Bang & Olufsen Case Study

4149 Words Aug 9th, 2012 17 Pages
1. Analyse the competitive structure of B & O’s markets using Porters Five Forces Model (see Section 2.3 and Figure 2.2).

Michael Porters five forces framework helps identify the attractiveness of an industry in terms of the five competitive forces: the threat of entry, the threat of substitutes, the power of buyers, the power of suppliers and the extent of rivalry between competitors (Johnson and Scholes 9e P 54). This framework will be used to conduct the analysis of B & O’s markets.

Threat of New Entrants

The first element in Porters model is the threat of new entrants. Looking at the audio visual industry it is difficult for a new company to come in to an already dense market with many brands with the intention of
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The Power of Buyers

The following category in Porters Frame work is the power of buyers. B & O has somewhat of an advantage in this category as they have private customers and enterprise automotive buyers. We will analyse these separately as their impact on the company differs.
In the normal consumer market, the customer whom in this case is the ultimate consumer can probably negotiate with the seller to get a good deal, especially in these tough economic times but overall bargaining power in the audio visual industry with regard to a private consumer is low. B & O’s value proposition, via differentiation and brand identity creates a barrier to customers bargaining power. B & O has commented that they are likely to increase bargaining power for the consumer as the differentiation strategy in the audio/visual market is becoming harder to achieve with the increased focus on design, quality and innovation by all of its competitors.
The Bargaining power on the Automotive and Enterprise sections are different as B&O operates with three very reputable car manufacturers, Audi, Aston Martin and Mercedes AMG (Bang & Olufsen Group 2008) whom serve as immediate customers and are not the ultimate consumer. These 3 car manufacturers play a vital role to the finance and market facing image of B & O, hence B & O will be willing to engage in negotiations around pricing etc. to ensure that a good positive relationship is retained with these 3 key

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