Strategic Management of Bang & Olufsen: A Case Study

This case study explores the strategic management of Bang & Olufsen, a luxury consumer electronics company. It examines the current position of the company, evaluates the selected strategy, and analyzes internal and external factors. The study also includes an individual reflective essay on personal experience and insights gained from the case study.

INDIVIDUAL
REPORT

Table of Contents
INTRDUCTION..............................................................................................................................1
PART 1............................................................................................................................................1
INDIVIDUAL REPORT.................................................................................................................1
Current position of company.......................................................................................................1
Evaluation of selected strategy....................................................................................................2
Analysis of internal and external factors.....................................................................................2
PESTLE Analysis:......................................................................................................................2
SWOT Analysis:.........................................................................................................................4
PART 3............................................................................................................................................1
INDIVIDUAL REFLECTIVE ESSAY...........................................................................................1
Personal reflection about my experience....................................................................................1
Evaluation of strategies adopted by Bang & Olufsen.................................................................2
CONCLUSION................................................................................................................................4
REFERENCES ...............................................................................................................................5

INTRDUCTION
Strategic management is the set of organisational resources which is useful in achieving
suitable goals and objectives of an organisation. Its overall management include setting
objectives and determining competitive environment which include internal and external
strategies and evaluation of effective strategies which make sure that management rolls out the
policies outside the company. Strategic management is a concept which is useful in predicating
the understanding of organisation as it include vision, mission and effective understanding of
existing purpose. For this, it is required the commitment of strategic plans which involves the
abilities and competencies of organisation and also depicts the allocation of resources that are
required to be achieved (Andrews Bryans and Kristensen 2014). For this, proper management is
required in order to make logical decisions and also develop new goals in quick manner that
evolves technology, business and market conditions.
For this report, Bang & Olufsen is considered which is a luxury consumer electronics
company which designs and manufactures the audio products in order to produce television sets
and telephones. Moreover, it founded in 1925 by two partners named Peter Bang and Svend
Olufsen, headquarter in Denmark. Additionally, this report is going to cover the various sections
of strategic management as it is divided into two major parts first is individual report and another
one is reflective essay. Here, individual report is going to cover the portfolio of company
regarding the market segment, position and competitors and also define the opted strategies
which impacts the level of business. Moreover, environmental analysis is conducted to analyse
the market conditions and needs. Lastly, reflective is done to determine the impact of opted
strategy and suitable actions that are taken for the development of company.
PART 1
INDIVIDUAL REPORT
Current position of company
Bang & Olufsen was incorporated in 1925 in Denmark as it is termed as one of the most
significant Danish design icon and also become the important part of Danish industrial legacy.
For this, company dominates the luxury segment in which customer expect exclusive designs,
new technology and qualitative solutions. Moreover, Bang & Olufsen has for many years as it is
considered as the leading television manufacturer and consider the growth on the primarily basis
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and because of this, introduction in new technology seems big on the picture. In the end of 2008,
every household in western Europe had on average 1.8 TVs from which 31% are belongs from
the category of flat screen TV and also expected to continue it because of the popularity of
bigger screen TV. Moreover, it is quite difficult for Bang & Olufsen to differentiate its products
on the basis of design and also increase the level of competition in various segments of TV
market. For this, company opt product development strategy in order to acquire new market area
with the help of its existing products and services (Bryans Fitzgerald and Kristensen,2014).
Evaluation of selected strategy
Business strategy is useful in putting the impact on the working conditions of company as
it influences the company on the grounds of business level and corporate level. For this, beneath
discussion is based on the evaluation of discussion and impact of product development on
different levels of strategies: Business level: This level of strategy is useful in describing the impact on the working
conditions of business as it depicts that it influences the company from the internal side
and intrinsic working capabilities and competencies of business. By determining the
current conditions of business it is analysed that the demand of big screen TVs increases
which impacts the product development strategy of company and decreases the
profitability of company at local level.
 Corporate level: This strategy depicts the influence of policy of company at international
or global level at it influences the company from the external side and develop risk factor
for company that impacts the abilities of company. For this, by examining the market
conditions, company need to develop and promote its product only if it generate suitable
amount of profitability in international market (Möckel and Borg, 2015).
Analysis of internal and external factors
PESTLE Analysis:
This framework is useful in examining the external components and determine the
considered risk factor which is associate with the enhancement of business and development of
strategy to acquire more and more customers for the expansion of business. In relation with this,
few macro factors are discussed as under:
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Political: This factor is played the most considerable role for the enhancement and
advancement of the market of Bang & Olufsen for the personnel development of company and
its technology in order to transfer and develop many institutes to transfer innovation. Moreover,
it prepares the growth and enhancement of modern technology as it is developed by federal
government to signify the duties and authorities. As it include many factors with it to develop the
infrastructure of nation and include many duties such as environment regulations, employment
laws, taxation policy, political stability and so on. It is also noted that charities need to be
considered for the growth and development of those services that are developed by government
to offer goods and services.
Economical: This factor is going to describe the market conditions and its demand and
supply only one the economic conditions of market. This excessive supply in this field is
complied with the cost which is lower than its cost and as a result it is concerned with the capital
and manufacturers of company (Bundgaard and Huulgaard, 2019). Moreover, the economic
crisis is the major concern and also reduces the cost of manufacturing as it carries out the
improvement in the effectiveness level that leads to develop manufacturing and also become the
reason for the downturn of excess supply and reduces profitability.
Social: For this factor, government put emphasis on the funding that tends to enhance
and develop the growth of industry with the purpose of training that enhances the specialist and
their resources at the industry level. For this, social efforts are useful in order to enhance and
improve the quality of market that sees the truth side of industry and develop departments of
labour worldwide. For this, it influences the certain conditions of business that varies from the
country to country. As it signifies that consider many factors of environment as it include safety,
health, other demographic and population factors that impacts the growth and cultural aspects of
company.
Technological: This factor describes that there are some technical problems in Bang &
Olufsen and in its manufacturing as it does not carry its innovation with it and still depends on
the global technical partners. For this, participation of government in this area put emphasis on
the changing conditions of market and also decreases their overall dependence. For this,
company make alliances with international businessman and make them their partners to opt
their strategies and expand their products in new market area. For this, technical restrictions put
negative impact on the functioning of company in setting up its business at international level as
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it is influenced by the federal government in order to hesitate the transferring its modern
technology.
Legal factors- Legal factors are discrimination laws, consumer protection laws and other
rules and regulations updated time to time by the government. In the context of Bang & Olufsen,
it is necessary that it pays attention on these factors. It is so because the product development
strategy it is adopting can get affected by them. If the government's rules and regulations are in
favour of the new product being developed by the firm then it will result in favourable results. If
the government's policies are not in favour of the organisation then it will affect its product
launch. Bang & Olufsen responses to these factors by ensuring that its goods are according to the
rules and regulations of the government (Casciola De Götzen. and Morelli, 2017).
Environmental factors- These factors are weather, climate, environmental policies etc.
Bang & Olufsen's product development strategy is impacted by the influence put by them as
either positive or negative effect can be generated by them. If the product of company is eco-
friendly and has no harmful effects on the environment then it will lead to its success. However,
if the product impacts the ecology in any manner then it will create negative perception among
customers for it. This will thereby impact the revenue generated from it and ultimately the
overall profits of the enterprise would be affected. Bang & Olufsen responses to these factors by
ensuring that environment is not affected due to its goods.
SWOT Analysis:
SWOT analysis is a management tool which is used for the purpose of analysis of strengths and
weaknesses which are internal in nature and opportunities and threats which are external in
nature. The detailed SWOT analysis in the context of Bang & Olufsen is as follows-
Strengths-
 Regular innovations brought by Bang & Olufsen in its products i.e. consumer electronics
help in attracting the customers. This helps the company in staying ahead of its
competitors. It also helps in enhancing creativity within the organisation as employees
are motivated and committed towards product development.
 Bang & Olufsen have a range of varied products to offer to the customers which helps it
in charging of different prices for its standard and premium goods. By charging higher
prices for premium products it can substantially raise its profitability level.
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Weaknesses-
 The brand image of Bang & Olufsen is lagging behind compared to its competitors. This
creates a problem for it as customers nowadays prefer branded products of big
companies. Also, goodwill is necessary for staying in the market.
 In terms of online presence, Bang & Olufsen is lagging behind as it does not has a
substantial base on these platforms. Thus in a dynamic business environment where
online shopping is trending it can create issues for it.
Opportunities-
 Development of new goods by using product development strategy is a huge opportunity
for Bang & Olufsen. It gives it a chance to innovate and create something new in the
market. This will help it in bringing more customers towards it.
 The company can expand in other countries where it has a good opportunity of increasing
its revenue and overall profits.
Threats-
 Increasing competition in the electronics industry is a threat for Bang & Olufsen as it will
result in lowering of profit margin for the company substantially impacting its financial
position. It forces the organisation to lower its prices due to price wars between
competitors which therefore lowers the profits (Cattaneo and Hacklin, 2016).
 Government's policy to increase the tax rates will lead to increase in company's tax
liability and decrease in its profitability level.
Company's response to internal factors- Bang & Olufsen is focusing on its weaknesses
of lack of brand image and online presence. For brand image, it aims to provide quality goods to
its customers thereby enhancing its goodwill. Also, it is focusing on increasing online presence
for catering to demands of a dynamic market. Also it aims to increase its strengths and capitalise
on the opportunities available. It needs to evade the potential threats to stay relevant in the
market.
Focus on company's capabilities- Bang & Olufsen is focusing on its capability of
bringing regular innovations in the market by being creative and bringing new goods according
to the needs and demands of its customers.
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PART 3
INDIVIDUAL REFLECTIVE ESSAY
Personal reflection about my experience
This case study is very informative and knowledgable for me, the case is based on Bang
& Olufsen which is a company developing products of multimedia and dealing in electronic
industry. The Bang & Olufsen is suffering from the impacts of market change and evolving
technological changes taking place in market. For me this assignment is useful and informative
as it enables me to apply my theoretical knowledge in practical scenario. It basically gave me a
thorough idea about how a organisation works and operates on daily basis (Consensus, 2015).
The problems which are faced by the company and the manner in which the organisation deals
with it I have recognized that in this case study my company Bang & Olufsen is suffering from
the impact of macro environment. The technological changes taking place, the social factors
changing as the preferences and buying behaviours of customers and population in which Bang
& Olufsen is dealing is changing. This analysis of macro factors is performed by making use of
PESTLE framework in which rendered me information about the company's position in current
working conditions. According to the macro analysis, internal evaluation of organisations
strengths and weaknesses is also done by applying SWOT analysis tool. By which I explored all
the strengths and weaknesses which are associated with the company and according to market
recognized the new opportunities which are available to it for growth and success. This has
enhanced by experience as I got a chance to conduct market research and in order to gain
knowledge about the efficiencies of organisation. In the next stage I have analysed the strategies,
techniques and models which are applied by Bang & Olufsen in their organisation to work and
practice their business addressing the varied customer base. The company is operating and
working by adopting product development strategy in which it is developing new goods and
services for their respective market according to their efficiency and needs of consumers. The
product development strategy was assisting company to be most effective but the company is
failing and it was proving to be ineffective as the market condition is changing new technologies
are coming in which are making the technologies of Bang & Olufsen outdated and inappropriate
according to the scenario. Therefore, the case study highlights that how company is making
changes and absorbing the changes taking place in the market. According to it Bang & Olufsen

made changes in their operative styles. It started making goods with new technologies and with
their unique designs. The company implemented it by using focus differentiation strategy which
helped it in adopting focused approach and concentrating on making the goods separate form
others already present. Enabling company to stand out from the crowd and keeping their
reputation up according to their designed and quality. This has enhanced by experience and
knowledge as I get a thorough introduction about how an entity works and deals with their
difficulties.
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Evaluation of strategies adopted by Bang & Olufsen
Bang & Olufsen is a organisation which was founded in 1925 in Denmark and one of the
most important part of Danish industry, carrying great legacy. It is a well known a global
organisation which develops, television, music systems, speakers and multimedia products. The
main focus of company is on high end luxury segment of multimedia, where company produces
best quality and designed products with making effective use of new technologies and
digitalisation. It is one of the best and top producer of multimedia products in the whole industry
and were part of 20 best organisation multimedia manufacturer list. The company is most famous
for its exclusive products which it develops by keeping the technological factor above and with
using all new technologies (Farhana 2014)(Hansen, 2019). The market situation is changing
regularly, current trends are evolving and all this is the impact of regular developing
technologies and their increasing advancement. The USP of Bang & Olufsen is its designs, the
technologies they use and the quality of their products. The competency and expertise of Bang &
Olufsen is in their designs, TV screens, loudspeakers and their audio and video systems. The
company's dependency is on their suppliers who supply them new technologies and digital
products parts which are made of exclusive technology. In recent years the product life-cycle of
company has fallen down and reduced due to increasing innovative goods coming in market such
as HD protocols for television. The company do not develop any new technology but make
effective use of introduced technologies in their goods. Due to aggressively increasing
competition in marketplace now these developed technologies are being patented and
copyrighted by other organisations which is creating problems for company. As Bang & Olufsen
is dependent on their supplier for new technologies but this source is also cut-off as the
technologies are patented and cannot be used. This implies that its becoming difficult for
company to survive in marketplace, as it is becoming very challenging for company to compete
with range of new products being launched in external environment rapidly. This is causing
entity to lack in fulfilling the needs of people and their potential customers. The market of
electronic products has changes form physical and broadcast media to digitally stored and
network based systems. This is the main problem which company faced in recent past year and
which caused them their growth and productivity (Huulgaard, 2015). The products in which
Bang & Olufsen mostly deals in are audio and video and the strategy which it adopts is product
development. In product development strategy it states that the company will be developing new
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goods and services of their existing market. In other words, with the help of market research
organisation search for its opportunities which can be explored by it for creating a new
innovative good which doesn't exist in marketplace for acquiring the attention of additional
customers and addressing to the needs of existing potential clients. The product development
strategy is adopted by Bang & Olufsen from the very beginning the entity regularly develops
freshly designed goods for the people and in order to be most effective in marketplace. Adopting
this strategy is the way by which Bang & Olufsen attains competitive advantage and stays one
step ahead of their competitors. After the downfall in product life-cycle of Bang & Olufsen the
company became more aware. Earlier, Bang & Olufsen was wholly dependent upon their
suppliers but with changing and regularly updating technology the company has made better
measures to compete in the external environment. Bang & Olufsen still follows the same strategy
of product development for attaining competitive advantage but have evaluated the market and
accordingly changed its application. The product development plan of company is more
concentrated, now company has stopped manufacturing DVD'S and other outdated product but
start dealing in more techno-friendly and updated technologies. The organisation is now
developing products with use of new technologies of HD protocols. This strategy is made into
action by using the porter's generic strategy, which has three elements, cost leadership,
differentiation and focus. Bang & Olufsen is using product development for achieving
competitive advantage in marketplace and additionally using focused approach. This focus
strategy is bifurcated in two broad categories which is cost focus and differentiation focus. Bang
& Olufsen is practising and adopting focus differentiation strategy by which they are keeping
their focus on their products and their respective marketplace for which the company is
developing new effective goods with the help of new technologies. Both these strategies of focus
differentiation and product development will work hand in hand in order to achieve desired
outcomes and effectiveness. Bang & Olufsen is suffering in from the changing technological
environment and advancement taking place which is affecting its business, product line and
growth (Mirabella, Castellani, and Sala, 2014). In order to be more competitive and sustain in
marketplace company is using and evaluating these strategies. The product development strategy
is usually adopted by company and with increasing technological advancement the company is
developing its products which are trendy and fulfil the needs of their customers. The focus
strategy enables Bang & Olufsen to concentrate on their market and potential population who are
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their customers and making them stick with the entity and its goods and services which its offers
to the public.
CONCLUSION
Thus, it determined that management of strategies is important to achieve success and
growth in an appropriate manner. For this, opted strategy is described which impacts the business
and corporate level strategies. In order to determine the impact of opted strategies, PESTLE and
SWOT analysis is done which is useful in analysing the capabilities and competencies of
business environment. This analysis is done in order to develop business conditions and examine
those factors which affect the development of company. Lastly, reflection is done which describe
the impact of current strategy and new strategy in order to gain the competitive advantage of
company.
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REFERENCES
Books and Journals
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In 2014 9th International Conference on System of Systems Engineering (SOSE) (pp.
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case study of Bang & Olufsen. Business Strategy and the Environment. 28(5). pp.699-
709.
Casciola, L., De Götzen, A. and Morelli, N., 2017. Leveraging design activism to guide public
projects towards citizen inclusion: a case study of Copenhagen Street Lab. In REDO
Biannual Cumulus Conference 2017.
Cattaneo, G. and Hacklin, F., 2016, June. Cycles of Organizational Renewal: The Interplay of
Strategy and Innovation at Bang & Olufsen. In International Conference on Advanced
Information Systems Engineering (pp. 72-77). Springer, Cham.
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Farhana, M., 2014. Implication of brand identity facets on marketing communication of lifestyle
magazine: case study of a Swedish brand. Journal of Applied Economics and Business
Research. 4(1). pp.23-41.
Hansen, M .S., 2019. Innovation as a strategy. Case: Bang & Olufsen.
Huulgaard, R. D., 2015. Ecodesign: A study of the ecodesign directive and ecodesign practices
at Grundfos, Bang & Olufsen and Danfoss Power Electronics (Doctoral dissertation,
Aalborg Universitetsforlag).
Huulgaard, R. D., A Study of the Ecodesign Directive and Ecodesign Practices at Grundfos,
Bang & Olufsen and Danfoss Power Electronics.
Mirabella, N., Castellani, V. and Sala, S., 2014. LCA for assessing environmental benefit of eco-
design strategies and forest wood short supply chain: a furniture case study. The
International Journal of Life Cycle Assessment. 19(8). pp.1536-1550.
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Olik, M., Jackson, P .J. and Coleman, P., Jan Abildgaard Pedersenc) Bang & Olufsen A/S, Peter
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