Strategic Management Report: Bang & Olufsen Strategies Analysis

This report provides a comprehensive analysis of Bang & Olufsen's strategic management, focusing on its adaptation to market changes and competitive environment. The report begins with an introduction to strategic management and its importance, followed by an evaluation of the strategies adopted by Bang & Olufsen, including technological transitions, changes in management, and product development. It examines the impact of these strategies on the company's activities and decision-making processes. The report then delves into an external and internal analysis of Bang & Olufsen, utilizing PESTLE and Porter's Five Forces models for external factors, and SWOT analysis for internal factors. The report concludes with a summary of the findings, highlighting the importance of strategic management for the company's success and providing insights into its ability to navigate challenges and capitalize on opportunities in the luxury consumer electronics market. The analysis underscores how Bang & Olufsen responds to political, economic, social, technological, environmental, and legal factors, as well as industry dynamics and internal strengths and weaknesses.

STRATEGIC
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Evaluation of strategy adopted by Bang & Olufsen impacted the activities and decision of
company.................................................................................................................................3
External and internal factors of Bang & Olufsen and how company respond to them..........5
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Strategic management is defined as the ongoing process of continuous planning,
monitoring, evaluation and assessment of the changes in the company in order to accomplish
goals. The changes within the environment keeps on going and for this company needs to make
changes in the strategies (Rothaermel, 2017). The present study is based on company Bang &
Olufsen which is a high- end Danish luxury consumer electronics company. The company was
founded in the year 1925 at Struer in Denmark. This company deals in television, speakers,
music system, and other multimedia products. The company has made many changes within their
strategies in order to meet the competition and needs of consumers.
In 2007. The company witnessed a downturn because of financial crisis along with a shift
in market and technological advancement. For meeting all these changes, the company has taken
many strategic changes for the company to improve. Thus, the present case will start by
evaluating the different strategies which are used by the company and the impact of these
strategies on the activities and decision of the business. In the end the discussion will take place
on the external and internal factors and how the company deals with those factors.
Evaluation of strategy adopted by Bang & Olufsen impacted the activities and decision of
company
As seen above the company was facing many problems in the business environment and
the company took many different steps for dealing with these changes. Thus, the first strategy
which the company adopted was to meet the requirement of technological environment. This was
very necessary to adopt because of the fact that if the company does not take into consideration
the technological advancement then the operations of the company will become obsolete. Thus,
to overcome this the company took the help of advancement in technology as a strategy.
Technological transition in market- this is the first strategy which is adopted by the
company for meeting the new advancement in the environment. In current technological
advancement the physical and broadcast media is being overtaken by the network based and
digitally stored technology. Due to this the market has become more dynamic and the
competition has increased (David and David, 2019). Among the use of dominant design and the
new standards within the technological era. The company tried to use technological advancement
but this was not much successful. This was majorly because of the reason that the company is
dependent on the suppliers and for this the company had to rely upon the supplier for the

knowledge of operating the technology. Also, another reason for the failure of this strategy was
that product life cycle of the electronic goods have been shortened because of frequent changes
within the technological sector (Hitt and Duane Ireland, 2017). Also, the company was not able
to meet the fast- technical developments and the fast- changing consumer needs and demands.
New management- another strategy adopted by Bang & Olufsen is the change in the
management team of the company. In Karl Kristian was appointed as a new CEO of the
company. This person was appointed as a new CEO because of the major fact that the he was
having a good experience of 6 years in the competitor company. Also, Karl is having a technical
background in field of engineering and is also having the label of international commercially
oriented manager. After the appointment of Karl, the company announced a new strategy named
Pole Position. This strategy was aimed as signalling a clear goal and a sense of urgency and main
focus on team work and delegating clear task to employees. Here the vision of new CEO was to
develop exclusive video and audio products which will differentiating with current products on
basis of new design, quality, some new innovation and friendliness for the users.
This strategy was helpful for the company both at business unit level and corporate level.
This is majorly because of the fact that this change in the management team of the company was
very helpful for the company in improving its business. This is mainly because of the reason that
the new CEO was having good knowledge as he was working in the company dealing in same
business. Thus, this helped Bang & Olufsen in determining new areas of development for the
company and to lead in a successful manner.
Changes in product development- basically Bang & Olufsen was dealing in the audio
and video products only. Thus, after the appointment of Karl it was outlined that the there are
many changes in the preferences and taste of the consumers. Thus, it is very necessary for Bang
& Olufsen it was witnessed that they need to bring in many new product and services for the
company. Therefore, for this the company is using the strategy of changes in the product
development. For implementing this strategy, the company developing the product categories
like mobile phones, MP3 players and also to close some of the product range which have become
obsolete like DVD2 has been closed (Lasserre, 2017).
This strategy was beneficial both at the business unit level and corporate level. This is
majorly because of the fact that this will increase a product range for the company. Also, this is
beneficial for the consumers as well as they will get a wide variety of options to choose from.

This is also a competitive advantage for the company because of the fact that this new product
range the company will increase its sales as it is not necessary that the other competitors also has
the product range (Trigeorgis and Reuer, 2017). Thus, this benefits the company at both the
business level and the corporate level.
External and internal factors of Bang & Olufsen and how company respond to them
External analysis- this is very necessary because there are many different changes taking
place in the external environment which impact the business to a great extent. For this Bang &
Olufsen uses PESTLE analysis which is discussed in the following points-
Political This includes the factors pertaining to the
political or governmental changes and
interference within the business. In present
there is political stability within the market,
thus, this is beneficial for the company. This is
majorly pertaining to the fact that if the
political state of country will be stable then
there will not be much changes in the policies
and laws. Thus, for following the political
factors response of company is positive as this
is not impacting the working of company in
negative way.
Economic This includes changes taking place in the
economic factors of the country which includes
changes in inflation, foreign currency, growth
rate and many other related factors. Currently,
the interest is low on the money borrowed
(Ethiraj, Gambardella and Helfat, 2016). Thus,
for dealing with this issue company responded
in a way that now company can take more loan
and they had to pay less of the interest. This
way the company can borrow more money by

paying the same amount of interest.
Social This includes the values, attitude, behaviour,
thinking of the people within the society
(Aguinis, Edwards and Bradley, 2017).
Currently, the preference of the consumers is
towards the use of the electronic gadgets and
equipment’s. Thus, for this the response of the
company is very positive and also, they have
started a new range of products like mobile
phones, and other range of electronic goods.
Technological This refers to as the advancement taking place
in the technological sector. Currently there are
many new changes within the technological
sector which Bang & Olufsen needs to take
into consideration. This is because if company
does not take into consideration the changes
then the company will become obsolete. Thus,
the response of company towards adaption to
technological advancement is both positive and
negative. It is positive because of the reason
that this improves the performance of the
company and is negative because the cost of
implementing technology is very high.
Environmental This includes the changes taking place in the
environment of the company and the impact
over the business. In latest business era the
consumers have become more protective
towards the environment (Baumgartner and
Rauter, 2017). Thus, in response to this
company is also taking measures to protect and
safeguard the environment. For this company

is trying to limit the radiation coming from the
electronic items which may harm the
environment.
Legal This includes the laws and rules and
regulations which are applicable on the
working of the company. For meeting this
requirement, the company is responding by
way of abiding by all the rules and regulations.
Industry analysis- this includes the analysis of the industry and different forces ruling the
industry position. For this Bang & Olufsen uses the Porter five force model.
Threat of new entrant This industry is attractive because there are
high entry barriers for the new entrants. This is
because of the reason that there are many
restrictions for the new entrant in the electronic
industry. Thus, because of this the new entries
within the market is low.
Threat of substitute There are many substitutes available for the
company and this makes the industry less
attractive for the company. As the consumers
can use the other substitute product as well.
Bargaining power of supplier The supplier in the electronic goods are many
this provides company many options to the
company. Thus, the supplier bargaining power
is low which makes the industry attractive for
the company.
Bargaining power of buyers This refers to as the power in hands of the
buyers. For bang & olufsen the bargaining
power is high that is more power is with the
consumers. Thus, this makes the industry less
attractive.

Competition This refers to as the different companies which
also work in the same industry and in same
products (Karadag, 2015). Currently the
competition is at peak and the competition is
intense and this makes the industry less
attractive for the company.
Internal analysis- also, it is very necessary for the company to conduct the internal
analysis of the company. hence, for this SWOT analysis is used by the company which is
discussed in following points-
Strength The major strength of company is that they
have a strong control over the product
development as they have entered into new
product range. Another strength is that the
company is having a strong brand image within
the market which increases the sales of the
company.
Weakness The major weakness of the company is that the
target market within Danish is very small and
this impact the sales of the company. Another
weakness is that there is low opportunity for
the company for diversification.
Opportunity The major opportunity for the company is that
the demand for esthetic design is high in the
market. Thus, this is an opportunity for
company to improve its product in this design.
Another opportunity is the development of the
market which is an opportunity for the
company as they can now tap the untap market
(Bromiley, Rau and McShane, 2016).
Threat One of the major threats is the high

competition within the market. This is a threat
because the competition cuts the consumers
and sales of the company. Another threat is the
decrease in consumer buying power which also
decreases the sales of the company (Engert,
Rauter and Baumgartner, 2016).
CONCLUSION
From the above study it is concluded that strategic management is very necessary for the
successful working of the company. This is pertaining to the fact that strategic management
helps the company in planning a strategy and successfully implementing it in the company. The
present case also discussed the different strategies which was used by Bang & Olufsen in dealing
with the changes in the business environment. These strategies were like technological transition,
change in management and the change in the product range.
Further the analysis of the internal and external and industry analysis was done. The
external analysis was done with the help of PESTEL analysis and the impact of the different
external factors was discussed on the company. for analysing the industry position the use of
Porter five forces was done and the industry position was outlined. In the end for internal
analysis SWOT method was used to analyse the internal capabilities and weakness of the
company.

REFERENCES
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