Strategic Management: Impact of Strategy on Decisions and Activities

This report discusses the impact of the strategy adopted by Bang and Olufsen on their decisions and activities. It also analyzes the external and internal factors affecting the organization and includes a reflective essay on competitive advantage.

Strategic Management

Table of Contents
Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
Set 1.................................................................................................................................................1
Evaluate how the strategy adopted by firm has impact on decisions and activities....................1
Demonstrate several external and internal factors in the context of an organisation..................2
Set 2: Covered in PPT......................................................................................................................7
Set 3.................................................................................................................................................7
Individual reflective essay...........................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Strategic management play an essential role in an organisation as it involves the preparation
of strategy by making use of organisation resources so as to gain competitive position in the
market (Baycheva-Merger and Wolfslehner, 2016). In other words, it involves the process of
ongoing planning and monitoring the activities in an organisation so that goal is accomplished in
a short span of time. Also, it provides direction of action that assist the firm to make an
appropriate plan and making proper organising of work by avoiding duplication of activities in a
marketplace. This report is based on Bang and Olufsen is an electronics company that is
headquartered in Denmark. The respective firm deals with wide range of products or services as
it manufactures television, telephones, radio and speakers which majorly aims on quality
specifications so as to gain large access of customers across the globe (Cooper, 2016). It is one
of the oldest public company that has expanded its operations in different parts of the country
and also it has around 1,028 employees and also it has captured the large market share across the
globe. It is a well-known brand as it renders an excellent and high-quality innovative solution to
their customers that generates maximum customer loyalty. This report comprises of strategies
adopted by the respective firm both at business level and at corporate level. Also, it determines
the availability of resources by comprising both internal and external factors so as to achieve
business objectives in a respective time period. This includes various models such as PESTLE
analysis, SWOT analysis, Porter’s five force model and industry lifecycle that assist the firm in
making an appropriate decision through proper planning and organising of work. At last, this
report also includes reflective essay that cover various aspects such as competitive position,
product differentiation and so on so as to gain competitive advantage in a marketplace.
Set 1
Evaluate how the strategy adopted by firm has impact on decisions and activities
Strategic direction at the business unit level
Bang and Olufsen emphasise on developing a niche market that look for greatest quality,
unique and innovative designs which grab the attention of users from different parts of the
country (Corban and et.al., 2019). The respective firm has good relation with its suppliers and its
efficient leadership assist it to gain competitive advantage across the globe. But at the same time,
it faces several threats such as the use of business to business by clients that reduces the profit
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margin and also an advancement of technology that is superior to B&O as they could have strong
financial position in the market. One effective strategy that could be used by the firm is to
cooperate with niche competitors and also emphasise on eliminating price wars so as to gain a
significant position across the globe. the respective firm could use new and innovative
technologies with advanced and unique features that would grab the interest of large number of
clients at a global level. Therefore, this improves the overall market share and increase the sales
and profitability within the confines of electronic industry.
Strategic direction at the corporate level
There are large number of stores of Bang and Olufsen in Europe and it would prepare a
strategy that could be based on development of new products or services due to the reason that
its current offerings are limited so it emphasise on using new and advanced technology so as to
beat the competitors in the marketplace (Gause, 2016). The manager of Bang and Olufsen may
follow a diversification strategy that emphasise on new products so that it could generate positive
brand image across the globe and also it emphasises on outsourcing the production. It can
decrease the cost of production and could emerge the market in country like Brazil so as to
achieve long term objectives and which in turn increase the sales and profitability. Outsourcing
provide a great advantage to the company as it minimises the shipping and labour cost.
Therefore, these strategies provide a greater growth opportunity to the firm at a global level. At a
corporate level, it could make an appropriate planning and organising of work and also its
excellent offerings especially in case of audio and video system would capture the large market
and thus increase the productivity within electronics industry.
Demonstrate several external and internal factors in the context of an organisation
External factors
PESTLE analysis: This analysis assists the macro environmentalist to scan the external
factors so as to achieve a significant position in a marketplace. It consists of several factors such
as political, economic, social, legal, environmental that provide assistance to a firm in making an
appropriate decision which in turn ensure greater success in future. In the context of Bang and
Olufsen, the six elements of PESTLE are presented as follows:
Political Factor: This aspect includes the interference of government and its rules and
various regulation that affect the business cycle of the country. Denmark is considered as the
political stable country in the world and ii is a part of European Union (Irawanto, 2017). Being
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part of EU, the rules and regulations minimise the chances of trade barriers which has direct
impact on the company. The country is currently running in a new government who had
increased the taxation level that directly affect the Bang and Olufsen (Policy, 2016). The
concerned firm has expanded its operation in different countries which is a challenging aspect as
it has to keep standardisation across its operations.
Economic Factor: This is a wider term in economics that includes economic stability,
economic growth, GDP, monetary and fiscal policies and many more. Due to financial crises in
2008, it leads to recession and create a lot of unemployment and also it creates an unimaginable
chaos in the country in an adverse manner. This decline the purchasing power of customers and
also it majorly affects the cash flows of a company. In addition to this, continuous fluctuation in
currency rates as there is fall in Danish currency that directly affect the turnover of Bang and
Olufsen in a market place.
Social Factor: This includes several demographic variables that covers birth rate, age
group and income distribution and many more. Today in a modern economy, there is a great
transformation in a technological era which emphasise on providing vast digital platforms that
provide enormous growth in future (Kharub and Sharma, 2017). The manager of Bang and
Olufsen emphasise on providing such products that attract the customers as it creates a great
influence towards them by its unique designs and sound quality of products.
Technological factor: This includes several aspects such as level of technological
awareness, research and development and so on. It has been analysed that there is giant volatile
in electronics industry due to fast development that has been taken place and also it involves
various and new emerging trends that arise in a dynamic environment. The manager of
respective firm emphasises on providing new and advanced audio and video system such as
television, speakers and so on that grab the attention of technical oriented youth and thus it
boosts the sales and increase the profitability within the confines of electronic industry.
Legal factor: These includes several constituents such as antitrust laws, copyright, patent,
trademarks and many more. It relates to several laws and legislations that has direct on the
operations of company (Prasad and Warrier, 2016). In addition to this, the manager of Bang and
Olufsen operates in different countries that possess a threat due to several rules and regulation
which creates limitation as it has to bind different contracts. The respective firm provide various
intellectual rights which facilitate smooth operations of a business in an effective and efficient
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manner. The manager abides all rules and regulations so as to gain maximum exposures which
emphasise greater transparency and accountability across the globe. This builds greater customer
satisfaction and also it maintains patent and copyrights so as to avoid the chances of violation of
fraud and malpractices.
Environmental factor: These includes constituents such as climate, weather, and other
environmental policies. In today’s era, the firms are taking several measures in order to provide
protection to environment as customers are looking for environment friendly products that save
cost. So, by looking this awareness the manager of respective firm uses 100% renewable source
of energy and avoids the use of plastic packaging that assist the firm in achieving sustainable
development in a long run. Also, the manager of Bang and Olufsen used 3R’s strategy that is
reduce, reuse and recycle as well as it provides an ease of capacity expansion that generate
positive image in the eyes of customers across the globe.
Porter’s five force model: this framework assists the firm by taking several factors into
consideration so as to gain competitive advantage in a market place (Sarsby, 2016). In relation to
this, it determines the attractiveness and profitability of industry in a competitive environment.
With reference to Bang and Olufsen, the five model of Porter’s are given beneath:
Bargaining power of suppliers: The magnitude of this force is regarded as low. There
are giant number of suppliers present in the market which provide same offering at low cost. At
the same time, the switching cost is low in case of Bang and Olufsen due to the reason that there
is high competition in electronics industry so the respective firm does not change its suppliers
easily as it emphasises more on quality. It is essential for the firm to provide excellent offerings
so as to gain maximum customers satisfaction.
Competitive rivalries: The power of this force is usually high. In regard to Bang and
Olufsen, there are several large competitors present in the market such as Samsung, Philips, LG,
Sony and many more which possess a big threat for the firm (Shenoy and Aithal, 2017). So, the
respective firm focuses on product differentiation and emphasise on quality specification which
gain large access of customers from different parts of the country and thus increase the sales and
profitability within the confines of electronic industry.
Threat of new entrants: The threat of new entrants is acknowledged to be low in the
marketplace due to the reason that it requires large access of capital that possess a big threat for
the new entrants. In addition to this, it allows Bang and Olufsen to enjoy greater economy of
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scale and allow to gain a significant position. Other factors such as technology, new product
development, acquisition of raw materials and many more would immensely affect the decisions
of new entrants in field of electronic industry.
Bargaining power of customers: The extent of this force is regarded to be low. There are
large number of competitors present in the market that provide same offering or attributes at high
cost (Tao, and et.al., 2017). So, the manager of Bang and Olufsen creates product differentiation
that increase the sales and profitability and also emphasise on delivering fast and efficient
services so as to achieve maximum number of customers at a global level.
Threat of substitutes: This model of Porter’s force is in the market is usually low. There
are several alternatives present in the market that posses a big threat for the firm. the manager of
Bang and Olufsen face strong challenges as it has to prepare an appropriate strategy and focus
more advertising campaigns in order to capture large market. This provides the way to company
to achieve a significant position which in turn increase the sales and profitability within the
confines of electronics industry.
Industry Life Cycle: In the context of Bang and Olufsen, the four stages of industry life
cycle is presented as follows:
Introductory stage: This is an initial stage in which the respective firm emphasises on
large research and development and also it focuses on providing unique and innovative products
so as to generate large base of customers. Also, the respective firm would focus more on
advertising and marketing campaigns so as to achieve large access of customers which ensure
future success.
Growth stage: Bang and Olufsen collect large amount of funds so that it could make
greater investment on advertising and promotional campaigns that allows company to enjoy
greater economy of scale in the marketplace (Wang and Li, 2016). In this stage, the respective
company promotes new and innovative ideas and prepare an appropriate strategy which ensure
greater success and also it provide vast growth opportunities in a marketplace.
Maturity stage: in this stage, the growth of product is slightly decrease in the market. the
manager of Bang and Olufsen emphasise continuous development on new products and provide
quality specifications and also it prepares an appropriate strategies and tactics so as to gain
competitive edge in the market. Also, it could provide excellent offerings and unique quality
among the customers which generate maximum satisfaction of clients.
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Decline stage: This is regarded as the last stage of life cycle of product in which the
utility of product declines. There are high chances of obsolescence in technology that affect the
overall operations of a company. In addition to this, the manager of respective firm possesses a
threat as there is sudden changes of products in a dynamic environment and also it requires huge
sum on research and development. In order to combat such threat, the manager should prepare an
excellent strategy and planning so as to gain significant position across the globe.
Internal analysis
SWOT analysis: This internal analysis assists the firm to determine both positive and
negative aspects by focussing on eliminating threats and grabbing opportunities so as to gain
competitive position across the globe (Zhao and et.al., 2016). In the context of Bang and
Olufsen, the same is presented as follows:
Strength
 Emphasise more on quality: The manager of Bang and Olufsen provide excellent and
unique products which generate maximum customer satisfaction.
 Increase market share: The respective firm emphasis greater on quality and provides
different range of items and also it is operated in different countries that gain large access
of customers across the globe.
Weakness
 Increase in prices: The respective firm provides offerings at a high price which induce
less in customers and thus decrease their sales.
 Increase in obsolescence: This is one of the major weaknesses as it become difficult for
company due to sudden changes that takes place which increase the chances of
obsolescence.
Opportunities
 Innovativeness in technology: The manager of respective firm focuses on new and
advanced technology which help in conducting fast operations of business and also
simplify the overall working procedures.
 New and emerging trends: the manager of Bang and Olufsen provide excellent quality of
audio and video product with unique designs that satisfy the needs and requirements of
emerging customer needs.
Threats
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 Increase in competitors: There are giant number of competitors of Bang and Olufsen
such as Samsung, LG, Sony and many more which posses the big threat for the company.
 Result in price wars: The manager of respective firm reduces the prices due to price wars
which in turn decrease the profit margin within the confines of electronics industry.
Set 2: Covered in PPT
Set 3
Individual reflective essay
From the above information, it has been analysed that the respective firm would adapt a
product differentiation strategy as provide wide range of products such as Television, high
quality speakers, headphones and many more. The respective firm uses low cost strategy so as to
gain competitive advantage across the globe as it emphasises on providing new and innovative
products which are highly fascinated by the younger generations and youth which in turn
increase the sales and profitability within the market. Bang and Olufsen emphasise on providing
excellent quality of products to their customers which gain maximum customer satisfaction that
deal with large variety of items such as manufacturing of televisions, quality audio and video
systems which gain large access of customers across the globe. the respective firm provide high
tech quality of products and are specially targeted to elite and upper class customers and also it
has introduce a new range of smaller items at a reasonable prices so as to grab the attention of
highly fashion youth generations in the market. moreover, the respective firm uses a lifestyle-
oriented strategy and use attractive slogans and marketing campaigns which creates a significant
position in a market. Furthermore, the manager of Bang and Olufsen uses niche marketing
strategy that allow it to beat the competitors such as Samsung, LG, Sony etc. The main aim of
firm is to be the most valued business that creates product differentiation and also it uses low
cost strategy which gain large access of customers at a global level.
At a business level, the manager of Bang and Olufsen makes an appropriate planning and
divides the work among the subordinates in according to their specialisation so as to achieve a
desired level of output in a respective time period. This increase the job satisfaction and
employee retention for a long period of time and thus increase the sales and productivity within
the confines of electronics industry. Bang and Olufsen uses oligopolistic industry as it emphasise
on high quality and unique offerings as well as it is associated with attractive and new designs
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that gain large access of customers. It has been analysed that it uses cost leadership strategy that
mainly focus the company to create new and highly designed products at a reasonable cost which
allow companies to gain a competitive position across the globe.
The offerings provided by Bang and Olufsen would attract mainly younger generations
due to its reliability and high tech features which increase the market share across the globe. In
addition to this, the respective firm would make a best strategy so as to overcome the financial
crises and it could enter into niche market so as to achieve a significant position within the
confines of electronic industry. this boost the sales and profitability in a marketplace and allow it
to attract large number of clients within the market. The respective firm creates product
differentiation which in turn gain maximum exposure across the globe and thus generate positive
reputation within the confines of electronics industry. Furthermore, the new management of
Bang and Olufsen would focus on specialised technology as it has strong goal to minimise the
number of strategic partners which ensure future success of a firm. Also, the respective firm
could use excellent offerings at a reasonable price and also it uses advanced and sophisticated
technology which generate maximum customers from different locations and thus improve the
brand image across the globe.
High quality is the major aim of Bang and Olufsen which create customer loyalty and
influence the customers to buy the product as these are seen as lifestyle products in the
marketplace. Therefore, the respective firm uses differentiated targeted strategy that is embedded
on both design and quality that create large satisfaction of customers across the globe. there are
several factors that keep the company to achieve a niche position such as its attractive designs,
superior quality and its collaboration with luxurious brand possess the firm to generate a high
position and thus provides a clear cut edge to its competitors in the market. Along with this, the
firm would focus on diversification strategy that allow it to enter into new market segments such
as Brazil which in turn increase the market share across the globe. The manager of respective
firm knows very well that market is dynamic in nature so it is highly dependent on its key
suppliers so as to gain competitive position across the globe in order to provide excellent
offerings among their clients. Also, the respective firm describes its items or articles as magic
that provides a high quality to the product which is different from its rivalries as it is one of the
major factors that ensure greater success in future. The vision of respective firm is to provide
excellent offerings at an affordable price which ensure maximum satisfaction of customers
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across the globe. This increase the sales and profitability of company within the marketplace and
also generate positive reputation across the globe.
CONCLUSION
From the above information, it can be summarised that the business environment in
which company carry out its operations is regarded as dynamic so the manager of a firm has to
adapt necessary changes in order to accomplish the task in a respective period of time. The
various internal and external factors have been determined that assess the availability of
resources and assist the firm in gaining competitive position across the globe. SWOT analysis is
conducted that determine the internal capabilities of a firm and also it help in determining both
positive and negative aspects as it combat threats and makes best use of opportunities. Also,
PESTLE and Porter’s model is discussed in this report which determine the attractiveness and
profitability of industry in a marketplace. This also includes the lifecycle of product that consist
of four stages such as introduction, growth, maturity and decline stages is covered in this report.
Also, the reflective essay that cover strategic purpose and competitive position of firm in a
marketplace is also included in this report.
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