Strategic Management: Analysis of Bang and Olufsen Case Study

This report provides an analysis of the strategic management of Bang and Olufsen, a luxury Danish consumer electronics company. It discusses the evaluation of strategy and its impact on company decisions and activities, strategic directions at the business unit and corporate levels, and analysis of external and internal factors. The report also includes a group presentation and an individual reflective essay.

Strategic Management

Table of Contents
Set 1.................................................................................................................................................3
Introducing the case.........................................................................................................................3
Evaluation of Strategy and its impact on decisions and activities of company...............................3
Strategic directions at business unit level....................................................................................4
Strategic directions at corporate level..........................................................................................5
Analysis of External and Internal Factors.......................................................................................6
External Analysis.........................................................................................................................6
Internal Analysis..........................................................................................................................8
CONCLUSION..............................................................................................................................10
Set 2...............................................................................................................................................10
Group Presentation....................................................................................................................10
Set 3...............................................................................................................................................14
Individual reflective essay.........................................................................................................14
REFERENCES..............................................................................................................................18

Set 1
Introducing the case
Strategic management refers to management of organisational resources in strategic manner to
reach goals and objectives of the company. Strategic management consider all the important
factors that affect and influence success of the company. This report will contextualise Bang and
Olufsen (B&O) is a luxury Danish consumer electronics company that designs and manufacture
audio products, television sets and telephones. Company was founded in 1925 by Peter Bang and
Svend Olufsen and is headquartered in Struer, Denmark. Bang and Olufsen after successful
operations experienced significant losses in year 2008 and 2009, followed by this a restructuring
plan was developed by company development of different types of products along with products
for automotive industry. Bang and Olufsen is a famous Danish and well known luxury brand of
its industry around the globe. This is because of the experience that they are providing to
customers with help of effective technology. There are several competitors of the company in
which companies offering personal audio systems as well as audio systems for automotives are
included. Competitors of the company involve Sennheiser, Bose, Beats, Shure and Dynaudio.
This report will discuss about analysis of environment of the market with help of different
models that are PESTLE, Porters five Forces, and industry lifecycle to understand external
environment and will also involve Value Chain, VRIN and SWOT analysis models for internal
environment.
Evaluation of Strategy and its impact on decisions and activities of company
Strategies can be defined as set of actions that are developed and designed so that organisations
can achieve its goals and objectives. Strategies in organisation guide different activities that are
aimed at achieving goals and realising vision of the organisation. There are different types of
strategies that are developed and employed by organisations on the basis of different areas of the
organisation and different levels of the job. Mainly strategies are created and employed at
different levels of business that are known as corporate level and business unit level.

Strategic directions at business unit level
Business unit level refers to level in organisation that is responsible for management and
operations of individual business of the organisation. Strategies at business unit level
significantly affect and influence performance of each business of the organisation. Strategic
directions at business unit level involve different strategies that are related to particular
department, division or function of the company that represent a specific business function. This
strategy is part of firm’s value chain activities. In context of Bang and Olufsen it can be related
to particular organisational function or this can be based on strategies for different products of
the company. Bang and Olufsen is involved in different businesses as it develops different
products. Strategies at this level are visible through success of different functions of the
organisation in terms of their contribution to overall success in achievement of organisational
objectives. Company’s decision and activities that gets affected at this level of strategy involves-
 Determination of products and their production in terms of quantity and quality that is
likely to be marketed by Bang and Olufsen, this is an important strategy and decision at
business unit. This mainly is concerned with production function of the Bang and Olufsen
and also is concerned with decisions regarding individual product of decision Bang and
Olufsen.
 Other than product and decisions regarding production and actions that gets affected by
business unit level strategies involve decision and actions regarding financial aspect of
business, marketing and promotion, sales and packaging, human resource and other
supportive elements. These factors and elements involve those elements that affect
overall success of the organisation.
In context of Bang and Olufsen company has developed different products and still working on
them.
Abandonment Strategy
In this context when company stop further production of a particular product in a product line
this is also a business unit level decision. This is however concerned with corporate level
decision but business unit decisions and actions get significantly affected by this. For example-
due to economic crisis and poor performance of Bang and Olufsen in terms of profitability,

company as s result abandoned development of new mobile phones and MP3 Player along with
some other products. It was a decision at corporate level to abandon development of these
products but its direct influence was on decisions and actions of these business units. Some
corporate level strategy of B&O involves-
Pole position strategy
This is one of the strategy in which B&O signalled a clear goal, a sense of urgency, team work
and clear task for each team member. This strategy is also a corporate level strategy with a focus
on profitability and centred on product range.
Global sales organisation
Under Pole position strategy another strategy involves was focus on creating one global sales
organisation to support 800 authorised concept stores and 400 Shop-in-Shops.
Strategic directions at corporate level
Corporate strategy involves strategies regarding market and businesses in which company
operates. In context of Bang and Olufsen it can be said that it operates in electronic industry and
this is why its strategies at corporate level are influenced with external market and environment
of business. This strategy is formulated by top level management of Bang and Olufsen.
Strategies which are developed and designed by top level management at corporate level
determine and describe directions for overall organisation including all its businesses and
product line. This means that under this strategy decisions and actions of different product and
business units gets affected. For example strategy at corporate level of Bang and Olufsen will
influence all actions and decisions regarding its products that including audio products,
television sets and telephones etc. This is contrary to business unit level in which decisions are
likely to influence any one of these products.
In this strategy of Bang and Olufsen some of the product lines have been deregulated and at the
same time some of the product lines have been restructured. Corporate level decision and
activities also get affected as strategy also affect contribution of activities to business goals and
objectives. Important element regarding impact of strategy on corporate level of the business is
that the strategy that has been developed is also a decision that has been made at corporate level

of the Bang and Olufsen. This means it is CEO and top managerial positions at B&O that has
decided to bring changes in existing product line and stop developing particular product. Later
this strategy of the company will guide actions and decisions at all levels of the business. Further
decisions like acquisition, and expansion of the company is also corporate level strategies which
influence actions and decision of the company.
Analysis of External and Internal Factors
External Analysis
This analysis is concerned with analysis of different factors in external environment of the
company. This involves identifying and analysing different elements that are likely to affect
company and its position in the market. This also involve identifying and analysing competitive
position of the company in its industry. External analysis of Bang and Olufsen is as follows-
Concerned with current market Bang and Olufsen is operating in electronic industry and
products of the company are high-end audio products that are characterised as luxury products.
Competitors of Bang and Olufsen are Bose, Beats, Shure, Onkyo, KG and Dynaudio. In relation
with television its competitors also involve Samsung, Sony and Loewe.
PESTLE analysis of Bang and Olufsen is as follows-
Political
This involves politics and political uncertainty of Denmark where Bang and Olufsen operates.
Other than this, countries where Bang and Olufsen operates and provide its products also
influence company. This is different economic policies and regulations because of which price of
the products gets affected in other countries.
Economical
This involves different economic and monetary decisions in which Bang and Olufsen becomes
subject. These are cost of operations that get affected by raw material, taxes in country on
electronic products, interest rates and GDP. Economic condition of people also influences Bang

and Olufsen, additionally it is a luxury product, and this becomes an important factor for
consideration.
Social
This involves attitude and perception of customers towards products of Bang and Olufsen.
Increasing interest of people in buying electronic products with advance technology is an
positive factor for Bang and Olufsen.
Technological
This involves technological aspect and changing and improving technology is a threat for Bang
and Olufsen. However, capacity of Bang and Olufsen to enhance and improve technology of its
products and ensure best quality is favourable element.
Legal
This is concerned with different laws and regulations affecting and influencing Bang and
Olufsen. This involves different regulations for product safety, employment regulations and
environmental laws Bang and Olufsen becomes subject to.
Environmental
This has become an important factor for consideration in which Bang and Olufsen needs to
ensure its practices are environment friendly. Additionally, company also needs to ensure other
environment initiatives that are waste management, reduction in carbon footprints.
Porters Five Forces
Threat of new entrants
This gets affected by entry barriers and technology is one of the biggest barrier for new entrants.
Additionally requirement of capital and investment is also high hence position of Bang and
Olufsen is strong.
Threat of substitutes

There are several products available that can be replaced for products of Bang and Olufsen.
Other than this, other products are more affordable and this is why in this position of company is
weak.
Bargaining power of suppliers
This is another force in which position gets affected by number of suppliers, type of material and
resources being supplied. In this force Bang and Olufsen has strong position because of high
number of suppliers.
Bargaining power of buyers
Buyers power gets affected by number of buyers, numbers of sellers, cost of switching and
availability of substitute. Concerned with this, position of Bang and Olufsen is weak because of
high number of sellers and effective
Industry Rivalry
This force gets affected by number of organisations operating in an industry and on this basis
position of Bang and Olufsen is weak because several firms are operating in electronic industry
and its competitors are also having strong position in market.
On the basis of this it can be said that position of Bang and Olufsen in competitive forces is at
moderate level.
Industry Life Cycle
This refers to evolution of industry through its four stages that are introduction, growth, maturity
and decline stages. This life cycle of electronic industry is getting short because of extensive
development of different types of technology. Bang and Olufsen is also experiencing this and
this is one of the reason that it needs to speedily work on its innovation and technological
development.
Internal Analysis
This is concerned with strengths and weaknesses of organisations and internal factors that exist
within organisation. This can be done with help of different models and one of the important

model for internal analysis of SWOT analysis model. SWOT analysis of Bang and Olufsen is as
follows-
Strengths
 Brand value and image- Bang and Olufsen has strong brand image and brand value in
terms of quality
 Innovative capability- Bang and Olufsen has capacity for innovative products, this
enables company to get competitive advantage and deal with industrial and competitive
advantage
 High quality- This is strength of Bang and Olufsen and its products that they are
developed with high quality
 Luxury and exclusive products- Products of Bang and Olufsen are of high quality and
along with this are luxury products and also has characteristic of being exclusive
 Competencies of Bang and Olufsen- These competencies are acoustics, design also
known as rich minimalism and craftsmanship (the way they build products).
Weaknesses
 High cost- This is only weakness that Bang and Olufsen has. Its products are costly and
this is why only limited customers get attracted to it and are capable to afford its product
Opportunities
 Increasing marketing efforts and subsequently increasing visibility of products
 Expansion of business operations and activities
 Reduction in price by means of promotions and offers
Threats
 Increasing competition
 Technological advancement
 Customers looking for affordable and qualitative products

CONCLUSION
On the basis of above discussion, it can be said that strategic directions at different levels of
organisation affect and influence different decisions and activities of the company. In this
analysis it was identified that business level strategy that has influence on business activities gets
affected by corporate level strategy. This is because corporate level strategy involves
consideration for business decisions and activities as well. Pestle analysis of the Bang and
Olufsen was discussed in this and it was identified that most of the factors are favourable for
Bang and Olufsen. SWOT analysis helped in identifying that Bang and Olufsen possess
significant competencies and strengths and this allows company to further employ strategies that
help in effective realisation of its strategic purpose and vision. Competencies that Bang and
Olufsen are employed by Bang and Olufsen can make significant contribution in achieving its
goals and strategic purposes.
Set 2
Group Presentation

Set 3
Individual reflective essay
By analysing the case study I found that B&O is demark company which is known for its global
brand and high tech products such as TV, music system, etc. they target high class customers.

But between year 2007 -09 they lost 20% market share in Germany, demark, and UK. this was
due to recession which occurred in 2008. I found that with technological change the market has
become more dynamic. Besides that, company is facing tough competition as well from Toshiba,
Hitachi, etc. So, it has become necessary for them to develop an effective strategy so that they
can gain competitive advantage. In my view the strategy provides a framework to company that
what they have to do to attain goals. so, there are various strategic solution which B&O can
follow in order to gain competitive advantage. The solution depends on company market
situation and target market. Along with that, it is necessary to set some strategic direction so that
goals and objectives are attained. During completing work in set 1 that are based on identifying
different strategies on the basis of their level. Their impact on organisational decisions and action
I identified that strategies at corporate level and strategies at business unit level has different
impact on decisions and strategies of organisation.
Bang and Olufsen is an organisation that is operating with a strategy in which their main focus is
to develop audio systems of highest quality and on this basis they enable themselves to set high
price for their products. High quality and luxury of their products also allow them advantage in
competition. These strategies of Bang and Olufsen are based on their vision to be the most
desired audio brand in the world. While doing this realised that it is important for organisations
to have Bang and Olufsen but in dyamic environment of business, organisations keep changing
their competitive advantage, however Bang and Olufsen has not changed their competitive
advantage based on design and luxury. Other than this, their competencies are also unique that
provide them competitive advantage. This is why competencies that organisation use also plays
important role in achieving their vision and objectives. In this set 1 work several things were
identified by me and this helped in getting vast view of different elements that play role in
success and failure of the organisation. This means that during economic recession Bang and
Olufsen experienced losses because in that time people capacity of people got reduced in context
of buying luxury and costly products and as a result organisation faced significant losses. Other
than this, luxury, quality and cost become a competitive advantage to attract customers from
target market that is high-class customers who can afford expensive products.
In order to maintain and get competitive advantage there are certain solutions that Bang and
Olufsen can implement. Presently company is working on the basis of differentiation strategy

and according to this strategy it provides effective and exclusive products of best quality. Other
than product differentiation company also is working with strategy of customers differentiation
strategy in which its target group consist of small number of people having interest in luxury and
exclusive products and capacity to afford expensive products. This is an effective strategy and
Bang and Olufsen can continue to use these strategy as long as provide competitive advantage to
company. But there is significant scope for improvement and changes in existing strategy
through which Bang and Olufsen can get profitability advantage along with maintaining its
existing competitive advantage. This means that along with differentiation strategy Bang and
Olufsen can adopt cost focus strategy in which certain customers of the company are allowed to
buy products at comparatively less cost. Employing this strategy for short time and in certain
times in a year will help in increasing sales of the products of Bang and Olufsen. This strategy
can be implemented by means of sales and promotional discounts and other methods of
promoting sales of the company by means of reducing price that more people can buy the
products. This will also enable company to increase its market share and communicate value of
its products in more real way. This means that once customers get to know value and quality of
products of Bang and Olufsen, they will be motivated to buy other products of company. This
strategy can be used with certain products of the company in which Bang and Olufsen needs to
maintain effective strategy but products should be available ar comparatively less price than its
existing price strategy to increase sale and profitability without changing perception of the
products of Bang and Olufsen. Other than this market penetration and market expansion strategy
is the one strategy that Bang and Olufsen can implement to get best benefits of its strategy and
price. This means Bang and Olufsen can expand its marker in terms of geographical expansion
and expansion in customer segment. Company’s strategy of high product quality and increasing
inclination of customers and people to buy exclusive products together can help in providing
competitive advantage to the Bang and Olufsen. Competitive advantage for company will be in
terms of profitability by increasing sale and at the same time maintaining existing brand value
and brand image. Company has strong capability in terms of technology and innovation and
applying all this together with marker expansion will also provide sustainable competitive
advantage to the company in its industry. Strategic purpose of the company is to be most desired
audio brand in the world and using market expansion strategy can contribute in realising this
purpose of the company. During completion of the set 1 I made a research abut different

strategic options available to the company and strategies that can help in getting competitive
advantage, I get to know more about different strategic models such as Ansoff matrix and other
strategic matrix and models. On the basis of these models and strategies outlines and suggested
through these models I realised that market expansion and market penetration are certain
strategies that Bang and Olufsen can utilise and also maintain competitive advantage through
existing strategies of the company. This strategy will help Bang and Olufsen in increasing its
market share in luxury audio brand which will also allow profit and productivity advantage to the
company. Application and implementation of adequate and required startegies can allow
significant advantage to the Bang and Olufsen that company can become most desired brand.
Another perspective that I had regarding this was that in order to become most desired brand it is
important that people and potential customers are able to buy the products and they are aware
about existence of Bang and Olufsen products.

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