Case Type:Decision BasedBPS is a decision base case because it has many different options itcould deal with its competitors who offer more superior and cost friendlyproducts then BPS. SWOT Analysis:Barco Projection Systems Strengths: · BarcoProjections Systems has many strengths, one of them is being part of the topmarket leaders in the projector industry.· Another major strength of BPS is their abilityto manufacture high quality projectors in niche based markets, this stillallows BPS to maintain high quality projectors. · BPS is extremelydedicated to Research and Development. BPS use about 15% of their totalemployees and 8-10% of their annual turnover, just to perfect their R&Dsystem. This just shows the dedication to always keep improving their products.· It is theleading manufacturer of projectors.
Weakness: · The biggestweakness of BPS is they get their supplies from Sony Components, which is asubsidiary of Sony. This means that they are heavily relying on direct competitorto get the supplies to build their products. · Anotherweakness you can find is that BPS price scheme is much higher than theircompetitors. This means that BPS is losing out on customers just because of theiroverpriced products. · BPS is verycomplex and is not as user friendly as its competitors are.
Opportunities: · There is not many opportunities for BPS, due to the fact they havealready achieved all their opportunities to expand beyond of what theycurrently have. · One major opportunity BPS has is to really go after the graphics sectorthat is basically untouched by any competitor. This could help BPS because theyare losing business in the projectors because of the Sony 1270. Threat: · The biggest threat to BPS is Sony. Because Sony is set to drop the Sony1270 which will negatively impact BPS. The market will be impacted for BPS andthe revenue projections for the BG400 will not be good ether.
Sony is the biggestthreat and BPS needs to start acting to help itself.· BPS will be impacted on the market share just because of the fact theSony 1270 is cheaper and better than the BG400. · Also Barco is heavily reliant on the consumer itself, if their productsbecome irrelevant to the consumer it can heavily impact the future of Barco. Porters 5 Forces SuppliersBargaining Power:· The Suppliers have VeryHigh bargaining power. If a suppliers are able to sell products that noone has it right away has the power to control the prices.· This specific market has a small amount of big players.
This isthe reason why the suppliers have very high bargaining power. . BuyersBargaining Power:· The buyers in this market have Low-medium bargaining power. In this specific market, buyersare extremely limited to where to buy there materials. · The buyers relyheavily on the suppliers in order to keep up with demand that they are facingfrom the market, this ends up putting them in very tough spot.
Threat-of-Substitute:· There is a very Lowthreat of a substitute. In this specific market there are not manysmall players that will really affect the big players. · If anyone wanted to copy the product of its competitor, itcould only be the big players in the industry. Threat of Newentrants:· The threat of new entrants is Extremely Low.
The reason why you won’t be expecting any newentrants is because of the extremely high startup costs. It would take a lot ofmoney and time to even begin to challenge the big players. · There is not a lot or even enough space for new entrants. IndustryRivalry: · The industry rivalryis Extremely High. The reasonwhy the rivalry is so high is due to the fact that everyone is trying to outperformand do better than there competitor.
ProductLine Strategy The product line strategy of Barco ProjectionSystems is pretty simple and it is to be in the industry of graphics andprojectors where they sell their products based on the scan rate and the price.All of this started in 1981, when they became the first one in the industry todisplay a motion picture on an aircraft. Barco has always targeted nichemarkets to get its business started and it has helped them grow into bigger business.BPS when it started to grow into the market leader, it started to increase thequality and it shift its focused into bigger markets. Whydid Sony decide to reject BPS’s vision of the market in August 1989? Sonydecided to reject BPS’s vision of the market, because it felt to them that theyand the industry where being held back of their goals by a bar set by BarcoProjections Systems. The BG400 was the biggest and best product available onthe market, BPS didn’t feel it was necessary to waste money and time to putanother product better than this one on the market. It had been a total of twoyears since the release of the BG400 (1987-1989), SONY came out with a bang in1989 with its Sony 1270, consumers everywhere lining up for this product and itwas great success for Sony. This is the reason why Sony rejected BPS’s visonand decided to create their own vision of what the market should be.
Howserious a threat is the Sony 1270? What are Sony’sobjectives? The Sony 1270 is a serious threat to BarcoProjections Systems and its BG400. The reason why this is a big threat is becauseit’s in direct competition with BPS projector. If you compare the twoprojectors, the Sony 1270 is better in all aspects compared to the BG400. The resolution,image quality and brightness. Also if we focus in on the price, Sony is makingthe Sony 1270 about 20-40% cheaper than the BG400. This will create a bigthreat to BPS, because now they will not be the only one offering the best apremium price.
They will have to adapt and try to compete with Sony’s new high-techand quality projector. Sony’s objectives where pretty clear and straight forward,they wanted to create a product that would offer great quality and high-techfeatures and low and efficient cost. They achieved they’re objective and arenow challenging BPS market share, also they are going to generate much morerevenue to help them continue developing and launching these type of products. DidBPS make a mistake somewhere along the way? Or do things like this “justhappen” when competing in high technology businesses on a global scale? Barco Projection Systems did make mistakes along theway, because they were too naïve and thought that there competition would notprogress to the level they are at currently. The release of the BG400 from 1987to 1989, BPS made the decision to stop innovating and putting out anotherproduct that was going to be better than the BG400. It turns out that was ahuge mistake because other competitors such as Sony, released the Sony 1270that was better in quality and price compared to the BG400.
BPS didn’t projectfor this type of competition from their competitors, this is a sign of acompany that wasn’t doing good business, BPS should have always been analyzing themarket to make sure they are up to date on its competition and are improving theirproduct line. Things like this just don’t happen it is a build up frompast behavior or choices that come back to cost you in the future. The decisionnot to continue to develop another product, when BPS believes highly inspending in the R department, cost them dearly when the Sony 1270 cameout. Consumers spent big on it and it really helped Sony generate tons ofrevenue. What should Barco do now withrespect to price? Whenit comes to pricing, Barco Projection Systems need to be calm and decisivetowards the pricing of their products.
If BPS suddenly decides to drop prices,it will hurt their bottom line and can damage company and brand image. BPS is knownfor their high quality producer of projectors, if it lowers the prices it losesthat image of offering quality products at a premium price. The Sony 1270 hashelped Sony gain a significant amount of market share because of its price, ifBPS keeps the pricing of their products the same it will not be selling manyBG400’s. The reason being that Sony is making their price 20-40% lower thanBPS, this creates a big dilemma. To resolve this dilemma BPS should lower theirprices just a tiny bit, just so they can competitive with the Sony 1270 andalso ramp up the R&D to come out with a product that is better than theSony 1270.
What should Barco do now withrespect to its product development plans? WhatBarco should do now is to really invest all its time and money into the BG800so it could beat Sony in the Infocomm in January 1990. This specific productwill help them regain the market share they lost to Sony after the release ofthe Sony 1270. It is vital that they are able to pull this specific productoff, because if they put out a low-quality product it will harm their brand. Alsoif it doesn’t make the deadline, BPS should focus on the lowering the price andmaking the most amount of money through that way.