Productivity Measurement Case Study Solution
Products of Best Buy:
The products of Best Buy ranges from home appliances to Mobile phones, health and beauty products, toys to video games etc. These products are under the brand name like Future Shop, Five Star, Napster, Geek Squad etc.
Popular Services:
Every online retailer offers a number of services. The best product services that Best Buy offers is the total technology support that includes Spyware and virus deletion, Audio setups, Navigation and many other services like that.
At Best Buy a unique scheme is followed in which freedom is given to workers. Workers can do anything they want until they give output as required. This scheme was introduced in 2003. In this scheme 100% autonomy was given to workers in trade off 100% accountability. Simply workers performance would be judged on magnitude of work they do irrespective of how they do (Valcour, 2013). This scheme is called Result Only Work Environment (ROWE). Workers are allowed to work on their flexible hours from home. There is no policy for attendance. Workers can off from work whenever they want. In result of this workers are asked to fulfill stakeholders expectations like increase sales by 10%. The main benefits they were getting from ROWE were that managers started focusing on work rather than people. It also drop the idea of feeling guilty for coming late to work. There is study conducted by a sociology professor Phyllis Moen related to outcome of ROWE on Best Buy. The study explains features of ROWE:
- It offer employees more sleeping hours so they do not feel stressed at work.
- It encourages employees to proper take care of themselves when they are sick and allow them to stay at home during illness.
- It encourages employees to being healthy and exercise more.
- It improved morale of employees.
- It reduced turnover rate.
That was all regarding to employees but according to company’s management, it also results in positive for company. According to them productivity was increased by 41% and turnover rate was declined by significant percentage as shown in exhibit 2.
Competitive Analysis
As shown in exhibit 3, Best Buy has significant productivity from workers. However there are some competitors are more productive and some are less productive than Best Buy. Competitors that are more productive includes Cost Co, Sam’s Club, Staples, Kmart and Amazon. Competitors that are less productive than Best Buy includes Target and Walmart.
Annual Income Statement:
With respect to the profit and revenues of last three years, the net worth of the Best Buy is approximately $30 billion. (Dennison, 2018) The five-year sales trend shows gradual increase in the sales and revenues of the Best Buy which was 42.15 Billion in 2018 and about to reach 42.88 in 2019. The net income of Best Buy is to reach 1.46 Billion in 2019 which is the highest net income yet as shown in Appendix 1.
Productivity Measures:
There are a number of things under consideration to efficiently measure the productivity level. This may include the percentage of the sale, no of employees, Product Delivery time, as well as popular services. These measures are described below:
Sales:
The sale of goods and products are less throughout the year like their competitors. The most sale of the Best Buy is usually made in seasons of holidays. In 2018, approximately 70% of the Best Buy sale was done in holidays, 56% of which constitutes the total merchandise in stock the company purchased.
No. of employees:
Initially, Best buy started its business on a small scale but with time and quality services, it started earning in billions. This all became possible because of increased number of employees working efficiently worldwide in the stores of Best Buy to give their best services to the customers.
Product Delivery Time:
The time of any product delivery depends on the type of product order. Best Buy provides the best service of product delivery as per customer requirements. The product can be delivered to the customer at the same day of the order as well but the condition is to place order before 3 p.m. for same day delivery and be sure that the product is available in stock otherwise it might take up to one week to deliver.
Payment:
The criterion of payment is that after the order is placed, the payment is deducted from the customers PayPal account. The payment is refundable in case if the product is not delivered to a client then they are notified of returns which mean that the payment returns to customer. This allows the customer to get its payment back within 24 hours without any loss.
Conclusion:
It can be concluded that there are shortcomings to measure both wages and labor productivity. Firms use KPI to measure productivity. Best Buy uses a scheme namely ROWE to improve their productivity. Financials of Best Buy suggest that overall its productivity has improved over since last 5 years.
Appendices
Exhibit 1 
Exhibit 2
Exhibit 3
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