Bang & Olufsen: Design Driven Innovation case study discusses the strategy of the company amidst competitors, which enabled it to thrive in the industry. It also deals with the strengths and weaknesses of the company and analyzes room for improvement.
Daniela Beyersdorfer and Robert D. Austin
Harvard Business Review (607016-PDF-ENG)
September 01, 2006
Case questions answered:
- How would you describe the competitive situation of Bang & Olufsen (B&O) in the spring of 2006? What are they good at? What should they be worried about?
- Take a closer look at the B&O design process to try to understand better how it works. How would you describe it?
- Is the design process at B&O written down anywhere? Should it, why or why not?
- What are the strengths and weaknesses of this design process? How changeable is this process?
- What is your assessment of the IdeaLab approach to changing the B&O design process? Will it work?
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Bang & Olufsen: Design Driven Innovation Case Answers
1. How would you describe the competitive situation of Bang & Olufsen (B&O) in the spring of 2006? What are they good at? What should they be worried about?
In the year 2006, Bang & Olufsen faced huge competition globally, especially in audio, video, and digital electronic appliances.
In addition, the electronics industry was witnessing a major shift with the launch of the Apple iPod, which required the company to gain an edge in product innovation and design to hold its competitive position in the market.
The company faces furious competition from tech giants, including Sony and Matsushita, and from industry outsiders, such as Apple, Gateway, and Dell.
5 Forces analysis to understand the competitive situation of B&O
Buyer Power: High – With the presence of only a few strong competitors in the market, the switching costs for buyers are very low, and thus buyer power is high.
Supplier Power: Average – With the long-term collaborations and partnerships of Bang & Olufsen with developers, designers, engineers, and other operational suppliers in the chain, the supplier power is average.
Threat of new entrants: Low – The incumbents in the industry are operationally efficient. The entry costs are high as competing against existing electronic giants is difficult.
Threat of Substitutes: High – With a consistent rise in technological advancements, products with better operational efficiency and superior physical appearance are launched consistently. This increases the threat of substitutes for B&O.
Competitive Rivalry: High – The rise of electronic giants in the industry and technological advancements has led to an increase in competition for B&O.
Competencies of B&O
The point of differentiation for B&O is the artistic design of its products offered with high quality. The company is renowned for creating products with appealing and creative product designs.
The products offered by Bang & Olufsen have high functionality and exterior appearance, which are instantly recognizable and position the company with unique product development and design.
The company has positioned itself as a company offering high-end and high-quality products to leverage to improve its market share globally.
Areas of improvement
Post the launch of the Apple iPod. The market has witnessed an increasing shift towards products that offer value in terms of technology coupled with a superior physical appearance.
B&O’s core strength is its innovative physical product designs. However, now, the company should be focusing on product innovation to improve the production process and software rather than just concentrating on the design and outer look of its products.
The company needs to think out of the box to develop products according to the demands of the modern world and not deal with the products with a traditional outlook.
Bang & Olufsen needs to look for great design by developing innovative production processes and software to catch up with the industry competition.
2. Take a closer look at the B&O design process to try to understand better how it works- how would you describe it?
The design process at B&O can be defined as follows:
- Bang & Olufsen never employed in-house designers. They believed designers didn’t need to understand the industrial limitations. As a result, designers were…
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