Barco Case Study Pdf Free

Barco Projection Systems

Introduction

        Barco Projection Systems (BPS) was one of the largest divisions of Barco N.V. which was a producer of radio broadcast receivers in 1934. Throughout all these years, Barco N.V. had been building this company on the basis of R&D and product quality and having a huge influence on the video equipment industry. However, in the 1980s, Barco N.V. changed its marketing strategy and focusing on niche markets, which was why BPS division became such a crucial part in the company. Projection system, including video, data, and graphic projectors, had not yet been popularly introduced to the world. Therefore, BPS quickly took over the projectors market after Barco N.V. saw this opportunity. Almost every industry which needs the projection systems such as automated production control systems, computer-aided design, and industrial projection was using Barco N.V.’s projectors.

Challenges

Nevertheless, in the late 1980s, due to the improvement of technology, the other companies had the capabilities to compete with BPS in the projectors area. For instance, Sony was one of the biggest competitors which gave BPS an enormous challenge in 1989. Sony produced a projector that had better functions and lower prices than BPS’s, which could easily win over the market share of BPS in projection systems industry. This was when the three most important leaders, Erik Dejonghe, Frans Claerbout, and Bernard Dursin, in BPS should make decisions on price and product development plans. It seems like a decision case, so I will make the decision after doing SWOT analysis and Porter’s 5 forces.

Competitors

        The main competitors of BSP back then were NEC, Electrohome, and Sony. First of all, although NEC was the first company which came up with the idea of applying digital convergence technology on projectors in the market, the inefficient distribution system compromised the success of the company. Second, Electrohome was the biggest competitor of BPS in graphic projectors market. Unlike NEC, Electrohome had the distribution advantage compare to others, especially its specialised dealers. Despite of the great distribution system, Electrohome still owned fewer market shares than BPS.

Last but not least, in fact, Sony was probably the strongest rival BPS had ever met. The three major components of projectors Sony used were as good as BPS. BPS and Sony had a strange relationship, because the main tubes supplier of BPS is its biggest competitors, Sony. It seemed like Frans Claerbout didn’t worry about this relationship at all. He thought Sony valued BPS’s business due to the lower manufacturing cost. However, in 1989, Sony proved Frans Claerbout wrong. Sony used their new model, the 1270, to show BPS how they reject its “vision” in the market. This introduction of new model implied that Sony didn’t want to follow the BPS’s prediction to the future of the market. When the market shares of projectors were mostly divided to BPS and Sony, the competitor’s next move would be predictable. Therefore, that’s why BPS could “vision” the future of the market which was dominated by BPS and Sony. Supplying the tubes to BPS was a very important leverage for Sony, which could make Sony the dominator in the projectors market. And, that was exactly what Sony did.

SWOT Analysis

        First, the strongest strength BPS had was its scan rate of projectors. The scan rate of BG400 was 64 kHz which was the highest scan rate in the market before the Sony 1270 showed up. The higher the scan rate was, the better the brightness, the image quality, and the resolution were, which helped the BPS’s product to be the customers’ favorite projectors. In addition, the targeting customers for BPS were mostly the industry which needed the professional projectors for businesses. Thus, its projector would be a little complex than the others’, which caused BPS to train their dealers well enough to explain the full function and installation procedure to the individual customers.

        Second, the weakness of BPS would be its higher price of projectors. BPS positioned itself in the market as a high-class, professional projectors brand. So, compare to the other companies, the price of its projector would be too high to accept for some customers. As I mentioned before, the complexity of its projector could be difficult for customers to understand and install. The most crucial weakness of BPS would be the source of components. Buying tubes from Sony was too risky, and it definitely would cause problems in the future.

        Third, the one of the opportunities BPS should seize was that they should focus on the graphic projector which was a product Sony didn’t produce. Although it seemed that BPS made a poor decision of buying components from Sony, its business had become an important source of Sony’s revenue. BPS could hold on to this kind of opportunity and cooperate with Sony.

        Last, the most threats of BPS were from Sony. Sony had much more dealers in US and European market, which made its distribution process more fluent. Moreover, the fact that Sony had its own tube supply division was a huge threat to BPS, not to mention that BPS was buying from that division.

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Case Study

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Barco Projection Systems Section C

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Group 11

PGP 2011-13 Page 2

Porter’s Analysis of the Industry

1.

Suppliers’ Bargaining Power (

High

)

1.1)

The industry has scarcity of quality suppliers which in turn strengthens thebargaining power of the sole quality supplier of tubes i.e. Sony (+)

1.2)

The fact that a major player in the projector market is itself dependent on itscompetitor

s manufactured unit, indicates the high bargaining power that the buyerenjoys

(+)

1.3)

The market is fairly consolidated with the number of players in the market beinglow. Hence, the suppliers

bargaining power may get affected

(-)

Overall, the suppliers’ bargaining power is

high

.

2.

Buyers’ Bargaining Power (

Medium

)

2.1) Buyers have few options of 

projector manufactures

to choose from (-)2.2)

The nature of the product is such that the switching cost is low and hence, thebargaining power of supplier is strengthened

(+)2.3)

There is a possibility of price war between the competitors which would eventuallyhelp the buyers, providing them with more bargaining power

(+)

Overall, the buyers’ bargaining power is

medium

.3.

Threat of Substitute (

Low

)

3.1)

The industry is not threatened by any close substitute

Overall, the threat of substitute in the industry is

low

.

4.

Threat of New Entrants (Low)

4.1)

The market is highly consolidated and hence there may not be any space for newentrants

(

-

)4.2)

Significant investment in R&D and technical expertise is required. This may amountto a barrier for entry to a new entrant

(-)4.3)

However, since the switching cost is low, new players may be inclined towardsentering into the market

(

+

)Overall, the threat of new entrants in the industry is

low

.5.

Industry Rivalry (

High

)

5.1)

The market witnesses intense competition as there is no single leader in any of thesegments

(-)5.2)

All players in the market are technically competent and are actively innovating withnew technology to manufacture better products

(-)Overall, rivalry in the industry is

low

.

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