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Barco Case Analysis
Barco Case Analysis
Erik Dejonghe, the iconoclast Senior Vice-President and chief operating officer of
Barco Projection systems was in a quandary regarding a befitting riposte to an
ominous product launch bulletin by a rival firm Sony.
PROBLEM/DECISION
OPTIONS
Pricing options:
– Induce a considerable price reduction its leading model viz-a-viz the
BG 400
Product options:
-Work on developing their proposed model, the BG 800. Arguably, the best
option available to Barco, introducing this latest addition to their product
line would effectively negate the threat posed by Sony. A breakneck scan
speed eclipsing that of Sony’s 1270 by far (90 khz compared to 1270’s 75)
and nonpareil performance would strip Sony of the benefits it seeks to
gain with its fresh offering.
CRITICAL EVALUATION
The core issue of the entire melee at Barco is essentially due to their inadequate
anticipatory skills with regards to the sensing where the market is headed and
what the competitors are up to. Despite being technology-driven, this was
already the third time that Barco engineers were caught of guard by Sony in the
tube domain (2):
· In 1985, Sony’s 1020 projector, although slower than Barco’s projectors at the
time,had a sharper focus, indicating a better quality tube.
It is evident that Barco in any case would optimise profit by maintaining current
price levels of the BG400, even taking into account that this could reduce market
share by up to 60%.
However, a gospel truth Barco should realize is that it can never compete with
Sony on the price wars front. Barco has always been a high-end, premium
product company and Sony a low-end, diversified one. A reduction in price will
prompt Sony to reduce their prices further, erding the profits further.Due to
economies of scale, Sony leverage to lower prices is greater than that of Barco.
Barco can either proceed with the launch of BD 700 or can even strive to develop
an advance version of the BD700, the BG700, hoping that it will be launched on
time to compete with Sony’s 1270. Moreover there were robust profitability
forecasts of $ 4.3 million and orders had already started puring in for which
commitments too been promised.
However, even if Barco mangges to achieve this feat, it will not yield the
desirable results since it cannot out perform Sony 1270 in terms of the
performance.
PROPOSITIONS
3. A key factor for Sony’s remarkable success is their focus on low end
products, as opposed to Barco’s high end objectives. The latter should
pay attention to this market and concentrate on diversification and
launch brand proliferation. They can make a brand to focus on volume
and low price
7. Yet another critical factor which Barco would require to sustain their
ascendancy in the projectors market is to perform efficient
environment and competitor scanning to stay ahead in the race. This
would certainly ensure that Barco is not caught off guard again by
competitor’s strategies.
8. A major drawback of Barco projectors are their complexities and
specifications. It would be handy for Barco to make their products more
user-friendly.