand for by letting employees override inventory management plans. The facts of the customer experience must drive the supply chain.

Threat of Substitute Products

 Threat of substitute products or Services is considerably high for Best Buy because of wide variety of products that Best Buy is carrying. Some examples we can account for are cell phones, games and computers. There are many specialty stores out there that deal only with those certain products and are offering a lot of good deals, which Best Buy, being such a broad company is not able to provide. Retailers like GameStop, EB Games just to name few, offer the same products at the lower price because they allowed to, buy back older games at a discount and exchange them for new releases for example. Their costs go down when they buy at discount for exchange. It is also important to note that Best Buy has no switching costs that could make costumer reluctant to switch to another product or service supplier. For example is the case with services of a cell phone provider that charge an extra money when costumer wants to break off the contract before its due date.

Threat of New Entrants

 The threat of new entrants is relatively moderate for this company because Best Buy is a well-known and established store for many years and has many branches locally and globally. Many stores are attempting to adopt the customer-centricity model but none have achieved and prospered in it as Best Buy. Stores include PC Richard, HH Gregg, and 6th Ave.  How Best Buy controls the worry of new entrants is through Customer Relationship Management (CRM) system which uses the information about customers to gain insights into their needs, wants and behaviors in order to serve them better. Best Buy measures this through a tool called the Customer satisfaction Index, which is a survey in which customers are encouraged to take where it measures how the experiences of the customers were and how the company can do better. By measuring this each store can get a better understanding on what behaviors and interactions their customers are looking for.

Rivalry Among Existing Competitors

 The rivalry among existing competitors is high because there are other stores offering the same products for the same price or cheaper like radio shack, six avenue, pc Richard, and wal-mart. Most of customers are looking for best offers, low prices, and discount coupons. Best buy’s chief thinks the electronics store of the future will focus on service and connectivity, not just gadgets(fortune 500.com) best buy CEO Brian Dunn say’s that he is ready for the challenge. He plans to dull wal-mart’s attack through the concept of “connectivity”. Connectivity means services like mobile services, satellite TV, and digital photography. Best buy makes money from service provider, installation and other fees and that’s carry high revenues to the company. Again best buy is following the differentiation strategy and that’s how it survives and will.

Best Buy Business Initiatives

Best Buy uses different business initiatives to get ahead of its direct competitors; They are currently in the Process of launching Tecca which they consider that will be the Next-Generation Personal Electronics Shopping and Information Service which is a top of the line initiative. With this new and emerging technology funded by Best Buy, the company is looking to change the way people shop, if that strategy is successful; the company will largely benefits from it. Best buy used Horizontal market Application software also called productivity software. The company is an Early adaptor of technology, and their current Business initiative is proof that the company is a Top-line initiative.

IT Organization

Best Buy is consulting and outsourcing information technology from the company named Accenture focusing primarily on customer–centric model. Best Buy Co. uses a more collaborative IT organization leaning toward a matrix approach. It has a separate IT department but it sends out personnel to other functions of the organization that will collect important data and use efficiently within their departments to support the costumer-centric model. Neville Roberts is the CIO for all of Best Buy Co. He joined the company in January 2008 as CIO of Best Buy International succeeding the previous CIO Bob Willett whom he will continue to report.  The company’s philosophical approach is decentralized and they focus to be early adopters of technology such as with its exclusive brands like Geek Squad, Insignia or the Best Buy’s Blue Label, “New Process for Developing Products Inspired by Listening to Costumers."