STRATEGIC MANAGEMENT

Strategic Management



Strategic Management

Question 1 Describe and discuss the bases of Bang & Olufsen's competitive strategy (generic strategy that it pursues in order to gain and sustain competitive advantage) offering plenty of examples to support your discussion.

A widely used framework for analysing product portfolios is the Boston Consulting Group Matrix. B&O has a huge range of products in various product groups. In order to limit the analysis in addition to make it more feasible, product groups will be used as the basis for analysis instead of the individual products (Utterback, 1994, pp. 23-55). This will be limiting in one sense, as there might be very big differences within a product category e.g. TV's. However, it is assumed that a better overall picture about the current state of the company will be provided by focusing on the product groups instead of individual products (Wasti, 1997, pp. 337-355).

The product groups that will be analysed are as follows: TV's (where integrated TV/DVD players will also be included), home audio players, portable media players, mobile phones, in addition to in-car media players (where the speakers are also included). When performing this analysis, an assumption is made that high growth markets are markets with a yearly growth above 10%. If we were to place these different categories in the BCG-matrix, the results would be as follows.

Question marks

The question marks are products that are in high growth markets but where the relative market share is fairly low. These are considered development projects where a lot of money will have to be invested in order to make the product succeed, in addition to will therefore put a pressure on the liquidity of a company. Before the implementation of the new strategy, B&O had two products which could be placed in this category, the MP3 player in addition to the mobile phones. These markets showed growth of 20 in addition to 14% respectively in 2006-07. B&O's relative market share in these markets are however considered to be very low, as they have no possibility to compete with huge international corporations like Apple in addition to Nokia which have captured large shares in the market (Desmet, 2002, pp. 60-68).

Stars

Stars are products which are also in high growth markets, but where the relative market share is high compared to its competitors. At the moment B&O seems to have one product group in this category, namely the B&O Automotive section. The in-car media players market had a growth of 13% in 2006-07. B&O is assumed to have a large market share in this section as it has agreement which Audi, Mercedes in addition to Aston Martin, which are three important brands with a large total market share of the car industry (Aaker, 1996, pp.10-76).

The stars require liquidity in the same way as the question marks as they operate in high-growth markets where investments are required to capture a share of the growth. These products are considered an important part of the company's upcoming in addition to be expected to ...