Strategic Management of Bang & Olufsen

This report provides an overview of the strategic management of Bang & Olufsen, a leading electronic company. It includes internal and external analysis, SWOT analysis, PESTLE analysis, Porter's five forces, and strategic recommendations.

Strategic management

TABLE OF CONTENT
...................................................................................................................................1
INTRODUCTION...........................................................................................................................3
Background information and current position of Bang & Olufsen .............................................3
Internal analysis ..........................................................................................................................3
External analysis..........................................................................................................................5
Personal reflection ......................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES .............................................................................................................................11

INTRODUCTION
Strategic management is a procedure of managing the resources of an organization to attain the
goal and objective. It helps the organisation to find out the competition, internal and external
factors which affects the organisation. This report gives the brief information about the company
called Bang & Olufsen. It is an electronic company which deals in manufacturing speakers,
headphones, television and telephones. This report describes the swot, pestle, porters five forces
internal and external factor, and various strategies used in the company and the recommendation
as well.
Background information and current position of Bang & Olufsen
Bang and Olufsen is established in 1925 by Peter boas bang and Svend Olufsen. It is one of the
famous company which deals in the electronic products as speakers, headphones, telephones and
television sets. It gives more focus to the design of the products. The quality of their headphones
and speakers give real life exposure to the customer. It has acquired many small electronic
company to survive in the market and to eliminate its competition. For market positioning B&O
have to be the worlds most craving company in the audio and television brand. Company wants
to serve its customer with innovative and progressive product with standard quality of sound and
designs. The major competitor of B&O is Bose and Beats electronics. For reducing competition
B&O has developed many strategies in which they are focusing on Brand, products and
innovation, channel of distribution, and competencies. The aim of the company is to give luxury
feeling to its customers through their core capacity of unique design, and sound. For promoting
the brand B&O is doing ventures, partnership and collaborations with few of the famous and
largest companies like- HP and HARMAN. By promoting the brand it can set an image in
customers mind. The major opinion behind the development of new product is they cater the
requirement, demand and choices of the customer. They several updates and improvise the
colour and material of the product to attract the customer. By adopting all these strategies B&G
has fall under the top five electric companies in the world (Pröllochs, 2020).
Internal analysis
SWOT: SWOT analysis is the tool which is used to identify the internal factors of the
organization.
Strength: the strength of the company is the resources which they are having which help the
company in getting the competitive advantage. They are having good experience in this sector

and also do the continue development. The company able to increase the sales because they
always think about the customer needs and wants. The products which are manufactured by the
company is of good quality having good picture and sound performance. They have good
customer support team which give timely service to their customers.
Weakness: company has provided plasma TV to the market but that fails as the colour quality
and picture quality were not what customer is expecting while the competitor of the company
have good quality of plasma TV. This results in declining of sales and profits for the company
(Venkatachalam, 2018). Another weakness of the company is their price. Many customers
believe that company offer good quality of products but their prices are high then their
competition which distract many customers from buying the products.
Opportunities: the biggest opportunity is that the company having efficient research and
development team which study the market change carefully so that company can take every
opportunity. Company understand the need of the customer and provide products according to
their needs. Introduction of the advance technology is also the opportunity.
Threat: the competition which company have to face from the rivalry company. The competitor
of the company are manufacturing the products which are of the same quality but comparable at
the low price which attract their customer to shift towards the rival company.
VRIO: VRIO is the technique which is used to analyse the internal resources of the company.
Valuable: this tells that the resource which the company is having adds to the opportunities and
fight against the competition and bang & olufsen have such valuable resources which help the
company in increasing the customer base.
Rare: resources which cannot acquire by every company easily. This give the competitive
advantage. Company have such research team who produce such products which are not easily
copied by everyone.
Costly to imitate: resources which are very expensive so the companies which do not have such
resources for them it becomes difficult to buy or imitate (Islam and Mamun, 2017). Company
focus more on those products which cannot be easily imitated so that they can constantly get
profit over it before any rival company enter the market.
Organization: those resources which are not organized properly will not give any advantage to
the company. Organization of resources are very necessary.

Value chain
It is a procedure of knowing the primary activities such as- inbound, outbound, operations &
marketing and sales. It uses in the organisation to find out the activities which is going on in the
firm and how it can contribute in the end result. Value chain is used in B&O to know the core
competencies, edge and advantages of the company (Islami, 2020).
Inbound logistic
It refers the raw material, elements and components which has been purchased by B&O from its
suppliers. As B&O focuses on the quality so the suppliers are essentially from Europe. Company
believes in establishing long term relation with the suppliers.
Innovation
B&O has a strong belief in providing innovative and new features in their product to draw the
attention of customers towards them.
Outbound logistic
It states the changes has done by B&O over the past years. Earlier they were producing the
products in Denmark and Struer and then distribute to all over the world by the warehouse which
was in Europe but now they closed it and create a new warehouse in Denmark and serve the
goods to the world this has given them h big success (Vieira, 2020).
Marketing and sales
Marketing is a very important part of any organisation thus B&O has an innovative and unique
products but without marketing and branding it becomes difficult to sell the products. Marketing
is needed to know the people about the different innovative feature of the product which
company is offering.
External analysis
PESTLE: pestle analysis is the framework which is used to analyse the external factors which
influence the organization. It has 6 factors which are:
Political factors: these factors are influenced by the government. The federal government is
trying to bring the bang olufsen company according to the global standards. Company has also
faced the change in the technology (Esteve-Pérez, Pieri and Rodriguez, 2018). Company faced
the change in tax and fiscal policy by the government.
Economic factors: the economic concern of the company is to balance the demand and supply.
Under this industry there is excess supply of goods in the market and as a result bang olufsen has

to low their prices. Economic crisis is the another challenge for the company which can also
reduce the manufacturing. Company has also experienced the recession.
Social factors: company having the social pressure to continuously bring the advanced
technology. Cultural trends, population, customer behaviour are the factors which influenced the
company. Income distribution of the consumer also affects the company. They usually target
new generations or population with high income.
Technological factors: this factors affects the company a lot as the company deals with
electronics and in this segment technology change happened rapidly. Customer demand for
innovation and rapid innovation is costly for the company because company have to do research
and development for launching innovative products in the market.
Environmental factors: environment factors are related to the weather, climate change,
environmental offsets etc. these factors also influence the business operations adversely.
Company also doing corporate social responsibility to build the brand image in the eyes of
public.
Legal factors: bang olufsen have issues related to the lawful agreements and IP legal rights. It
includes employment laws, health and safety laws, patent laws, consumer protection laws etc.
company know their legal boundaries and work ethically. As the company trading internationally
so have to take care the rules of the government of multiple countries.
Porter's five forces: it is the framework which is used to identify the competitive environment
of the company.
Bargaining power of supplier: it is generally low. They have the low negotiating power
because the supply of bang olufsen products are more and because of that company manufacture
huge units and due to this the cost of per units has decreased.
Threat of substitutes: the threat of substitutes is high for the company because many
alternatives are available in the market like Toshiba, IBM, Hitachi etc. and their substitutes are
also offering nearby same products so it is likely that customer can shift to other company.
Competitive rivalry: bang & olufsen level of rivalry is high as its substitutes are easily
available. Their competition have high development capacities and have expertise or expert staff
which gave them the high negotiation power in the markets (ÖNEREN, ARAR and
YURDAKUL, 2017). They have high number of rivals and the quality of products which they

are providing is also almost the same, so now price of products will decide the sales of the
company.
Bargaining power of buyer: as the bang & olufsen other big companies has dominated the
market like Samsung and IBM etc. which gives the good bargaining power to the buyer or the
consumer. High bargaining power of the buyer will result in price cuts by the company and due
to that company profits decrease.
Threats of new entry: the risk of new entrants in this industry is comparable low because the
equipments which is required in these kinds of industry are expensive and the fast change in the
technology also restricts the new entrants. It also continuous require modern technology and
which cannot adopted by everyone.
Industry life cycle: it tells about the stages through which the business operates. It consists of
five stages.
Start-up stage: it is the stage where the demand of the customer is limited as they are not
completely aware about the products of the company (Ariyani and Daryanto, 2018). At this stage
company get limited profits as their distribution channels were also not developed properly.
Growth stage: as the name suggests it is the stage which facilitate growth to the company. At
this stage profits started rising. At this stage company has understand their area of improvement
and the improvement by the company increased their sales.
Shakeout stage: it means industry consolidation. Here businesses eliminate who are not able to
fight with the competition and facing negative cash flows. Here companies do merger with
competition or acquire by other big companies who want to increase market share.
Maturity stage: this is the stage where industry became well-established and the industry
reaches towards the success. Here bang & olufsen adopted such strategy to fight against the
competition and restricts the new entry because the company want to become the dominant
player.
Decline stage: this is the last stage of the industry life cycle. At this stage company mostly focus
on those products which give them the highest profitability and are high on demand.

Porter's generic strategy
It refers the competency and competitive advantage of the company in the market.
Cost leadership style
With the help of this strategy B&O increased profit by not taking premium prices
(Jueseah,2020). By cost leadership it has increases the market share.
Differentiation strategy
Through this B&O focuses on quality of products and services which make them different from
the competitors, for that company did deep research to know the perception of customer towards
their product.
Focus strategy
B&O focuses on the demands and needs of the customer, as they serve unique products to the
customer to built a strong customer base (Fernandez, 2019). By this strategy company
understands the ups and downs of the market.
Cost focus
B&O has started focusing on the cost because they have targeted to upper class people but now
they are providing products to all the customer with affordable price.
Ans-off of matrix of B&O
Market development
To develop the market B&O has targeted new geographical are and untouched customers to sell
their products and has used different strategies for marketing and sales (Linkov, 2020).
Diversification
B&O rarely uses this as it is a risky method because in this company sells totally different
products to the different customers.
Market penetration
In this segment B&O has introduced new marketing strategies to attract new customers buy
B&O's product.
Product development
In this B&O has launched new features and expand the old version of its products and has
improvised the consumer services (Panoutsou, 2020).

Personal reflection
While preparing this report I have learnt that B&O is one of the best company in manufacturing
electronic product. The competitive advantage of B&O is the quality of their products which is
only possible by their immense research and development, the line of product they are offering in
sound, television and in electronic products makes them different from others. The quality of raw
material they use in manufacturing like- they use best sound equipments in headphones and
speakers, same as in television they provide a great look, quality of sound, and a beautiful design
which can win the heart of customers. Which is a competitive advantage of B&O. The strategy
they used to sell their product is that they believe in technology, to sell their product online they
have made a venture with Amazon to sell their products. B&O targets the wealthy customers
who never think to pay premium prices. From this report I got to know that they give more
importance to the design and look of the product which attracts the customer easily. During the
preparation of this report I got to know that B&O is following customer differentiation strategy
by which it serves the best quality product to each and every customer who shows interest in
buying any of the product of B&O to set up a long term relation with customers. B&O believes
that their products are unique and special from others same as they think for the customer too
that their customers are very special for them and by having view and opinions of the customer
they consider changes as well and company should take this strategy further. The major
capabilities and strength of the company is that its one of the oldest and iconic brand in the
history of electronic product so it has gain the trust of customers. The another thing which is the
capability of B&O is raw- material they used in their products to give real experience to the
customer. B&O cares the perception of customers and to make their product innovative they use
modern and advanced technology but they sell user friendly product so that its customer can
easily understand the extraordinary features, can easily use them. The major capability of B&O
is that they know the perception of customer that they can pay high and premium prices for
highly innovative and quality product but they don't want to waste their money in buying cheap
and worst products. By utilizing their capabilities B&O is fulfilling their strategic purposes. As
my personal experience is concerned I would like to recommend that B&O is doing well in
developing new and innovative products their approach towards the customers is good and
enough but they should focus on the price sensitivity as the prices of the products are very high
which becomes difficult for the middle class people to afford. They should also make such

products which suits all type of customer and customer never go with empty hands if they visit
any store of B&O instead of focusing on upper class people they should consider all the
customers.
CONCLUSION
From analysing this report it can be concluded that it elaborates the strategic management
techniques of B&O. This report defines the strategic directions, external and internal factors,
current market trend, analysis of pestle and porter, value chain analysis, cost leadership,
differentiation, market penetration etc. for B&O. Along with explains how company is using
different strategies to remain competitive in the market, and focusing on the strategy of cost and
consumer differentiation to eliminate the competition and win the faith of the customers. This
report recommends the appropriate strategies to B&O to fulfil its upcoming goals and targets.
This report states the VIRN and value chain analysis and internal analysis for the company.

REFERENCES
Books and Journals
Islami and et.al, 2020. Linking Porter’s generic strategies to firm performance. Future Business
Journal.6(1). p.3.
Fernandez and et.al, 2019. Global value chain analysis: a primer. In Handbook on Global Value
Chains. Edward Elgar Publishing.
Jueseah and et.al, 2020. Seasonal flows of economic benefits in small-scale fisheries in Liberia:
A value chain analysis. Marine Policy.119.p.104042.
Linkov and et.al, 2020. The case for value chain resilience. Management Research Review.
Panoutsou and et.al, 2020. A value chain approach to improve biomass policy formation. GCB
Bioenergy.
Pröllochs and et.al, 2020. Business analytics for strategic management: Identifying and assessing
corporate challenges via topic modeling. Information & Management.57(1).p.103070.
Vieira and et.al, 2020. What generic strategies do private fitness centres implement and what are
their impacts on financial performance?. Sport, Business and Management: An
International Journal.
Islam, F.R. and Mamun, K.A., 2017. Possibilities and challenges of implementing renewable
energy in the light of PESTLE & SWOT analyses for island countries. In Smart Energy
Grid Design for Island Countries (pp. 1-19). Springer, Cham.
Venkatachalam, A.M., 2018. Identifying dynamics of growth in a competitive and transitioning
lighting industry using PESTLE and SWOT analysis.
Ariyani, W. and Daryanto, A., 2018. Operationalization of Internal Analysis Using the VRIO
Framework: Development of Scale for Resource and Capabilities Organization (Case
Study: XYZ Company Animal Feed Business Unit). Asian Business Research
Journal. 3. pp.9-14.
ÖNEREN, M., ARAR, T. and YURDAKUL, G., 2017. Developing competitive strategies based
on SWOT analysis in Porter’s five forces model by DANP. Journal Of Business
Research-Turk. 9(2). pp.511-528.
Esteve-Pérez, S., Pieri, F. and Rodriguez, D., 2018. Age and productivity as determinants of firm
survival over the industry life cycle. Industry and Innovation. 25(2). pp.167-198.

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