Finding the Best Buy - Coursework Example

Best Buy:Corporate Governance The two corporate governance challenges that are likely to arise from the unprecedented growth of Best Buy through its acquisition and opening of new stores strategies include the following (Hitt, Ireland & Hoskisson, 2012). Firstly, the company will face the challenge of concentrated ownership resulting from the dilution of ownership as a result of share allocation to the new shareholders if the acquisitions are done through share allotment as opposed to cash payment.

Secondly, the company is likely to face challenge of power balance among the shareholders and the board directors, which is likely to trigger the shareholders and directors’ conflict and its associated costs. Moreover, because of diluted ownership resulting from lack of concentrated ownership, the monitoring function exercised by directors on behalf of the shareholders can also become impaired.Best Buy can overcome the aforementioned challenges through better acquisition and expansion strategies.

For instance, lieu of making acquisitions through share allocation the company use the cash method to avoid ownership dilution to safeguard the interest of ownership concentration (Hitt, Ireland & Hoskisson, 2012). Moreover, I believe that by safeguarding the interest of ownership concentration e.g. through opening of new stores as opposed to acquisitions, the company can maintain its influence power on the shareholders and the board of directors hence enabling it avoid the consequences of shareholder and directors’ conflict..ReferencesHitt, M.

, Ireland, R. D., & Hoskisson, R. (2012). Case 4. Finding the Best Buy. In Strategic management cases: competitiveness and globalization. Cengage Learning.