Strategic Management Project: Bang & Olufsen Case Study Analysis

This strategic management project provides a comprehensive analysis of Bang & Olufsen, a luxury consumer electronics company. The project is structured in three sets, beginning with an introduction and an examination of the company's external and internal factors using PESTLE, competitor, SWOT, and value chain analyses. The first set explores the political, economic, social, technological, environmental, and legal factors impacting Bang & Olufsen, alongside a competitor analysis. The internal analysis delves into the company's strengths, weaknesses, opportunities, and threats (SWOT), and a value chain analysis. The second set, presented in a PPT, is not included in the provided text. The third set concludes with a reflective essay on the company's turnaround strategy, inspired by Formula 1 racing, focusing on audio and video product development and cost reduction. The report concludes with a call to action, suggesting that strategic changes and product improvements are essential for Bang & Olufsen to regain its market position.

STRATEGIC
MANAGEMENT PROJECT

Contents
SET 1...............................................................................................................................................3
Introduction..................................................................................................................................3
External and internal factors of the company..............................................................................3
Internal Analysis..........................................................................................................................5
Conclusion...................................................................................................................................8
SET 2...............................................................................................................................................8
SET 3...............................................................................................................................................9
Reflective Essay...........................................................................................................................9
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Strategic management involves setting objectives, analyzing the competitive environment,
analyzing the internal organization, evaluating strategies, and ensuring that management rolls out
the strategies across the organization . Bang & Olufsen is a high end luxury Danish consumer
electronics company that designs and manufactures audio products, television sets, and
telephones. This report is classified in 3 sets, first one gives the analysis of external and internal
forces that the company needs to assess and implement. Second set is about the generic and
intensive strategy. The last set is the reflective essay of the report.
SET 1
Introduction
Bang and Olufsen commenced their operations in Denmark and it was in the year of 1925. The
company has been successful in establishing itself as a global brand. They deal in the high end
and luxury goods which are offered by the brand. They were in the top 20 list of companies in
the year 2008. But after that they lost more than 20 per cent of their share in the market. There
was a reason behind that as there was no new launch by the company which affected their sales.
The last decade was very bad for the company as they were dependent on their key suppliers so
that they can compete with the advancements of technological era. They needed to focus on the
life cycle of the product in order to maintain their position in the market. This started as a
competition but became a challenge for the company to match with the level of development
required in the area of technology. This pushed them away to meet the demand and expectations
of the consumers in the market. In order to improve they even changed their management, their
CEO and they changed the base of the company from technical oriented to communication
oriented. With that they changed the strategy of the company which was stated as new
turnaround strategy so that they can focus on the centered range of product. The name of the
strategy given by the company was pole position which meant to work as team of Formula one
racing. So that they can work as a team with clear task of everyone in mind. With the help of this
theory they will be able to focus on their structure of cost and the global sales with one thing in
mind and that is to explore the area of audio and video products. This task contain s pestle

analysis, competitor analysis, SWOT analysis and value chain analysis so that they can cover the
internal as well as external approach of the market and the company (Lasserre, 2017).
External and internal factors of the company
Political Factors-
These factors have helped Bang Olufsen to achieve development and growth by
complying with innovation. The federal government helped them so that they can fill the gap and
meet the criteria of standards on a global level. This was done so that they can comply with the
aspect of technological change in the market (Cosenz and Noto, 2016).
Economic Factors-
The products manufactured by the company were meeting with low demand and the
supply of the products in the market is on an excess level. Another factor of the downfall in sales
of the company is that they have faced recession three times between 1991 to 2007.
Social Factors-
Company is focusing on training so that they can grow in the funding of humans and
focus on increasing the expertise of resources they have in the industry. This aspect is solely
based on the department of labor and the quality of market which is related with IC (Ferrer
Romero, 2018).
Technological Factors-
There are still many factors which are affecting the manufacturing stage of the company
and that is they are not able to cope up with the level of innovation in the market and because of
that they have to rely on other dealers and partners. With the help of support of government they
have been able to reduce the impact of this factor.
Environmental Factors-
They contribute in these factors for the betterment of the society so that they can sustain
the environment by using renewable resources and achieving better image of the brand.
Legal Factors-

Company complies all the factors which are related with this aspect such as intellectual
property. Other than this they follows all the protocols so that they are allowed to serve in the
country with the support of government.
Competitor Analysis
Bargaining Power of Supplier-
The power of negotiation is low because there is dominance of the market by 3 players
such as Nanya, Powerchip and ProMOS. Company is considering partnering up with other
companies in the market. another reason for the low power of negotiation is there are many
competitors because of which price has decreased and power of customer has increased.
Threat of Substitutes-
There are many other alternatives available in the market such as Samsung, Hitachi,
Motorola etc. which have a high presence in the market. This states that company faces a high
level of competition in the market.
Bargaining Power of Buyer-
There are many companies such as Samsung which is dominating the market which
affects the business of the companies such as Bang and Olufsen. It is assessed because of low
access to technological advancements it reflects a high power in others.
Threat of entrants-
The impact of this aspect is low because Bang Olufsen is low because of the structure and
the level of investment that is needed to enter the market. other than this equipment offered is
expensive. For example resources for 30,000 units can vary up to $ 500 million on the basis of
their size. It is difficult to cope up with the new technological advancements and the other key
players in the market (Vasista, 2017).
Rivalry among Competitors-

Company faces an intense amount of competition from many key players such as LG,
Samsung, and Panasonic and due to the availability and advancements of resources they are
getting left behind.
Internal Analysis
SWOT Analysis-
Strength
The company has been able to sustain their environment on the basis of consistent
development. The quality offered by the company was premium which was considered as
strength for the company. the company is known for their video and audio quality equipment.
They make sure that customers get a real experience when they are watching television. Also the
products introduced by them are user friendly as many of the customers feel difficulty in using
the technological related products. This has helped the company to attain a large no of customer
base.
Weakness
The company may have been successful in different markets but there are still some areas
where they lack. The BeoVision that was launched by the company achieved success in the
market but with time people shifted from plasma TVs to LCDs and at that time company did not
meet up with change which was necessary and it shifted the customers to its alternatives. Other
than this many of them wanted to buy the product because of high quality but they were not able
to because of high price which was not affordable by everyone (Schilling and Shankar, 2019).
Opportunities
The company has a lot of scope in the market that needs to be served and met. With their
team of global marketing and needs of customers they have developed a strategy so that they can
meet and claim these opportunities. It is necessary that they take the advantage of designers of
product so that they can make changes in their design and assess it with new technology. The
company works on the basis and with that strategies that can improve their process of
production.

Threats
The strategy implemented by the company was well but with time it faded and because of
no changes in its competitors of the company took their position in the market. Sony and Apple
are the ones who manufacture the same range of products and sell it to the consumers at low
prices. Many of the customers have budget issues which is why they have to leave plasma and
buy their alternatives as they were getting them at half of their price.
Value Chain Analysis
With the help of this process the company classifies their work in activities on the basis
of primary and support so that they can analyze them (Stretton, 2019).
Primary activities-
These activities undertake the aspect of activities which are concerned with distribution.
Inbound Logistics-
In this department company has to deal with activities such as storing, receiving,
distributing etc. so that they can maintain and control their stock.
Operations-
These aspects is concerned with the conversion of raw materials into a final product and
make it available for market. assembling of parts , activities that deals with the aspect of
packaging are taken under this aspect.
Outbound logistics-
Bang and Olufsen has to deliver the product to the customer in this stage.
Marketing and Sales-
After the product has been introduced they work on the strategies of marketing and
promotion such as advertising, sales etc. This way they will be able to increase the awareness of
the brand and help them to fight with the competition in the market.

Service-
This aspect is concerned with dealings that are necessary after the product has been sold.
It is important that Bang and Olufsen maintains a team for this service.
Support Activities-
These activities look after and help the primary activities so that they can fulfill the needs
of the task.
Procurement-
This aspect is concerned with making sure that all the equipment that are needed to
perform the activities of primary aspect will be delivered by it. Items such as machinery, raw
materials are involved in this aspect (Martinsons, Davison and Huang, 2017).
Development of technology-
In order to make this aspect successful it is necessary that Bang and Olufsen invests a
huge sum of money into this area. It is necessary that the team appointed for global marketing by
the company conducts research in this area so that they can attain the benefit from it.
Management of Human Resources-
This department of the company looks after the evaluation, training and development,
performance and appraisal of employees. It is necessary so that their performance can be
monitored and necessary goals can be met.
Infrastructure-
This aspect is concerned with looking after the whole aspects of the organizations such as
finance, planning, management of information, planning, government affairs, control of quality
etc (Ansoff and et.al., 2018).
Conclusion
From this set it has been analyzed that there are many areas in which Bang and Olufsen needs to
make changes so that they are able to take their position back in the market. It is necessary that

the strategies assessed in this set are looked after and implemented by the company so that they
can make the changes in those areas which are necessary so that they can cope up with it. Also it
is important that they work on the changes that are required in the products offered by them so
that they can sustain their target audience. This analysis was concerned with changing the
structure of the company as there are many changes which is important for the company to make
so that they can improve their position.
SET 2
Covered in PPT
SET 3
Reflective Essay
Management of Bang and Olufsen initiated a turnaround strategy which was inspired by the team
of formula car racing team and that is why they stated the name of it as pole position. They
believe that this strategy will be the way for them to reach their goals and objectives. This
strategy is implemented so that they can increase their focus on the development of products
which are specifically in the category of audio and video. For each category a digital platform
needs to be assessed so that they can make ways to reduce the cost of launches of product. Other
than this they focus on global sales and the improvement of it by working on their previous
concept that is 800 concept stores across the world and the other one was Shop in shops. Also it
is necessary that they work on the structure of cost and make it comply with the conditions of
current market. After the implementation of pole position they have removed many products
from their range of portfolio. This is because the products that they offer require constant
changes and the company was not able to cope up with it which is why they took this step. Now
the prime focus of the company is solely on the audio and video products. They were facing a lot
of challenges in the procedure of it which is why they changed their whole platform to
standardized and the hardware of the platform would work on various types of microchips, board
of circuit and components of software. The company was in the position of delivering high end
televisions. But when the changes such as conversion of TV from analogue to digital and box to
flat screen took place it affected the sales of the company. The market for televisions were big

and wide but there was one problem and that was flat screen couldn’t come in any other design
which stole the factor of uniqueness. Although this opened the gate for the company to
manufacture high resolution and clarity TV. After the launch of LCD in the market the company
lost their dominant position in the market. This was because many of the competitors of the
company offered flat screen with HD resolution at less price and because of the attribute of the
design and the effectiveness of the price they are suffering through it. To counter this measure
Bang and Olufsen implemented different strategy they come up with a 40 inch flat screen with
better quality of sound. The only problem was the pricing of the product which was too high as
compared to the competitors. To gain the economies of scale many companies such as Toshiba
and Sony worked only on LCD and many of them took their step back and wind up their
operations from the market.
In order to work for gaining the competitive advantage and win their position back in the
market there are many steps through which they can achieve it. I believe that company must
evaluate their employees and take only those who meet the criteria of work. It is necessary that
work up to their potential so that they can make the way for the company or grasp a opportunity
for them. It is necessary that the employees in the company possess the knowledge of market on
the basis of trends so that they can share their ideas with the manager and if viable they can come
to an conclusion. I believe that it is important that they enable a training program for everyone so
that they can have a clear insight about the work and how to approach things. This will make
sure to perceive things in the right manner. The most important thing according to me is keeping
the employees of the company motivated so that they work towards attaining the objective of the
company. I can suggest many strategies in order to keep them motivated such as reward them on
the basis of their performance, encourage them in the meeting of the company, increase their
knowledge and assign them incentives on the basis of completion of task. Other than this I feel
that it is important that the products introduced by the company are unique and have some
attributes which keeps the competition behind and attracts the customer. It is necessary to set the
price as per the condition of the market. I believe that effectiveness of price is what attracts the
customers to purchase the product. There are many few people who are ready to pay more for
quality goods. That will not be enough to beat the competition and sustain the forces of market. I
feel that it is necessary that Bang and Olufsen also focus on making their presence online. It is
necessary for the company due to the immense growth of online sector. I am 100 per cent assure

that it will help the company to enhance their reach in diversified markets and increase their
availability. This way they will be able to deliver more products of the company as the strategy
used by company is niche marketing and in order to make that successful it is necessary that
company looks after these aspects so that they can be successful in sustaining their market. If
they are available online it will be easy for customers like me to know the details about the
products offered by the company and compare it with others so that a better decision can be
made. Bang and Olufsen always fails when it comes to strategy of pricing because not many
people can afford it which is the reason why they need to make their competitors understand or
make a deal with them which is profitable for both of them. It is necessary that employees of the
company are trained and have the knowledge of it. I believe that it is necessary that in a
competitive environment and condition of business such as these they need to maintain their
relation with suppliers. If suppliers become their representative for sales the company will be
able to achieve competitive advantage in the market. If the relationship is maintained with them
then they will have their support when it is needed. They will train the employees of the
company. Also they will get their materials and equipment delivery on time. Other than this with
their coordination they can form the strategies which will be beneficial for both and easy to
execute. Suppliers of the company will help them to increase their credibility in the market and
they will help to assess the needs of the customer by conducting a research which is necessary
for them and help them to take the right steps. There were many mistakes in the structure of
Bang and Olufsen as they never promoted their strategies of promotion effectively. I believe that
it is necessary to highlight this measure of obtaining the advantage of the situation as this will let
the customers know why it is valuable to pay more for the product and what other benefits they
are getting by the company. If the company is expecting then they will come to know about their
deals on their own then they are wrong. As per my knowledge I feel that the company can gain
their position back if they consider the option of coming into a joint venture with other company
of same nature so that they can share the resources and contacts of each other.
When I read the whole analysis it came to me clearly that where the company went
wrong and where it is required that they make changes so that they can survive in the market and
attain success. They believe that if they keep investing in the area of research and development
to assess the needs and wants of market with the analysis of the competitors then they wouldn’t
be in this position. It is necessary that they assess the forces of market and work on the basis of

that. I believe that if the company changes their strategy of pricing then they will be able to beat
their competitors. Also it is necessary that the products offered by them in their portfolio keep on
changing with the attributes that meets with the demand of the market so that customers do not
loose interest in them. The company has made changes in their strategy and turnaround the
products they will offer but they will still need to focus on changing its offering and qualities on
time so that they are able to continue the product and achieve success in the market.
CONCLUSION
From the above studies it has been concluded that Bang & Olufsen undertakes strategies that
helps them to overcome the condition they are stuck in. most importantly they need to work for
attaining the competitive advantage so that they can stay ahead which is necessary for them. In
order to that they need to make changes which are mentioned in this report. This whole analysis
is for the company and the changes they need to made in the aspect of strategic management so
that they can achieve their goals and objectives.