Strategic Analysis of Bulgari's Business Strategy Report

This report provides a comprehensive analysis of Bulgari's business strategy within the luxury watch and jewellery industry. It begins with an executive summary and an introduction outlining the report's objectives. The core of the analysis involves a micro-environment analysis using Porter's Five Forces framework to assess the competitive landscape. The report then delves into Bulgari's competitive advantages, leveraging the resource-based view and the VRIO framework to identify valuable, rare, inimitable, and organized resources. The analysis covers both tangible and intangible resources, such as brand image, product quality, and design. Finally, the report identifies future opportunities, like expansion in the Asian market, and challenges, such as increasing competition. Recommendations include market penetration strategies and a focus on traditional designs to capitalize on opportunities and mitigate challenges. The report concludes with a summary of key findings and recommendations.

Running head: BUSINESS STRATEGY
Bvlgari
International Business Strategy
1-21-2020

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Executive Summary
The intent of the report is to analyse the performance of the Bulgari in the jewellery and
luxury watches industry to identify its strategic position in the industry. The report has made
use of Porter Five force framework in order to identify its position in the industry and it has
been revealed that the company is presently working as a high-end brand with low threat of
new entrant, but along with this, the threat of competition is high for the company. In
consideration to the competition advantage that is attained by the company with the use of its
resources are brand image, quality of product, exclusive design, and creativity. In the end, the
report has highlighted the opportunities and challenges that company can face in the coming
future. The possible opportunity for the company is expanding the business in the Asian
market and the challenge is increasing competition in the jewellery and watch industry. In
order to gain the opportunity, the report has recommended company to expand in designing
traditional Indian jewellery and watches to target customers of this market and to deal with
the rivalry the company needs to focus on market penetration strategy.

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Table of Contents
Executive Summary...................................................................................................................1
Introduction................................................................................................................................3
Overview of Bulgari...............................................................................................................3
Micro Environment Analysis.................................................................................................3
Porter Five Force Framework.............................................................................................3
Competitive Advantage of Bulgari.........................................................................................6
Resource Based View.........................................................................................................6
VRIO Framework...............................................................................................................7
Future Opportunities and Challenges for Bulgari................................................................11
Opportunities....................................................................................................................11
Challenges.........................................................................................................................12
Recommendations to cope with Opportunities and Challenges...........................................12
Opportunities....................................................................................................................12
Challenges.........................................................................................................................12
Conclusion................................................................................................................................13
References................................................................................................................................14

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Introduction
The intent of this report is to identify and analyse the performance of Bulgari’s core business
that is luxury watches and jewellery. In order to do so, the report is making use of different
models and theories such as Porter Five Force, Resource Based View, etc. in order to identify
what future opportunities and challenges that company can face in the coming years. In the
end, the report is providing recommendations for how Bulgari need to gain the opportunities
and deal with the challenges.
Overview of Bulgari
Bulgari is one of a well-known Italian brand of luxury products like fragrances, leather
products, watches, accessories, and jewellery. Where, most of the production, designing, and
marketing of the products is executed by Bulgari, but sometimes the company also get into
the partnership with other companies (Ethos Watches, 2020). Presently, the company is a part
of the LVMH Group. In consideration to the Jewellery and Watch products of Bulgari, the
collection of jewellery includes Divas’ Dream, Bridal Line, Serpenti, Parentesi, B. zero1, and
BVLGARI BVLGARI (Bulgari, 2020b). On the other side, the collection of watch is for both
men and women. For men, the option includes Haute Horlogerie, Octo, Diagono, and
BVLGARI BVLGARI, whereas, BVLGARI BVLGARI, LVCEA, B.zero1, Serpenti, and
Divas’ Dream (Bulgari, 2020c). The watches of Bulgari are the mixture of Swiss
watchmaking and Italian design.
Micro Environment Analysis
Porter Five Force Framework
Porter’s Five Forces is considered to be an outline that is used to analyse the business
competition. The five forces that are used to determine this are threat of new entrant,
bargaining power of supplier, bargaining power of customer, threat of substitute products,
and competition among existing players (Safari, Farhang and Rajabzadehyazdi, 2016). The

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strength of each force in the luxury watches and jewellery industry is presented below in
consideration to Bulgari Brand.
Threat of New Entrant
This force talks about the easiness in taking entry in the specific industry. In consideration to
the luxury watches and jewellery industry it has been identified that Bulgari has covered a
specific position that cannot be easily covered by any other new player. This is because the
requirement of capital to build a new jewellery and luxury watch brand is very high and also
considered to be unrecoverable when the business fails. Besides this, Bulgari has highly loyal
consumers, who are obsessed with particular products or brands and do not prefer to change
(Paton, 2015). In addition to this, for a new player it is tough to get into the contact with the
suppliers that helps in protecting the competitive advantage of the products or brands they
supply to. High level distributors mostly do not like to work with the new players in the
market as there are chances that they can damage their image and reputation in the market.
Hence, by considering these above-mentioned aspects, it could be said that the threat of new
entrant force power is low for Bulgari Brand.
Threat of Substitute Products
The impact of this force is threatening for the businesses at the time when customers can very
easily move to the substitute product available at reasonable prices or with superior quality
(Rachapila and Jansirisak, 2013). The power of threat of substitute products in the jewellery
and watch industry is moderate because the brands offering mid-range products pretend
themselves to be premium. For instance, it is known that in Paris Place Vendome is
considered to be where all the famous and luxury brands operate (Davis and Cordero, 2013).
Near to this place there is a Maty Jewellery shop which is not a high-end brand but because
of its prime location people consider it as the part of the Place Vendôme community that
impacts the position of luxury brands like Bulgari. In addition to this, the brands that are

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involved in offering similar products in the market like Signet Jewellers is also a threat to
Bulgari in the Jewellery industry.
Competition among existing players
The force of competition is considered to be the main basis that represent how profitability
and competition is in the specific industry. In the competitive industry, businesses get involve
in aggressive competition in order to gain major market share. In consideration to the luxury
watches and jewellery industry, the competition is high because some of the big groups
dominate the industry like LVMH Group and Chopard. There are some strong brands in this
industry that have maintained a strong image with different strategies such as Carla Bruni is
shown in the advertisement of Bulgari, besides this in consideration to the brand heritage the
magic of Chopard can be seen in the Disney Collection (The Jewellery Editor, 2012).
Customer’s Bargaining Power
Buyers holds the power of demanding low prices of the products or higher quality from the
producers at the time of high bargaining power. But, offering low price products to the
consumers leads to low revenue for the business, whereas offering high quality means
increased cost of production (Tavitiyaman and Zhang, 2011). In consideration to the
jewellery and luxury watches industry, the bargaining power of the customers is low because
the customers who are loyal to the brand are also emotionally attached to the brand. Besides
this, Bulgari is the brand that offer unique designs of this products which are said to be
masterpieces which increases the desire of the customer and reduces their bargaining power
in the market. Furthermore, the number of customers is also increasing for these brands
specially in the Asian countries which again reduces the bargaining power of the buyers.
Supplier’s Bargaining Power
The strong power of bargaining of the suppliers enable them to sell the products at high
prices or offering raw material of low quality to their clients. This directly influences the

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profit of the buying firm since it has to pay high price for the material (Aithal, Shailashree
and Kumar, 2016). In the jewellery and luxury industry the supplier bargaining power is
moderate to high because in order to offer unique styles to the customer, businesses like
Bulgari require the strong commitment of its supplier to provide high quality material.
Besides this, in this industry to be exclusive the business needs to maintain good relationship
with its suppliers otherwise competitor can gain the high position in the market.
Competitive Advantage of Bulgari
Source [(Jurevicius, 2013)]
Resource Based View
This model is said to be a model that takes into account the resources as the significant aspect
for the performance of the company. If the resource of the firm displays VRIO attributes, the
resource allows the company to get and sustain competitive advantage. According to this
model, it is essential to identify external opportunities with the use of existing resources in

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new manner in place of trying to attain new skills for all the diverse opportunity (Hart and
Dowell, 2011). Under this model, there are two types of resources that are intangible and
tangible resources.
Intangible Resources – The intangible resources of Bulgari are strong brand image, high
quality of product, friendly environment, customer service, marketing skills, creativity.
Tangible Resources – The tangible resources of Bulgari are human resources, exclusive
designs of products, supply chain, etc.
Heterogenous
The assumption that has been made is that resources, capabilities, and skills that are hold by
the business different from one business to another business. If the businesses that holds the
similar type of resources then they will not be able to use different strategies from each other
(Lin and Wu, 2014). Therefore, the resources that are specified above of Bulgari Company
are different from its competitors.
Immobile
Another assumption that has been made under the resource-based view model is that the
resources are immobile and are not shifted or mote from one company to another in short run
(Barney, Ketchen and Wright, 2011). This helps the business that the competitor cannot
replicate its resources and copy its strategies.
VRIO Framework
VRIO Framework is said to be a tool of strategic analysis which is framed to support the
businesses in uncovering and protecting the capabilities and resources that provides then a
competitive advantage. This framework helps business in identifying the value, rarity,
imitability and organization of the resources and capabilities of the company to identify how

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business achieve competitive advantage in the market (Tresna and Raharja, 2018). The below
table is presenting the competitive advantage of Bulgari with the use of different resources.
Resource Valuable Rare Inimitable Organized Competitive
Advantage
Brand Image Yes Yes Yes Yes Competitive
Advantage
Product
Quality
Yes Yes Yes Yes Sustainable
Competitive
advantage
Environmen
t
Yes No Yes Yes Competitive
parity
Customer
Service
Yes Yes No Yes Competitive
parity
Creativity Yes Yes Yes Yes Competitive
Advantage
Human
Resource
Yes Yes No Yes Competitive
Parity
Exclusive
Design
Yes Yes Yes Yes Competitive
Advantage
Supply
Chain
Yes No No Yes Temporary
Advantage
Reason for the Relevance
Valuable

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Brand Image – Yes, the brand image of Bulgari is valuable which support it in developing the
customer base and effective at the time of marketing.
Product Quality – Yes, the quality of the product is valuable for the business as it helps in
attracting maximum customers in the market and competing with the rivals.
Environment – Yes, this helps in retaining the customers.
Customer Service – Yes, the service provided to the customer is valuable resource as it helps
customer in creating a positive image about the brand in their mind.
Creativity – Yes, creativity is one of the resources because it has supported company in
attaining leading position in the market.
Human Resource – Yes, the diverse and talented human resources is the main reason who has
helped in meeting the goals and objective of the company (Bulgari, 2020a).
Exclusive Design – Yes, exclusive designs of watches and jewellery are the reasons to attract
customers.
Supply Chain – Yes, it has supported company in delivering services in different market.
Rare
Brand Image – Yes, the brand image of the company is rare as well as challenging for the
competitive brands.
Product Quality – Yes, the quality offered by the company is rare in terms of jewellery and
watches which helps it in differentiating itself from non-premium brands.
Environment – No, the environment is not rare because it can be achieved by any competitor.
Customer Service – Yes, the service provided by the company is rare in this industry because
this resource requires huge investment in the training as well as hiring of good staff.

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Creativity – Yes, the creativity that is represented by its employees is rare and attractive.
Human Resource – Yes, the company is always involved in hiring talented and skilled
workforce that can contribute in the growth of the business.
Exclusive Design – Yes, the designs of the company is rare that helps the company in
representing itself as a unique brand of jewellery and watches.
Supply Chain – The supply chain of the company is not rare, because other players in the
market also has strong supply chain like Chopard.
Inimitability
Brand Image – Yes, the brand image is inimitable due to the position that has been gained by
the brand against its rivals.
Product Quality – Yes, the quality of the product is also inimitable as the company has
contacted with suppliers who provide high quality materials.
Environment – It is tough to copy the environment of the company.
Customer Service – Yes, the customer service offered by the company is inimitable as the
company is involved in training its staff who provide best service and experience to the
customers.
Creativity – Yes, the creativity that is reflected in the products of Bulgari is inimitable.
Human Resource – No, the skilled and talented workforce can be hired by any of the
competitor.
Exclusive Design – Yes, this resource of Bulgari is not imitable as company maintains the
copyright of its designs.
Supply Chain – Yes, the supply chain of the company can be copied by any of the player.

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Organized
Brand Image – Yes, the brand image of the company is organized and linked with its
performance.
Product Quality – Yes, the quality of the product is also organized.
Environment – Yes, this resource is organized and a key part of company’s marketing
strategies.
Customer Service – Yes, the employees involve in providing service are properly organized.
Creativity – Yes, this resource of the company is organized.
Human Resource – Yes, the human resource of the company receives organized training and
work properly.
Exclusive Design – Yes, the designs of the company are organized by the talented team of
designers.
Supply Chain – Yes, the supply chain of the company is organized which helps in delivering
its high-quality services on time to the customers.
Future Opportunities and Challenges for Bulgari
Opportunities
The future opportunity that can be gained by Bulgari in the coming 5-10 years in
consideration to its growth is market expansion. The company can plan to expand its business
in the Indian and many different Asian market as these markets are considered to be
developing. Besides this, people in these markets like to invest in branded and luxurious
products like jewellery and watches. Expanding in this market will help company in growing
its revenue.