Strategic Management of Bang & Olufsen

This document discusses the strategic management of Bang & Olufsen, a luxury Danish consumer electronics organization. It includes an analysis of internal and external factors using PESTEL analysis and SWOT analysis. The document also covers competitor analysis using Porter's five forces analysis, value chain analysis, and VRIN analysis. It provides strategic solutions for managing competitiveness and a reflective analysis in the form of an essay.

Strategic Management
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Contents
INTRODUCTION...........................................................................................................................2
SET 1...............................................................................................................................................3
Introduction..................................................................................................................................3
External analysis of Bang & Olufsen..........................................................................................4
Internal analysis of Bang & Olufsen...........................................................................................6
Current market and competitor analysis......................................................................................9
Conclusion.................................................................................................................................10
SET 2.............................................................................................................................................10
Covered into PPT.......................................................................................................................10
SET 3.............................................................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................10
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INTRODUCTION
Strategic management is an activity of constant planning, determination, analysis and
assessment of all that is required for an establishment to accomplish its goals and objectives. It
can be a procedure of explaining the organisational plan of action with the assistance of them,
the administrators of the venture and select a set of tactics and strategies for an organisation
which is unable to attain its effective execution (Ansoff and et. al., 2018). This written document
is supported to Bang & Olufsen which is a high end luxury Danish consumer electronics
organisation that frames and produces audio products, television sets and telephones. This
establishment was founded in 1925 by Peter Bang and Svend Olufsen. This venture deal in
electronics business sector and is headquartered in Struer, Denmark. The report will discuss
information about the analysis of internal and external factors of the firm by using PESTEL
analysis and SWOT analysis. Along with this competitor analysis will be conducted through
Porter’s five force analysis. The capability analysis will be explained by using Value chain and
VRIN analysis. Further, will define about strategic solution that support organisation to manage
its competitiveness by using Porters generic strategies. Finally, reflective analysis will define of
the mentioned information in form of essay.
SET 1
Introduction
Introducing the case- Bang & Olufsen has administrated to accept to changing market
conditions majorly by launching new products with the best accessible technology and a unique
design. In 2007, B&O suffered a dramatic downturn cause of the global financial crisis and the
same time experienced a paradigm shift in the market with the key drivers supported on digital
and networked technology. New management, installed in 2008, modified the framework and
introduced a new strategic plan, developing effectiveness and enlarged product development
whilst retaining the concentration on B&O core competence of unique design (Schilling and
Shankar, 2019). This case investigates the sustainability of the new strategy in a technology
driven market with key rivals that develop their own technology, often leading the technology
standards of the marketplace.
Background information- Bang & Olufsen was incorporated in 1925 in Struer, Denmark and it
is included to be one of the most crucial Danish design icons and an essential segment of Danish
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industrial legacy. B&O is a well known global brand with a immense concentration on design
and high tech solutions in television, music systems, speakers and multimedia commodities etc.
To make development in the business, the respective company adopt the strategy of
technical innovation at the business unit level so that it can create positive impact on
organisation’s decisions and activities in term of fulfilling consumer’s needs and demands
(Ginter, Duncan and Swayne, 2018). Whereas at corporate level, the firm adopt new
management and change in products so that they can operate their business in systematic manner
without influencing any kind of financial crisis and offering innovative and new product in
corporate world.
External analysis of Bang & Olufsen
External analysis states examination of the industry environment. It is an activity and
process of determining the impact and influence of external factors which affect the business of
enterprise due to change in political aspects, economic situation of nation, social fluctuation and
changes in technologies and legal as well as environmental components. In context of Bang &
Olufsen, the administration of this firm can use PESTEL analysis to determine the impact of
external factors over establishment.
PESTEL Analysis
Political- This factor of external analysis is consider government intervention, political
stability or instability, foreign trade policy, trade restrictions, taxation policy, labour law,
environmental law and many more. Free trade is an effective aspect that can create favourable
impact over the business of respective firm in term of expanding business in diverse nations. But
political instability situation in some nations affect negatively to the firm.
Economical- It considers economic components which have a significant influence on
how an establishment does business and also how profitable they are. It includes economic
development, interest rates, inflation or deflation, currency rate, employment or unemployment
rate, disposal income of consumers and many more (Moutinho and Vargas-Sanchez, 2018). By
offering job opportunities to the people, the firm make development in the employment of nation
which positively affects organisation’s development. Global financial crisis are affected
unfavourable to the economic condition and profits of the establishment.
Social- It acknowledge as cultural components and the area that consider the shared
belief and attitudes of the individuals. It consists population growth, age allocation, needs,
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demands, taste & preferences, demographic aspects and many more. By making technical
innovation in its products like audio, video and TV products, they try to meet consumer’s needs
in effective manner which positively affect their business. Along with this offer their
commodities and services online that assist in maximising their customer base.
Technological- This factor of PESTEL analysis consider several elements like
technological innovation, research & development, artificial intelligence, advance technology
and many more (Okumus and et. al., 2019). The market for consumer electronics is changing due
to new technology. A transition from physical and broadcast media to digitally stored and
network based technology is taking place By making technical innovation in design,
loudspeakers, TV screens, they make development in their products. The ability to amalgamate
all video and audio systems into one unit has until newly secured B&O a leading position in the
luxury segment.
Environmental- These components have become crucial due to the maximising scarcity
of raw materials, pollution targets, performing business as an ethical and sustainable firm, carbon
footprint, weather, climate, environmental law like pollution act and many more. In B&O, the
management of the firm effectively follow pollution act and other environment reacted act which
so that the business of this firm did not harm and create unfavourable impact over the
atmosphere.
Legal- It refers to laws and legislations that are framed and formulated by national
authorities for the effective running and operating business in effective and efficient manner. I
include health & safety, consumer rights and laws, employment law and many others. Due to
COVID19, there are several kind of changes and modifications are arisen in government laws
and legislations that affect the business of respective firm as it operate globally so it also make
modification as per change in legislation (Makadok, Burton and Barney, 2018). Along with this
the respective firm effectively follow health & safety, employment law and consumer protection
laws to operate its business i successful manner that favourably influence it.
Industry Life Cycle- An industry life cycle depicts the several phases where businesses run,
grow and slump within a business sector. An industry life cycle considers of five stages:
introduction, growth, shakeout, maturity and decline. The description of these all phases of
Industry life cycle is described as below in reference to B&O:
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Introduction- It is the first phase, within it; the strategic objective is to attain market
acceptance and seed future growth. In this step, product innovation is at a maximum
(Carayannis, 2018). The common strategy to attain objectives in this stage is to initiate and
leverage network effects. In B&O, within it, the administration of the firm make introduction and
create awareness about the goods and services of the firm by using diverse promotional tools.
Growth-It is a development stage, within it, the revenue constantly rise and increase or
establishments start generating favourable cash flows and profitability as commodity revenue
and costs surpass break even. In B&O, within this stage, the enterprise can make improvement in
its audio, video, TV and others by using innovative and effective technology to get attention
range of consumers and make growth in its fiscal situation and profit margins.
Shakeout- Under this step, the development rate, cash flows and profitability start to
slow down as the industry approaches maturity. The respective firm can suffer with this phase
when it will not make innovation in its products and will not make change in its commodities as
per consumer needs. Then, the profits will slow down and generate negative cash flows.
Maturity- At this phase, organisations realize maximum profits, profits and cash flows as
customer demand is fairly high and dependable. Commodities become more ordinary and
popular between the general public and the prices are fairly sensible, as evaluated to new
commodities. In O&B, the demand or commodities and services now consists of substitute or
replicate purchases. The market has reached its maximum size and industry growth is likely zero
or negative.
Decline- It is the final phase of this process as there is range of similar products and
services are accessible in the market and cause of which sales of goods are low and decline
(Sullivan, Thomas and Rosano, 2018). The intensity of competition in a declining sector based in
diverse components like speed of decline, height of exist barriers and the level of fixed costs etc.
Internal analysis of Bang & Olufsen
SWOT analysis-
Strengths- Bang & Olufsen has administrated its competences by vast experience,
practice and constant growth. It provides gained capability over the years as it attempts to assure
that consumers always get the effective experience of their commodities. The respective firm
acknowledges that technology is quite challenging to its consumers. Thus, it makes commodities
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that are user friendly and provides the maximum amount of support to the clients as potential
concerning to product utilisation.
Weaknesses- The respective firm has administrated to produce TVs that offer a truly
cinematic experience. For example, that venture has trust its torso that nothing is better than its
BeoVision 10-40’ plasma screen (Teece, 2019). It is regrettable though that consumer spread
term that the plasma technology utilised for the TV sets age’s as times passes. The plasma screen
little deteriorates and the crispy colours become exhausted and faded after some time.
Opportunities- The business has a study and development team of three thousand
individual that is one their feet. In affiliation with the global marketing team, that has exposed
unmet customer requirements, the organisation has formulated a strategy plan to tap in these
growth options. A global need of the audio-video commodities also flavours good to the firm and
management performance at any hour to spread its wings to these marketplaces. New
technology is also a benefit through which the enterprise gets the opportunity to take up this in
order to develop its production.
Threats- The major risk that highly affect the business of establishment is competition
from other entities. These are ventures like Sony and Apple which create an unfavourable tremor
in the market for respective organisation. Price is another factor which also affect on the facial
skin of B&O but nonetheless the grade of its commodities stand out.
Value chain analysis- This analysis is utilised and implemented as a tool for finding out
activities, within and around the company and associating these actions to an assessment of rival
capability. The description of this analysis is as under in reference to B&O:
Inbound logistics- The respective firm required high quality technical component for its
manufacturing. So organisation has formulated strategic relationship with its providers who
produce high quality technology factors (Amason and Ward, 2020). It is a competitive edge in
form of innovative technology. Storage is one of the inbound logistics in value chain, this link
maintain less value to B&O. It is seem to be a link which should be as small and less value as
potential as it connects would not add value to its finish commodity.
Operations- Product design of B&O is the most crucial aspect for the value creation; the
respective firm commodity and brand are mostly based on its product design. These design good
is not just creative also high level and innovative. Design is the external appeal of the commodity
and the technology is the internal intensity.
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Production- After getting but order, manufacturing will start, like a logistic approach
may not add significance to product. It does make the manufacturing more cost effective (Meyer
and Xin, 2018). B&O can move its labour work to the diverse destination where wages is low
and have a competency. Production in the existing location is add low value to B&O value chain
as it’s very hard to make comparison with other easy options.
Outbound logistics- All outbound allocation of respective enterprise commodities is
coming from outside the region. B&O pays high cost for delivery. Outside of Europe cost is
much high cause of its longer distance. The management of this firm require framing the
manufacturing facility that produces cost effective solution. Effective inventory administration
easier so it can have a favourable impact on the value chain.
Marketing/sales- B&O has made a status in entire world by reaching its consumer needs.
In an effect these shop grow and maximise sales for respective firm’s commodities maximise the
value of the B&O brand. That is sure such global sales support the development in sales give a
big growth and offering recognition in the market to B&O as an establishment.
Services- Make comparison with the cheaper rivals the service offered by respective
venture is essential component in Business. After launching new product each sales staff get
training to acknowledge the product and provide direction how it is suitable for the consumers.
The form offered provision of 12 years of facility after commodities have been taken out of
manufacturing. The respective enterprise also offers facility for manufacturing spare parts for
non market item and the instant cost of manufacturing these portions.
VIRN Analysis- It is a capability analysis model which verifies, on what basis company
capabilities might be the sources of sustainable competitive benefit and superior economic
execution (Konovalova and et. al., 2018). The description of this framework is as under in
reference to B&O:
Resources Valuable Rare Inimitate Non-sustainable
Product and
technological
innovation
Yes No No No
Customer service Yes No Yes Yes
Brand Yes Yes Yes Yes
Patents Yes Yes Yes Yes
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Value- In B&O, the product and technological innovation that are made by firm in its
products are valuable as they get attention consumer and able to fulfil their needs as well as
strength of the firm (Holloway, 2018). They are not rare, inimitate and non sustainable as they
can use of by other firm.
Rarity- The customer service of the firm is also valuable but not rare as they can also offer
by other establishment. They are inimitable and non sustainable because they cannot be copy by
other and managed by other ventures.
Inimitate- Rare image of the company cannot be copy by other because each company has
its own image in the market. It is valuable, rare and non-sustainable for other establishment.
Non-sustainable- The patent of this firm is non-sustainable because the firm has
approximately 100 patents. The intellectual property right is valuable, rare and inimitate for the
firm because without taking permission no firm can copy its products.
Current market and competitor analysis
Porter’s Five Forces Analysis
Threats of new entrants- Bang and Olufsen operate its business in electronic industry so
to establish business in this sector a firm required more cost and there are several laws and
legislations that are required to follow. So these are some barriers that generate threat to enter a
new business in this sector. Along with this to gain consumers believe and trust is also hard for a
new business.
Bargaining power of suppliers- Powerful dealers acquire more power to capture crucial
value for themselves by demanding high cost while limiting the quality and the quantity of the
product or services or by making transformation in the prices on the contributor of the business
sector. Due to this COVID pandemic the suppliers make development in their raw material cost.
Bargaining power of buyers- The buyers have an immense bargaining power that can
highly affect the profit margins of the providers that operate in the market by imposing situation
that are not much favourable for dealers in context of price, quality and services (Cescon,
Costantini and Grassetti, 2019). B&O consumer are estimated strong if they enclose negotiating
influence particularly if the sector is responsive to cost, the purchaser can pressure suppliers for
further price reductions.
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Threats of substitutes- This force highly affect the firm as there are range of company
that offer substitute products like audio, video, TV, loudspeaker and other electric items (Wan
and et. al., 2019). The similar commodities are harmful as the firm is under constant threat of
being replaced.
Competitive rivalry- This factor also create high influence over firm as there are number
of competitive firm are in market and operate their business in particular sector. Samsung, Sony,
Apple and many more ventures are create competition by offering electrical items.
Conclusion
This has been determined form the above defined information that is several internal and
external components that affect the business of an organisation. To administrate the strategic
management of establishment, the management of organisation can consider and implement
diverse model, framework and tools etc.
SET 2
Covered into PPT
SET 3
CONCLUSION
It has been concluded from the above mentioned information that Strategic administration is
a process of establishing aims and setting targets, determining competitive atmosphere,
monitoring internal management, measuring plans and assuring that administrative rolls out
strategies crosswise the firm. By using PESTEL analysis the firm can determine the issue of
macro environment. To determine the internal environment, the firm can consider SWOT, VRIN
and Value chain analysis. To analyse the competiveness of firm, the management can consider
Porter’s generic model, Ansoff matrix and BCG matrix. To monitoring organisation’s
competitive advantages and fulfilling strategic purpose, a personal reflection can be conducted
by company.
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Books & Journals
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Schilling, M.A. and Shankar, R., 2019. Strategic management of technological innovation.
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Carayannis, E., 2018. Strategic management of technological learning. CRC Press.
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Barbosa, M., Castañeda-Ayarza, J.A. and Ferreira, D.H.L., 2020. Sustainable strategic
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