Impact of Bang & Olufsen's Strategy on Company Activities

This document discusses the impact of Bang & Olufsen's strategy on the activities and decisions of the company. It also analyzes the external and internal environment factors of B&O and their impact on the organization.

STRATEGIC MANAGEMENT
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Explain the impact of the Bang & Olufsen's strategy on the activities and the decisions of the
company......................................................................................................................................3
Analyse the External and Internal Environment factors of B&O and explain their impact on
the organization...........................................................................................................................5
TASK 2............................................................................................................................................9
Draw an analysis of the strategic solutions of two companies and provide a deep description
of their portfolio and segment, Market position and competition...............................................9
TASK 3..........................................................................................................................................11
Draft a reflective report on the strategies of Bang & Olufsen..................................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
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INTRODUCTION
Strategic Management is a process of planning, monitoring, analysing and assessing all
the needs of an organization, which are required to accomplish the targets and the objectives.
Due to the dynamic business environment it becomes important for the organizations to assess
their strategies on a regular basis to achieve success. The strategic management process helps in
analysing the current situation of the organization, formulating the strategies. Implementing them
and analysing the effectiveness of the management strategies. There are five phases of the
strategic management process, namely- Assessment of organization's current strategic direction,
Identification and analysis of strengths and weaknesses of the organization, Formulating plans,
Execution of plans and evaluating the effectiveness of actions plan and making changes if
desired results are not achieved.
BANG & OLUFSEN is a Denmark based electronic company which was founded in
1925. It is a popular global brand and is a part of Danish Industrial Legacy. It is among the most
important design icons of Denmark which focus on providing quality, design and the high tech
solutions in speakers, televisions, music system and multimedia products. B&O has successfully
achieved a leading position in the luxury segment of the industry (Bettis and et.al., 2015).
TASK 1
Explain the impact of the Bang & Olufsen's strategy on the activities and the decisions of the
company.
B&O deals with proving the quality, design and technology solutions of the electronic
devices like television, headsets, etc. B&O has coped up with the dynamic environment of the
market by the introducing new products with latest technology and design. In 2007, B&O faced a
downfall in the market and later changes the organizational structure and adapted to new
strategies in order to improve the efficiency and enhance the product development at the
organization. The various business and corporate level strategies followed at B&O are as
follows-
Business level strategies
Business level strategies help a business entity to achieve a competitive advantage in the
industry (Albert and Grzeda, 2015). An organization must choose among the following-
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 Cost leadership: Cost leadership strategies are adopted by the the organization in order to
provide its customers with products at prices lower than the competitors. It has a further
classification based on the market scope whether organization aims at wider scope or
narrow.
 Differentiation: Differentiation strategy is adopted by the organizations who aim at
providing products with unique features and they charge a higher price for it.
Organizations further classify differentiation strategy into wide market differentiation or
focussed differentiation which is specifically for a particular market segment (Bindra,
Parameswar and Dhir, 2019).
Bang & Olufsen adapted to the Focussed Differentiation business strategy in order to
enhance the efficiency of the organization in the industry. B&O aims at providing the electronic
products with best in class quality, design and technology solutions to a limited population of the
market at higher prices hence it can be said that B&O follows focussed differentiation business
strategy.
Corporate level Strategies
Corporate strategies are adopted by the organizations in order to gain competitive
advantage and earn above average profits. The various corporate strategies are Growth, Stability,
Retrenchment and combination and expansion strategy.
B&O has adopted the expansion strategy of the Corporate level strategies. Expansion strategy
can be adopted by the organization which aims at introducing new product or services or to
expanding to new markets. This strategy focuses on increasing the level of activity or
performance of a business at present level. The various Expansion strategies adopted by B&O
are explained below-
 Market penetration: B&O penetrated into market for the television platform which
already has various competitors like Sony, Samsung and LG as a result it only has a
marginal share in the market (Dyer and et.al., 2017).
 Market development: Earlier B&O was considered as a high end manufactures of
television, with an up gradation in technology, B&O had to shift to the production of
LCD TV and smart TVs which can be considered a new market for B&O.
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 Product development: B&O primarily dealt with the products like audio and video
products. B&O has now developed basic digital platform for the technology of all the
products in order to cut down the cost of separately developing the technology for every
product (Engert, Rauter and Baumgartner, 2016).
 Diversification: B&O offers diversified range of products to their customers like
televisions, headsets etc.
 Internationalisation: In 2008, B&O witnessed a change in the management which further
aimed to form a customer and service oriented organisation with a strong intent to focus
on the international market.
Analyse the External and Internal Environment factors of B&O and explain their impact on the
organization.
Bang & Olufsen is a Denmark based multinational company which deals in luxury
electronic products and aims at providing the best quality, design and technology to their
customers. In order to achieve the organizational goals and objectives it is very important for the
organization to analyse its internal and external market factors in order to determine the current
market position and competitor analysis. There are various ways to analyse the external
environment of the organization such as Pestle analysis, Porter's 5 forces model, etc. In order to
analyse the internal environment SWOT analysis, Value chain analysis, etc. can be followed.
PESTLE analysis of B&O
The Pestle analysis aims at determining the political, economic, social, technological,
legal and environmental factors which impact the efficiency of Bang & Olufsen.
 Political factors: The political factors of each country differs as per their political
scenarios. This is one of the major reason for fluctuations in the operation of the business
across different region of globe.
Positive impact- The facilities provided by government of few countries to attract and provide
market for B&O will have a positive impact on the organization. For example, Taiwan's market
provided opportunity for personnel & technology growth by setting up institutes.
Negative impact- There are countries which do not co operate with the foreign companies hence
this might be a drawback for B&O (Ferlie and Ongaro, 2015).
 Economic factors: The economic factors like inflation, market demand and supply play
the role of economic factors for B&O.
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Positive impact- The situation where the market demand is and supply is balanced, it will help
organization to sell at higher prices and incur profits.
Negative impact- The situation of higher supply and economic crisis have a negative impact on
the operation of the business at B&O (Frynas and Mellahi, 2015).
 Social factors: The social factors include availability of the physical resources and
human resources in the organization.
Positive impact- The locations which are rich in human and physical resources have a positive
impact on the operations of B&O
Negative impact- The locations which face scarcity of the resources have a negative impact on
the working of B&O.
 Technological factors: The technological advancement and up gradation of an
organization has various impacts on the operations of an organization.
Positive impact- At B&O main aim is to provide the customers with the latest technologies to the
customers which has a positive impact in attracting customers.
Negative impact- The negative impact on B&O is that at Taiwan set up B&O is still dependent
on the government of Taiwan for innovation and technology.
 Legal factors: The legal factors which have an impact on operation of B&O are related
to the legal rights and obligations which need to be fulfilled.
Positive impact- B&O holds a lawful security to protect and sustain its intellectual property
which are processing and technology. Hence it is a major profit for the organization as it
increases dependency of other organizations on B&O.
Negative impact- The negative impact of legal factors for B&O is that it has various issues in the
form of Intellectual property legal rights (Gallus and Frey, 2016).
 Environmental factors: The factors related to the environmental conditions of a locality
affect the operations of a business organization.
Positive impact- The region of Taiwan has a positive impact on B&O as it is highly favourable
due to the simplicity in ability development.
Negative impact- The regions which do not offer ease of capacity expansion for B&O have a
negative impact on the operation of B&O.
Porter's five force model of B&O
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The porter's five force model helps in analysing the buyer power, supplier's power, threat
of substitutes, threat from the new entrants and rivalry inside the industry for Bang & Olufsen.
 Bargaining power of buyer: The electronic market is already occupied by the brands like
Samsung , Hynix etc. which limits the market of B&O and hence the power lies with the
buyer (Gamble, Thompson Jr and Peteraf, 2019).
 Bargaining power of Supplier: There is low negotiation in the market of Taiwan hence it
is a power of supplier as their cost price is low and it manufactures huge range of
products to cope up with the needs.
 Threat of new entrants: There is low or reduced risk of new entrants for B&O as to
establish a new business in the industry requires huge finances.
 Threat of substitutes: The threat from the substitutes is high for B&O as suppliers of
Taiwan take on the market share which is compensated by the loss of B&O.
 Rivalry inside the industry: There are many competitors like Intel, Motorola which
increases the competition in the market for B&O to capture the market share in the
industry.
SWOT Analysis of B&O
The SWOT analysis of the B&O helps to determine the internal analysis of the
organization. It helps to determine the Strength, Weakness, Opportunities and threats of the
organization (Hanson, and et.al., 2016).
STRENGTH
 B&O has a strong recognition as a
brand in the market.
 It innovates products in unique designs
which is a positive factor for B&O.
 It has a well equipped outsourcing
distribution channel.
 The products of B&O are durable and
long lasting which attracts customers to
choose the brand.
 B&O has strong marketing strategies
WEAKNESS
 The weakness of B&O are that it offers
slow launch of products.
 The products of B&O are highly in
demand by the customers. Hence the
demand is not fulfilled by organization
hence this cuts down the profit of the
organization.
 The organization is highly dependent
on the Europeon regions and BRIC
which is a drawback for B&O.
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which help them in flourishing in the
industry.
 B&O offers compatible products and
its focus is on the core business.
 The successful brand, B&O PLAY is
the biggest strength of the organization.
 It has a support of strong Chinese
partners (Jenkins and Williamson,
2015).
 The long product life cycle is also a
weakness for the organization.
 The profits or the efficiency is
dependent only on one category of
B&O which is B&O PLAY.
 It has a limited capital which might
limit the expansion of the business
organization.
OPPORTUNITIES
 There are various opportunities for
B&O in the market like the ageing
population.
 The huge market of China is also an
opportunity for the market which
enhances scope of growth and market
expansion.
 The trends of China and India also
determine the opportunities for B&O.
 B&O has discovered 3 crisis in the
business life cycle and it has good
scale of recovery after the crisis
situation hence it is an opportunity for
the organization.
 The patents and the copyrights are the
opportunity for B&O.
 The free market trade of B&O develops
various opportunities for the business to
flourish.
 B&O enjoys high real GDP in
THREATS
 Emergence of a new financial crisis is a
threat to B&O in the market.
 The dynamic trends of consumers in
the market is a threat to the
organization.
 The rapid changes in the technology is
a threat to the organization as it
requires B&O to keep an updated mode
of technology to cope up with the
changes.
 The political issues related to taxation
and environment is a threat to the
organization (Joyce, 2015).
 B&O has a high dependency on the rich
and wealthy consumers which is a
threat to the organization.
 B&O has a major threat from it s
competitors like Samsung, Motorola,
Apple,etc.
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important markets.
TASK 2
Draw an analysis of the strategic solutions of two companies and provide a deep description of
their portfolio and segment, Market position and competition.
(Covered in ppt )
TASK 3
Draft a reflective report on the strategies of Bang & Olufsen.
In accordance with the Task performed to study the impact of the strategies of Bang &
Olufsen on the organization, I can analyse that The management strategies have a huge impact
on the operations of the organization. I can understand in reference to the task that B&O is a
leading organization in the industry of electronic gadgets and formulate various business level
and corporate level strategies. The conclusion drawn out in my views based upon the study in
Task 1 is that there are various business level strategies like cost leadership, differentiation and
focussed strategy. Every organization chooses one or the strategies or a group of strategies to
fulfil the organizational objectives and goals. I could analyse from the study that Bang & Olufsen
adopts the strategy of Focussed Differentiation (Pfarrer and et.al., 2019). The reason behind
concluding this strategy is that B&O aims to cater he needs of a specific segment by
manufacturing luxury goods which states it follows a focussed strategy, further it can be
analysed that B&O aims at providing the best in class quality, design and technology which
differentiates their product from the competitors. Hence I can analyse that B&O follows the
strategy of Focussed Differentiation.
I could further analyse from the study that There are various corporate level strategies
which can be followed by the organizations. The broad classification of Corporate Strategy are
Stability, Expansion, Retrenchment and combination strategies. In my views the corporate level
strategy adopted by B&O is expansion strategy. The reason for choosing the expansion strategy
is that it is very important for an organisation to widen its scope in the market with an aim to
survive in the industry for the long term. In my aspect, the various expansion strategies which are
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adopted by Bang & Olufsen organization are Market penetration, product Development, market
development and diversification. The market penetration strategy is used by B&O while
introducing the existing product in the existing market. The market development strategy is used
by B&O while entering with an existing product in a new market. The Product development
strategy is applied by B&O when the organization aims to launch a new product in the market.
Diversification strategy is used by the organization to enter into a new market with a new
product. The strategy of internationalisation is used by B&O in order to expand the business of
the organization beyond the international borders. This strategy helps in expansion of the
business at a large scale and hence earn huge profits (Trigeorgis and Reuer, 2017).
This strategy further helped me in analysing the external and internal environment of
B&O. I used various analysis techniques to study the impact of internal and external factors on
the organization. The technique of analysis used by me in order to evaluate the impact of of
external factors was Pestle analysis and Porter's five forces model. The pestle analysis helps in
evaluating the impact of political, economic, social, technological, legal and environmental
factors on the Bang & Olufsen. There are various positive and negative impacts of the factors
which affect the operations of B&O. The another model used by me for drawing an analysis of
the external factors on B&O is Porter's five forces model. The Porter's five forces model helped
me in analysing the power of the buyers of B&O, power of the Supplier in the organization,
threat from new entrants to the organization, threats from the substitute products for B&O and
the rivalry or the competition in the industry. Further I conducted an analysis of the factors that
have impact on the internal environment of B&O. I conducted the study of Bang & Olufsen's
internal environment with the help of SWOT analysis which helped me in analysing the
strengths, weakness, opportunities and threats of B&O. In my views, the strength of B&O can be
strong recognition as a brand, innovation, outsourcing distribution channel, marketing strategies
etc. the weakness which I portrayed in the study are slow launch of products, high demand of
products, high dependency on European regions, long product life cycle etc.
In my views, Bang & Olufsen can switch from the Focussed Differentiation strategy to
“Differentiation strategy” because the focussed differentiation strategy deals with providing
differentiated products from its competitors only to a specific market segment whereas
Differentiation strategy will help in focussing on the diverse market segments and it will
ultimately increase the market share of B&O as at present B&O focuses only upon the 2% of the
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population (Velikorossov and et.al., 2020). In my opinion, B&O must carry out with the same
corporate level strategies which the are following at present like, diversification, market
development, product development, market penetration and internationalisation. But according to
me, the company must lay more emphasis on the product development in order launch
innovative products in the market and at lower prices to attract higher customer base in the
market.
CONCLUSION
It can be concluded from the above report that Strategic management plays a crucial role
in the operational activities of the business in order to achieve the organizational goals and
targets. The study revolves around the strategy formulation and implementation of Bang &
Olufsen. The study explains the business level strategies such as cost leadership, differentiation
and focussed strategy. It can be concluded that B&O follows the business level strategy of
focussed differentiation as it targets a specific market by offering differentiated products. The
study further explains various corporate level strategies followed by Bang and Olufsen. The
corporate level strategies followed by B&O are market penetration, diversification,
internationalisation, market development and product development. The study also includes the
impact of internal and external analysis of B&O. The external analysis has been explained with
the help of Pestle analysis and porter's five force model where as the internal analysis has been
conducted with the help of SWOT analysis. The report further contains a reflective essay based
on the study.
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REFERENCES
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