Summaryof Company BackgroundThe following analysisfocuses on Barco Projection Systems (BPS),which was the second-largest division within Barco N.V.. In 1934, Barco N.V.kicked off their business as a producer of radio broadcast receivers.
Thecompany had a rapid success and expansion during their early stage of businessby carrying out the television receiver technology based on their strong R&Dand product quality. Even though the global recession and oil supply shockcreated a significant damage to their business at the end of 1970s, theirchanges in focus on the niche markets brought them even greater success duringthe recession. Barco Projection Systems (BPS), as a subsidiary ofBarco N.V., headquartered in Belgium and was introduced in the early 1980s fortheir video projection technology. With the great market demands of videoprojection, BPS experienced rapid growth and it represented 23% of Barco N.V.’sturnover by 1988.
SWOTAnalysis Strengths · BPS used scan rate to segment its markets as their product line strategy. · Strong commitment to R (10% of turnover and 15% of employees were dedicated to R). · Expansion in international presence in sales, product development and production. · Fully-owned distributors represents 61% of BPS’s total unit sales and revenues. · Box dealers and system dealers. · Barco provides its dealers sales and technical courses and hired professional technicians. · Dealers preferred selling Barco’s projectors since they received higher price and higher percentage of the price. Weaknesses · BPS was unable to seek for other tube suppliers since all other tubes were either inferior to Sony’s or more expensive.
· Graphics projectors were incompatible with any computer scanning higher than 64kHz. · Dealers complained the machines were unnecessarily complex and not user-friendly. · End users found BPS’s control panels and instructions too complex. · BPS responded by claiming the customers were disregarding the instruction manual. · Relying on Sony supplying the tube instead of focusing on inventing their own. · Decided to go against the new 8″ tube from Sony because they are unwilling to redesigning the shape of the projector. Opportunities · Downgrade its technology to suit consumer, upgrade it higher performance, or enter untested market.
· Upgrade of the application would keep competitors out of the market and expand market share. (sales ratio reversed). · Digitally controlled projectors. · Evolution of projection products line for best possible image, inputs flexibility, and user-friendliness. · Predicted annual growth (graphics>data>video), (Asia>Western Europe>U.S.).
· Pricing strategy and product development option against Sony 1270. Threats · Unable to locate other suppliers other than Sony. · Sony showed a more reliable reputations and lower price among dealers. · Sony invented a sharper focus and better-quality tube far superior than BPS’s supplier.
· Electrohome had comparable distribution strength to BPS with lower price. · Sony 1270 had far better performance and lower price than anything on the market. · BPS projected to lose approximately 75% of its forecasted profit. Product Line StrategyStrengthIt is known that Barco N.V.’s vision is the commitmentin research and development, as well as expanding international presence andproductions. In 1981, Barco N.
V. started to get involved in the projectionsystems business when it was developing a video projector for the airplanes.When BPS was formed as a division under Barco N.V., its great early success washeavily based on two big factors.
Traditionally, BPS had a great strength onelectronics, which was the major component of the projectors. Given the propercombination of tube and lens, they developed a better performance and qualityprojectors among its competitors. However, whatmade them stand out the most in the industry was the way they segmented themarket. BPS’s product line strategy was very smart that they used the scan rateto segment the markets and identity potential customers based on their needs.This created a huge positive impact to their business because they knew thatcertain business would prefer certain projectors based on their business’sneeds.
The three product lines that they had were – first, the video projectors that were designedspecifically for standard video sources with running at a 16kHz and cheaperprice. Second, the data projectors,relatively more expensive than the video projectors, which were dedicated fordisplaying input from personal computers and video sources that scanned at16kHz to 45 kHz. Third, the graphicsprojectors that scanned above 64 kHz which were designed for acceptinginput from relatively more powerful computer-aided design and manufacturingsystems.BPS segmented the market based on the end users’ needwith regard to the scan rate since they understood that more options wouldbring them more potential customers. This product line strategy provided BPS abigger market share and better reputation.BPS’s Vision against SonyWeaknessOne of the biggest issues that BPS had to face is thefact that they relied on their competitors on supplying the most importantcomponent for their projectors. Dejonghe had a false assumption that theirbusiness partnership with Sony implied both organizations would help expandingthe market together. The biggest problem was that Sony had put so muchresources into developing newer and better tubes, while BPS was only focusingon developing better projectors and totally disregarding the threat from Sony.
Whendoes one competitor accept another’s vision of the market?When one competitor accepts another’s vision of themarket, it has something to do with their ability to gain more market share atthat moment. To put it simply, Sony was coping with BPS to supply the mostinnovative and efficient tubes to BPS at that moment because Sony had yet todiscover a way to utilize the tube to invent better projectors. Instead offighting against BPS to come up with better projectors, knowing they had thetubes technology advantages, Sony would rather supply the tubes to BPS and gainprofits from there, while developing its own projectors at the same time. Here,the difference between BPS and Sony is that when Sony came up with the new 8″tube, BPS engineers decided to go against the idea to redesign the shape of theprojectors even though the new tube.