Strategic Management Report: Bang & Olufsen Business Analysis

This report provides a comprehensive strategic analysis of Bang & Olufsen, a company established in 1925. It examines the company's business strategies, including cost leadership, differentiation, market penetration, product development, and diversification. The report delves into both external factors through PESTLE analysis, Porter's Five Forces, and competitor analysis, and internal factors using SWOT and value chain analysis. It evaluates the impact of political, economic, social, technological, legal, and environmental factors. Additionally, it assesses the competitive landscape and the bargaining power of suppliers and customers. The internal analysis explores the company's strengths, weaknesses, opportunities, and threats, culminating in a conclusion summarizing the strategic management approaches and their impact on Bang & Olufsen's performance. The report emphasizes the importance of strategic management in achieving organizational goals and objectives in a competitive market.

Strategic management

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Evaluate how strategy adopted by Bang & Olufsen....................................................................3
Analyse the external and internal factors of Bang & Olufsen.....................................................4
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Strategic management is defined as the procedure of establishing organisational goals, objectives
and define working process for the purpose of making organisation more competitive. . In this
report the chosen organisation is Bang & Olufsen that is established in 1925 by the Peter Bang
and Svend Olufsen (Cavicchi and Vagnoni, 2018). The headquarter of organisation is situated
in Struer, Denmark and approximate 915 employees are working with organisation. The report
consists Various business strategies such as cost leadership, differentiation, diversification and
market penetration of Bang & Olufsen organisation. Apart from that different internal and
external business factors like Pestle analysis, porters five forces, swot analysis and VIRM model
is being covered in this project report in the context of Bang & Olufsen company.
TASK
Evaluate how strategy adopted by Bang & Olufsen
Strategic direction at the business unit level: Business strategy is defined as the
framework that consist clear set of plans and actions that are guide business to how to perform in
specific market segment to attain all business goals and objectives. Effective strategy of Bang &
Olufsen provides guidance to perform all business functions in defined manner to gain
competitive positioning through satisfying all needs and demands of customers. Bsuiness
strategies that are used by Bang & Olufsen are mentioned below:
Cost leadership: Cost leadership strategy is used by the Bang & Olufsen organisation to
produce organisational products at lower prices that provides various competitive advantages to
organisation. There are various latest technologies are used by respective organisation for the
purpose of reducing cost of production of electronic items that enables it to provide quality
products to customers at lesser prices than other competitors (G'iyosov, 2019).
Differentiation: The ultimate vision of Bang & Olufsen organisation is to produce
exclusive audio and video products that are differentiated form the products of other competitors
in terms of quality, designs, user friendliness as well as innovation. The organisation creates new
features in their products that are not provided by the other organisations.
Strategic direction at the corporate level:
Corporate level strategy is defined as the top management approach and multi-tiered
plans that are used by organisational leaders for define, outline as well as achieve particular

business goals and objectives. There are various strategies such as market penetration and
market development and diversification that are mentioned below:
Market penetration: Market penetration strategy is implemented by the Bang & Olufsen
organisation to ensure potential growth in existing market industry. There are various
technological strategies that are used by organisation to enlarge organisational reach towards
potential customer base (Hansen and Jacobsen, 2016). Advertisement and promotions are used
by the Bang & Olufsen to spread awareness of organisational existing products in existing
market.
Product development: Product development strategy is adopted by Bang & Olufsen
through intriducing new product in existing market place. Respective organisation focuses on
product development in fewer product categories such as primarily audio and video products.
Apart from that, mobile phones, MP3 players, and standalone products are developed by the
organisation. Various latest technologies are implemented in production to creates new featured
products.
Diversification: Bang & Olufsen adopts the diversification in which organisation provides
new offerings in new market for the purpose of expand business in new market areas. The
organisation provides 40-inch LED and LCD televisions in new markets (Hong, Shin and Lee,
2016).
Analyse the external and internal factors of Bang & Olufsen
External analysis: External analysis is defined as the framework that is used to examine various
factors that are exist outside of organisational boundaries but affect the functioning and operation
of Bang & Olufsen organisation. There are various strategies are adopted that are mentioned
below:
Current market and competitor analysis: As Bang & Olufsen organisation provides
electronic products to customers so organisation have to face high completion from Bowers &
Wikins, Onkyo, Harman and Denon Professional that affect the profitability of respective
organisation. Bang & Olufsen organisation analyse the strengths, weakness, products, policies
and working procedure of competitors in order to gain various competitive advantages over
competitors.
PESTLE analysis:

Political factors: As the Bang & Olufsen organisation expands business activities in
various that contains variety of lows and legislations that may be different from each other.
There are various political factors such as political stability or instability, interest, foreign
interest and inflation rate that affect the functioning and performance level of respective
organisation in various counties (Kalkhouran, Nedaei and Rasid, 2017). Regular changes in
government regulations and political instability are some factors that affect business working
procedure and strategies.
Economic factors: Economy wellbeing as well as expectations of economy affect the
abilities of Bang & Olufsen to attract customers and improve performance. T. Recession creates
the unemployment that develops uncertainty among people so they are less likely to purchase
high-end customer electronics. Employment rate, consumer disposable income are some factors
that affect the Bang & Olufsen organisation.
Social factors: There are various aspects are included in social factors that affect the
performance level of Bang & Olufsen organisation. Attitude towards saving, education level of
society, power structure, purchasing behaviour, attitude towards health and safety and level of
social awareness in society affect the business in positive as well as negative manner.
Technological factors: There are various changes are happened in the technologies that
affects current working procedure and policies of organisation. Development of artificial
intelligence, analytics to analyse customer behaviour enhance the demand of usages of latest
technologies in working procedure (Köseoglu, Parnell and Yick, 2021). Bang & Olufsen
organisation conduct proper research before investing in technologies for innovation, acceptance
level of technology acceptance level in society before launching products. Respective
organisation implement various innovation in products to gain various competitive advantages
than other competitors.
Legal factors: There are various rules and regulations are formulated by the government
for conducting all business functions in legal manner. Government has passed various
regulations such as customer protection laws, employment laws, intellectual property rights
protection, health and safety as well as data protection legislations that are considered by the
Bang & Olufsen in organisation policies and procedures. In the production of electronic products
all rules are implement by the respective organisation.

Environmental factors: In macro business environment, various factors are included that
impact on organisational performance in positive as well as negative manner. Environment
factors includes regulations related to environment, change in climate and weather, waste
management and different environment standards that are considered by the Bang & Olufsen in
business strategies (Laužikas and Miliūtė, 2019). Respective organisation develops environment
friendly resource and adopts waste management process, recycling and corporate social
responsibility to reduce carbon foot prints and protecting environment.
Porters Five Forces: Porter’s five forces are defined as the strategic tool that is used by
the organisation to minimise risk and gaining competitive advantages. It enhances organisational
profitability and productivity as well. Factors of Porters five forces are defined below:
Competitive rivalry among industry: There are various organisations provide electronic
products to customers like LG, Samsung that enhance competition for Bang & Olufsen. As there
are various regulations and barriers are imposed by the industry to limits new entries. Respective
organisation analyses the products of competitors their strengths and weakness as well strategies
than formulate strategies to maintain effective positioning in market.
Threat of new entrants: The threat of new entrants is low for Bang & Olufsen
organisation because there are range of legal as well as industrial barriers are regulated by the
industry to enter and various laws and regulations are followed by entrants (Mahsud, Imanaka
and Prussia, 2018). As there are large companies like Samsung, Sony and LG are also operating
their business and it involves high cost to enter that affect the decision of new entrants.
Threat of substitute products: The threat of substitute product is high because there are
various products are available in the market on comparatively better prices. Now these days
innovation and various technological aspects are used to produce products. The range of similar
products affect the profitability as well as growth ratio of Bang & Olufsen organisation.
Bargaining power of suppliers: The higher bargaining power of suppliers enables
suppliers to charge higher prices for their limited quality and quantity material and other
resources that enhance the overall cost of Bang & Olufsen. If there is high switching cost in the
market and suppliers provides differentiated products affect the bargaining power of suppliers.
Bargaining power of customers: There are strong bargaining power consist by the
buyers that affect the organisational profitability margin because customer demand for high
quality products at affordable prices (Sawhney, Gupta and Kumar, 2017). The bargaining power

is affected by various factors such as industry contains low switching cost and availability of
similar products.
Internal analysis: Internal analysis is related to examining organisational internal
capabilities, competencies, competitive viability and cost positioning in respective market place.
Internal analysis facilitates the Bang & Olufsen organisation to take accurate decisions and
formulate strategies.
Value chain analysis: Value chain analysis is defined as the process that identifies
various primary and supportive activities which add value to final products. It also analysis the
activities that reduce operations cost and enhance differentiation. There are various activities are
included in value chain analysis like primary activities that consist inbound logistics, operations,
outbound logistics, marketing and sales as well as services. In supportive activities infrastructure
of organisation, human resource management, procurement and technological development is
included that help the Bang & Olufsen organisation to attain competitive advantages efficiently.
SWOT analysis of Bang & Olufsen:
Strengths: Strengths are defined as the capabilities and resources of Bang & Olufsen that
provides various competitive advantages at market place. The organisation maintains strong and
effective relationship with suppliers that provides quality material to produce products, provide
extreme quality and differentiated products that facilitates the organisation to enhance market
share and customer loyalty. Bang & Olufsen manages all regulations related to business
environment and adopt latest technologies that help to reduce cost and operate of business
functions efficiently. strong brand awareness and equity strengthen the organisation attract more
customer and enhance profitability level.
Weakness: Weakness are defined as the factors that limits organisation to gain competitive
advantages than other competitors. Bang & Olufsen organisation do not manage inventory and
cash cycle properly as well as having no expertise to implement technologies efficiently. As
organisation lack of talent and diversify work force to perform organisation operations. Bang &
Olufsen gain low return on investment that affect the organisation performance and profitability.
Opportunities: Opportunities are external factor that provides opportunities to maintain
existing market positioning or expanding business in other markets. As Bang & Olufsen
implement latest technologies to operate business functions and developing products. There are
various e-commerce and social media advertisements help to spread the awareness of

organisational products worldwide (Szwejczewski, Sweeney and Cousens, 2016). Because of
quality products there are various opportunities of expanding business at global level are raised
to business.
Threats: Various regulations of government, and economic recession affect creates various
threats for the Bang & Olufsen that affect their brand image and performance. As the respective
organisation faces high competition as well as threat of new entrants that share organisational
market share and customer base as well. Competition is the biggest factor that enhance threat for
business and impacts on overall profitability and market share.
CONCLUSION
As per above report, in can be defined as the Strategic management facilitates organisation to
manage all activities and develop various strategies to attain all defined goals and objectives.
There are various business level and corporate level strategies are formulated by business that
facilitates it to attain defined objectives and goals properly. The Bang & Olufsen organisation
adopts various latest technologies and strategies to attain all desired outcomes. Organisation
analysis all internal and external factors that affect business than formulates strategies
accordingly.

REFERENCES
Books and Journals