Business Management HL Extended Essay

Business Management
Extended Essay
__________________________________________
Title: Strategic alliance of Go Pro and Red Bull
Source: https://worldvectorlogo.com/downloaded/gopro-hero and https://www.freepnglogos.com/images/red-bull-logo-2826.html
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Research question:
To what extent has the equity strategic alliance between GoPro and
Red bull, helped GoPro remain competitive in the action camera
industry?
______________________________________________________________________
Session: May 2023
Word count: 3999
1
Business Management Extended Essay, May 2023
To what extent has the equity strategic alliance between GoPro and Red bull, helped GoPro remain competitive in the action
camera industry?
________________________________________________________________________________________________________
Table of Contents
Introduction
Methodology
Sources
Business theories and tools used
Main findings and analysis
Prior to the alliance, reasons causing formation of this alliance
Porter’s 5 forces
Bargaining Power of Suppliers
SPACE Matrix
Quantitative analysis
Ratio analysis
Conclusion
Bibliography
Appendices
2
camera industry?
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Introduction
On May 24, 2016 GoPro confirmed the information by tweeting that GoPro and Red bull
GmbH are entering into a strategic alliance. GoPro is an American company founded in
20021 by Nicholas Woodman that manufactures and markets action cameras that they
initially invented. The company's products are used for capturing photos and videos in
extreme environments such as, extreme temperatures, underwater, skydiving or even in
space. Red bull GmbH is an Austrian company which developed the concept of
including taurine in caffeinated energy drinks in 1980s 2, and today dominates its sector
by being recognized as one of the most successful brands of all time.
Both companies entered an equity strategic alliance which gave Red bull a certain
undisclosed percentage of equity in GoPro, while allowing GoPro to be “Red Bull’s
exclusive provider of point-of-view imaging technology for capturing immersive
moments from the energy drink’s events.”3
GoPro engaged into multi-year contracts for the leasing of property, the purchase of
sponsorships with resorts, athletes, and event planners as part of its marketing
initiatives, software licensing for its financial and IT systems, and numerous other legal
obligations. The Company and Red Bull GmbH (Red Bull) engaged into a 3.5-year
partnership in May 2016 that covers content production, distribution, and cross-
promotion. Unregistered restricted shares of the Company's Class A common stock
1
We Are GoPro. gopro.com/en/us/legal/about-us.
2
Red Bull Energy Drink - Official Website. www.redbull.com/in-en/energydrink/company-profile.
3
“Red Bull and GoPro Ink Exclusive Global Partnership ‘to Inspire the World to Live a Bigger Life.’” The Drum,
www.thedrum.com/news/2016/05/24/red-bull-and-gopro-ink-exclusive-global-partnership-inspire-world-live-bigger-life. Accessed 2
Feb. 2023.
3
camera industry?
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having a fair value of about $7 million were given to Red Bull as part of the agreement;
these costs are being spread out over a year as a component of sales and marketing
expense.4
My passion for gadgets especially the ever-changing and advanced technology used by
GroPro, which was quite intriguing as an alliance with Red Bull, a business in a
completely diversified field, lead to deciding upon this essay. The intent is to evaluate
the strategic alliance and how it has helped GoPro gain a competitive advantage in the
action camera industry. The alliance’s potential to grow or fail, as two companies that
work in different fields have formed the following research question:
To what extent has the equity strategic alliance between GoPro and Red bull,
helped GoPro remain competitive in the action camera industry?
4
“FORM 10-Q.” FORM 10-Q, GoPro, 2016, http://www.sec.gov/Archives/edgar/data/1500435/000150043516000116/gpro2016-
06x3010xq.htm.
4
camera industry?
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Methodology
Sources
Despite knowing that primary research might supply new information about employee
perspectives because of the size of the sample and the geographic location of GoPro, it
becomes exceedingly difficult to acquire a sample that is even relatively unbiased.
Consequently, all research will be secondary which will be collected through newspaper
articles/blogs, case studies, research papers. GoPro’s financial documents will help in
identifying how the company grew after the alliance by comparing reports before the
data of alliance and after.
Limitations
 Online articles/blogs cannot always be trusted as they might be out of date or
incorrect.
 Go Pro is a public company5, thus financial records can be found on USA’s
SEC’s website which is usually synthesized.
 Online articles of different writers, might differ and be biased.
 Selective coverage of news, might impair the research.
The possibility of gaining sources with incorrect or unreliable data can be minimized by
evaluating the sources and confirming the data with other source.
The analysis and evaluation will involve analytical tools such as, Porter’s 5 force
analysis, SPACE matrix, Profitability ratios and Ansoff Matrix.
5
Investor FAQs | GoPro Inc. investor.gopro.com/investor-faqs/default.aspx#:~:text=GoPro%20common%20stock%20is
%20listed,under%20the%20symbol%20%E2%80%9CGPRO.%E2%80%9D.
5
Business theories and tools used
SPACE Analysis
Strategic Position and Action Evaluation (SPACE) matrix. It is a management tool used
to analyze a company's strategic position and determine appropriate actions based on
that analysis. The SPACE matrix evaluates a company based on two internal factors:
financial strength and competitive advantage, as well as two external factors, industry
strength and environmental stability. Based on the scores for each factor, a company
can be classified into one of four quadrants: aggressive, conservative, defensive, or
competitive6. Each quadrant is associated with a different set of recommended
strategies. The SPACE matrix is a useful tool for companies to assess their strategic
position and make informed decisions about future actions.
Porter’s five forces
A framework for industry analysis and corporate strategy formulation is the Porter's Five
Forces Framework.7 It helps decide the level of competition and profitability of a
business by identifying the five competitive forces that influence every industry. There
are five forces:
1) Threat of new entrants
2) Threat of substitutes
3) Bargaining power of suppliers
6
Tafti, Saeed Fallah, et al. “Assessment and Analysis Strategies According to Space Matrix-case Study: Petrochemical
and Banking Industries in Tehran Stock Exchange (TSE).” Procedia - Social and Behavioral Sciences, Elsevier BV, Nov.
2013, https://doi.org/10.1016/j.sbspro.2013.10.562.
7
“Porter’s 5 Forces Explained and How to Use the Model.” Investopedia, 1 Aug. 2022,
www.investopedia.com/terms/p/porter.asp.
6
camera industry?
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4) Bargaining power of buyers
5) Competitive rivalry
Ansoff Matrix
The Ansoff Matrix is a strategic planning tool that helps businesses determine their
product and market growth strategy. It provides a framework to help a company decide
whether to focus on existing products and markets, to enter new markets with existing
products, to develop new products for existing markets, or to enter new markets with
new products. Each quadrants depicts, market development, market penetration,
diversification and product development. All quadrants represent a different growth
strategy, with varying levels of risk. The Ansoff Matrix can help a company make
informed decisions about how to grow its business.8
Profitability ratio
Profitability ratios are used to evaluate a company's ability to generate profits 9 10. There
are many different profitability ratios, but some common ones include the gross profit
margin ratio, operating margin ratio, and net income margin ratio. Profitability ratios will
be used to determine how the alliance proved prosperous for GoPro, through their
balance sheets and profit and loss accounts that are open to access on SEC’s website.
8
Ansoff Matrix.” Corporate Finance Institute, corporatefinanceinstitute.com/resources/management/ansoff-matrix. Accessed 2 Feb.
2023.
9
Hayes, Adam. “Profitability Ratios: What They Are, Common Types, and How Businesses Use Them.” Investopedia, 11
July 2022, www.investopedia.com/terms/p/profitabilityratios.asp.
10
Schmidt, Jeff. “Profitability Ratios.” Corporate Finance Institute, 14 Feb. 2023,
corporatefinanceinstitute.com/resources/accounting/profitability-ratios.
7
Main findings and analysis
Prior to the alliance, reasons causing formation of this alliance
Analyzing the needs of both firms for formation of alliance allows for a better
understanding of this case study.
GoPro’s need for the alliance
In 2015, GoPro experienced high fluctuations in their finances this was because of their
failed product, Hero 4 Session. The action camera turned out as a failure due to its
smaller size compared to predecessor products and its shape, it was a small cube with
a camera and a button that was to be pushed to start recording. This product was
different from its predecessor Hero4 which was sold in large volumes, this was an
innovative product that was deviated from their flagship products by being lighter,
compact and easy to use. GoPro's Hero4 Session was said to be the smallest and most
convenient camera the company had produced. It combined the best of GoPro's
engineering and user experience to provide a user-friendly solution for capturing life's
moments. 11The Ansoff Matrix below showcases GoPro’s new product line in contrast to
its previous product.
11
“GoPro Launches HERO4 Session: The Smallest, Lightest and Most Convenient GoPro, Yet.” GoPro Launches HERO4 Session:
The Smallest, Lightest and Most Convenient GoPro, yet | GoPro, 6 July 2015, gopro.com/en/us/news/gopro-launches-hero4-
session-the-smallest-lightest-and-most-convenient-gopro-yet.
8
camera industry?
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Figure 1
Due to GoPro’s product-led orientation approach while making their Hero 4 session,
they were unable to meet the wants of their customers causing their product to fail 12 due
to limited demand. GoPro originally priced this product at $399 and due to its negative
response they had decreased the price13 so much so, that their operating costs were
higher than their revenue. GoPro’s financials continued to worsen to the point where
their net income turned out negative.
Figure 2
Gopro's key financials

$450,000
$350,000
$250,000
$150,000
$50,000
($50,000) Quarter 1, 2015 Quarter 2, 2015 Quarter 3, 2015 Quarter 4, 2015 Quarter 1, 2016
($150,000)
Rev- 363109 419919 400340 436603 183536
enue
Gross 163733 194340 186630 128511 59714
profit
Net in- 16752 35031 18799 -34451 -107459
come
Operat- 22268 46138 27636 -41294 -121742
ing In-
come
12
Soin, Gaurav. GoPro: How a Hero Is Losing Millions - IJRAR. 2019, https://www.ijrar.org/papers/IJRAR19K1900.pdf.
13
Cipriani, Jason. “GoPro Drops Price of Hero4 Session for Second Time.” Fortune, 24 Apr. 2021,
fortune.com/2015/12/04/gopro-session-price-drop.
9
camera industry?
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Alliance with Red Bull will be necessary considering GoPro’s declining finances. This
alliance will help GoPro associating their brand with a well-known and respected name
in the extreme sports and action sports communities, which would help to increase the
company's visibility and appeal to a wider audience of potential customers who are
interested in action sports. The partnership also includes co-branded events and
products, such as the previous "Red Bull Stratos" project, where GoPro was able to
showcase their cameras in capturing the footage of the highest skydive 14, which helped
to enhance their brand as a leader in action camera technology.
Red Bull’s need for the alliance
Red Bull's marketing strategy is to target a wide range of consumers including athletes,
students, and busy professionals. The company uses a mix of partner marketing and
broadcast marketing channels to reach its target market. Broadcast marketing channels
include television, radio, and print advertisements, while partnership channels include
sponsoring sporting events, sponsoring extreme sports athletes, sponsoring influencers,
and hosting events. Being able to reach out to a wide range of consumers through this
marketing strategy Red Bull’s expenditure had sky-rocketed. A collaboration would
reduce Red Bull's expenditure in cameras used to film sporting events. By collaborating
with GoPro, Red Bull would gain access to the company's cutting-edge cameras and
technology, allowing them to capture high-quality footage for use in marketing and
promotional materials. Furthermore, the partnership with GoPro provided Red Bull with
access to a larger audience of extreme sports enthusiasts who were previously
14
10 Years Later: Remember When Red Bull Sent HD HERO2 + a Human to Freefall From Space.
gopro.com/en/us/news/red-bull-stratos-video-10-years-later.
10
camera industry?
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unfamiliar with the Red Bull brand. This collaboration aided Red Bull in broadening their
reach and showcasing their events and athletes in a more engaging and dynamic
manner.
In short it is evident that need of GoPro is desperate and the alliance with Red Bull is a
necessity for them in order to thrive, as GoPro is constantly making losses. On the other
hand, Red Bull isn’t in a situation where this alliance is a need, rather this alliance would
help Red Bull lower the cost for action cameras for GoPro.
11
camera industry?
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Porter’s 5 forces
Threat of new entrants
The top action camera firms worldwide 15 include Sony, Garmin, DJI, Olympus, YI,
Insta360 and GoPro. The action camera market is extremely competitive. Due to the
stringent rules and procedures set forth by certification organizations like patents, and
copyrights, this industry has substantial barriers to entry. A barrier to entry being,
economies of scales, smaller firms cannot exploit, which deters new competitors from
the market. Due of the audience's shared interests and ability to reach a larger
customer base, GoPro will have access to Red Bull's current and potential customers.
The partnership will also help GoPro further develop its brand identity and offer its
customers high-quality products16. The industry requires significant expertise and capital
to produce high-quality cameras. GoPro's partnership with Red Bull has created a
barrier to entry for potential competitors. The alliance has enabled GoPro to establish
itself as a leading player in the action camera market and strengthened its brand
recognition and image. This makes it more difficult for new entrants to establish a
foothold in the market, as they would need to compete with GoPro's established brand
and extensive distribution network. Reliability or trust of consumers, is a significant
barrier for new entrants, as customers tend to trust established companies and are
likely to purchase their products. The combination of these factors makes it difficult for
15
Zamanian, Kavon. “The Best GoPro Alternatives in 2016.” The Beat: A Blog by PremiumBeat, 13 Sept. 2016,
www.premiumbeat.com/blog/best-gopro-alternatives-2016.
16
Richardson, Jillian. “Will GoPro Content Knock Redbull From Its Content Marketing Throne?” Contently, 3 Feb. 2017,
contently.com/2015/09/15/why-gopro-could-replace-red-bull-as-the-new-king-of-content-marketing.
12
camera industry?
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competitors to enter the market and keeps low the threats of new firms entering the
market.
Bargaining Power of Suppliers
The digital camera industry's supplier bargaining power is considered moderate. This is
due to the fact that suppliers possess specialized technology and skills, however, there
are limited reliable suppliers available. Choosing a supplier is a crucial decision for
companies as switching suppliers could disrupt their operations.
Figure 317
The success of GoPro depends on its suppliers, and a partnership with Red Bull will
further streamline their supply chain further. GoPro maintains six third-party distribution
centers to store finished items and ship them to retailers and distributors around the
world. While GoPro only buys camera parts from a select few providers, those suppliers
have a lot of negotiating leverage.
17
Withers, Brian. “1 Thing GoPro Is Doing Right.” The Motley Fool, 29 Aug. 2017, www.fool.com/investing/2017/08/28/1-
thing-gopro-is-doing-right.aspx.
13
camera industry?
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Due to their dependence on the firms, suppliers have some influence, but as the
companies are also the main producers of digital cameras, this influence is balanced by
the suppliers' dependence on the companies as well.
Bargaining Power of Buyers
GoPro's customers have a lot of bargaining power because alternatives are available
and switching doesn't cost money. This shows that even though there are more buyers
than sellers, there aren't as many opportunities for buyers as there might be for
suppliers. However, the company's affiliation with the well-known action sports brand
Red Bull may increase consumer loyalty and reduce buyer bargaining power.
Threat of Substitutes
The threat of substitutes is the potential for products or services to replace the
company’s offerings. With smart phones advancing and gaining the capability of
recording in high definition alongside features of being water resistant, there is a great
chance for people to rather purchase smart phones18 than action cameras due to smart
phones better utility and its multipurpose usage.
Competitive rivalry
The level of competition between already-existing businesses in a market is called
competitive rivalry. For GoPro, the competitive rivalry is high. Other makers of action
cameras like TomTom and Garmin are fierce rivals of GoPro. The company's financial
difficulties in 2015-16 have also heightened the level of competition. However, the
18
“How Smartphones Devastated the Camera Industry.” World Economic Forum, 8 Feb. 2020,
www.weforum.org/agenda/2019/09/impact-smartphones-had-camera-industry.
14
camera industry?
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partnership with Red Bull has enabled GoPro to stand out from the competition and
boost its competitiveness through greater brand recognition.
Popularity of top brands in the action camera indus-

try
100
90
80
70
60
50
40
30
20
10
0
16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16
/ 20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20
1 1 1 2 2 3 3 3 4 4 5 5 5 6 6 7 7 7 8 8 8 9 9 0 0 0 1 1 2 2
/0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /1 /1 /1 /1 /1 /1 /1
03 15 27 08 20 03 15 27 08 20 02 14 26 07 19 01 13 25 06 18 30 11 23 05 17 29 10 22 04 16
GoPro: (Worldwide) Garmin Ltd.: (Worldwide)

Nikon: (Worldwide) Olympus Corporation: (Worldwide)
TomTom: (Worldwide)
The above graph showcases the popularity of the top brands in the action camera
industry. The scale 0-100 defines popularity, greater the number, greater the
popularity19. It is seen that after a failed launch of Hero4 Session in June 2015 due to
consumer dissatisfaction, and attempts to increase sales by extreme reductions in sale
price for the same product in December 2015, Red Bull’s year-round co-branded sport
campaigns helping maintaining stability in GoPro’s recognition and awareness in the
action camera market as GoPro did not launch any product till late October 2016.
19
Ramadanti, Ristanti. “Telling Stories With Google Trends Using Pytrends in Python.” Medium, 30 July 2020,
towardsdatascience.com/telling-stories-with-google-trends-using-pytrends-in-python-a11e5b8a177.
15
camera industry?
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SPACE Matrix
Financial strength (FS)
GoPro's financial strength after its alliance with Red Bull was not very strong, as the
company experienced declining revenue and profitability during that period. In 2017,
GoPro's revenue was $1.18 billion, a significant decline from its peak revenue of $1.6
billion in 201520. The company also reported a net loss of $182.9 million in 2017,
compared to a net loss of $419.9 million in 2016. Additionally, GoPro's stock price fell
from a high of $98.4721 in October 2014 to a low of $4.04 in December 2018.22
23
Table 1
Formula Calculation Answer
Return on Net income −183873 -21.62%

∗100 ∗100
Cost of investment 850246
Assets in 2017
Return on −419003 -45.41%

∗100
922640
Assets in 2016
Current ratio in Current Assets 573687 1.54:1

Current Liabilities 370531
2017
Quick ratio in Current Assets−Inventory 573687−150551 1.14:1

Current Liabilities 370531
2017
20
“GoPro Ceased to Be a Loss-making Company.” TAdviser.ru, tadviser.com/index.php/Company:GoPro.
21
La Monica, Paul R. “GoPro Shares Down More Than 20% From Their Highs.” CNNMoney, 14 Oct. 2014,
money.cnn.com/2014/10/14/investing/gopro-stock-bubble-burst/index.html.
22
“GoPro - Stock Price History | GPRO.” MacroTrends, www.macrotrends.net/stocks/charts/GPRO/gopro/stock-price-history.
23
GoPro. “Annual Report - 2017.” Document, 2017,
https://www.sec.gov/Archives/edgar/data/1500435/000150043518000010/gpro2017-12x3110xk.htm.
16
camera industry?
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Debt-to-equity Total Liabilities 551541 1.846:1

'
Total Shareholde r s equity 298705
ratio in 2017
Interest EBITDA −31368 2.29:1

Interest expense −13660
coverage ratio in
2017
In 2017, GoPro's Return on Assets (ROA) as -21.62%, indicating that the company was
not profitable and their assets aren’t efficient. However, this was an improvement from
the previous year, where the ROA was -45.41%. This improvement can be partially
attributed to the partnership with Red Bull, as it helped GoPro increase its brand
visibility and market share.
Liquidity ratios such as the current ratio and the quick ratio also provide insight into a
company's financial strength. In 2017, GoPro's current ratio was 1.54:1, indicating that
the company had enough current assets to cover its current liabilities. The quick ratio
was also healthy at 1.14:1, indicating that the company had enough liquid assets to
cover its short-term liabilities. These ratios suggest that GoPro had a strong liquidity
position in 2017. Leverage ratios such as the debt-to-equity ratio and the interest
coverage ratio also provide insight into a company's financial strength. In 2017, GoPro's
debt-to-equity ratio was 1.846:1, indicating that the company had more debt than its
equity. The interest coverage ratio was 2.96:1, indicating that the company is generating
enough earnings to cover its interest expenses. These ratios suggest that GoPro had a
moderate level of leverage in 2017. Overall, while GoPro's financial performance was
not stellar in 2017, the company showed some improvement from the previous year.
17
camera industry?
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The partnership with Red Bull likely contributed to this improvement by helping GoPro
increase its brand awareness24 and market share, while GoPro continued making
financial losses.
Competitive advantage (CA)
The alliance between GoPro and Red Bull has provided GoPro with a competitive
advantage25 by allowing GoPro access new markets and extend its customer reach.
Red Bull has a significant presence in the extreme sports industry and boasts a large
following base of athletes and enthusiasts. With formation of the alliance, GoPro has
been able to utilize its partner's brand recognition to enhance its own visibility 26 and
credibility in the action camera market, which had taken a considerable fall due to its
failed product launch. GoPro has always been known for its high-quality cameras, and
the partnership with Red Bull has further strengthened this aspect. The Red Bull
phenomena27, any sport/company that is sponsored by Red Bull faces great economic
growth and brand awareness, due to Red Bull’s marketing strategy. This has helped
GoPro to maintain its reputation for producing durable and reliable cameras with high-
quality imaging capabilities. The alliance with Red Bull has helped GoPro to create a
unique brand image that appeals to adventure enthusiasts. Red Bull is known for
sponsoring extreme sports events and competitions, and by associating with Red Bull,
24
CoSchedule. “GoPro’s Marketing Strategy: Creating a New Height of Success.” CoSchedule Blog, 5 Jan. 2023,
coschedule.com/marketing-strategy/marketing-strategy-examples/gopro-marketing-strategy.
25
Randewich, Noel. “Red Bull Deal Gives GoPro Wings.” U.S., 24 May 2016, www.reuters.com/article/us-gopro-redbull-
idUSKCN0YF2IZ.
26
Graziano, Dan. “GoPro, Red Bull Partner to Capture the World of Extreme Sports.” CNET, 24 May 2016,
www.cnet.com/tech/computing/gopro-and-red-bull-partner-to-capture-the-world-of-extreme-sports.
27
Kunz, Reinhard, et al. “Sport-related Branded Entertainment: The Red Bull Phenomenon.” Sport, Business and
Management, vol. 6, no. 5, Emerald Publishing Limited, Oct. 2016, https://doi.org/10.1108/sbm-06-2016-0023.
18
camera industry?
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GoPro has been able to position itself as a brand that caters to this segment of
customers. This has helped to differentiate GoPro from its competitors and create a
strong brand image.
GoPro's market share in 2017 was 21.3%, which is slightly lower than its market share
of 26.2% in 2016. However, GoPro remained the market leader in the action camera
industry. 28
The alliance between GoPro and Red Bull has also enabled the former to consolidate
its position in the industry. By collaborating with Red Bull, GoPro can differentiate itself
from its competitors, create a unique value proposition and build brand recognition and
loyalty among its customers, which in turn has strengthened its market position.
Environmental Stability (ES)
GoPro operates in the consumer electronics industry, which has constant and rapid
technological innovations and intense competition. Operating in an industry which is
highly sensitive to macroeconomic conditions, with consumer spending on discretionary
items such as action cameras subject to fluctuations in GDP growth and inflation.
However, the company's partnership with Red Bull has helped to mitigate these risks by
targeting a niche market of extreme sports enthusiasts who are less affected by
economic downturns.
The technology used in action cameras is constantly evolving 29, and GoPro's alliance
with Red Bull can help the company to stay at the forefront of these technological
28
NPD. “Press Releases Archives.” The NPD Group, www.npd.com/wps/portal/npd/us/news/press-releases/2018/2017-us-digital-
imagery-market-recap-finding-growth-amidst-the-challenges.
29
Zach. “History and Evolution of Action Cameras.” Pevly, 14 Oct. 2021, pevly.com/action-camera-history.
19
camera industry?
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advancements. Red Bull has a significant presence in the extreme sports industry,
which can provide GoPro with insights into emerging trends and technologies.
Industry Strength (IS)
The partnership with Red Bull has opened up new growth opportunities for GoPro,
particularly in the extreme sports and adventure market. Red Bull is a major player in
this industry and has a massive following of athletes and enthusiasts 30. By collaborating
with Red Bull, GoPro has been able to tap into this market and expand its customer
base31. This has helped GoPro to increase its revenue and market share, which in turn
has strengthened its position in the industry.
Graphing has been done on GeoGebra as can be seen on the next page:
Internal Score Average External Score Average
strategic strategic
position position
Financial +3 0.5 Environmental -1 1
strength stability
Competitive -2 Industry +3
advantage strength
30
Puzzlelondon. “Red Bull’s Success in Sponsorship, Marketing and Branded Content.” Puzzle | Digital Agency, 4 Sept.
2020, puzzlelondon.com/2016/09/06/red-bull-sponsorship-marketing-content.
31
Ratcliff, Christopher. “Red Bull Vs GoPro: Taking Content Marketing to the Extreme.” Econsultancy, 20 Aug. 2018,
econsultancy.com/red-bull-vs-gopro-taking-content-marketing-to-the-extreme.
20
camera industry?
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The collaboration between two well-known companies, GoPro and Red Bull, has
enabled GoPro to enhance its market position, expand its market share, and
differentiate its products from those of its rivals. According to the SPACE matrix
analysis, GoPro is well-suited to undertake an assertive growth strategy that prioritizes
expanding its market share. To achieve this goal, GoPro can leverage its financial
resources and competitive edge to develop innovative products, expand its distribution
channels, and capitalize on its partnership with Red Bull to showcase its products in
use. By implementing such an aggressive strategy, GoPro has the potential to establish
a lasting presence in the fiercely competitive action camera and drone industry.32
3219
GoPro. “Annual Report - 2017.” Document, 2017, https://www.sec.gov/Archives/edgar/data/1500435/000150043518000010/
gpro2017-12x3110xk.htm.
21
camera industry?
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Quantitative analysis
Ratio analysis
Table 219 ,22, 33
Period Sales Gross Operating Net income
Revenue profit income
Quarter 1, 2016 183,536 59,714 -121,435 -107,459
Quarter 2, 2016 220,755 93,002 -109,377 -91,767
Quarter 3, 2016 240,569 97,069 -115,589 -104,068
Quarter 4, 2016 540,621 212,135 -26,568 -115,709
Quarter 1, 2017 218,614 68,566 -88,215 -111,150
Quarter 2, 2017 296,526 105,632 - 24,983 - 30,536
Quarter 3, 2017 329,805 130,546 8,049 14,661
Quarter 4, 2017 334,796 79,786 -58,311 -55,848
Gebhard, Rita Feio, and Matilde Sá Lemos. “GoPro: A Threatening Future - Run.unl.pt.” GoPro: A Threatening Future, NOVA –
School of Business and Economics., 3 Jan. 2020, https://run.unl.pt/bitstream/10362/105992/1/2019-20_S1-34453-36-
Rita_Coimbra_34046-16-Matilde_Lanca.pdf.
33
GoPro. “Annual Report - 2016.” Document, 2016,
https://www.sec.gov/Archives/edgar/data/1500435/000150043517000036/gpro2016-12x3110xka.htm.
22
camera industry?
________________________________________________________________________________________________________
Profit Margins
Table 2
Quarter
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 1 Quarter 2 Quarter 4
3
2016 2016 2016 2016 2017 2017 2017
2017
Gross
Profit
32.53% 42.13% 40.35% 39.24% 31.37% 35.60% 39.58% 23.83%
Margin
(GPM)
Operating
Income
-66.16% -49.546% -48.048% -4.91% -40.35% -8.42% 2.44% -17.41%
Margin
(OIM)
Net
Income -16.67%
-58.46% -41.57% -43.26% -21.40% -50.84% -10.3% 4.44%
Margin
(NIM)
Profitability ratios
50.00%
30.00%
10.00%
Q1, 2016 Q2, 2016 Q3, 2016 Q4, 2016 Q1, 2017 Q2, 2017 Q3, 2017 Q4, 2017
-10.00%
Gross Profit Margin 0.3253 0.4213 0.4035 0.3924 0.3137 0.356 0.3958 0.2383
Operating Income Margin -0.6616 -0.4955 -0.4805 -0.0491 -0.4035 -0.0842 0.0244 -0.1741
Net Income Margin -0.5846 -0.4157 -0.4326 -0.214 -0.5084 -0.103 0.0444 -0.1667
-30.00%
-50.00%
-70.00%
Formation of alliance in Quarter 1 of 2016 has certainly helped GoPro improve their
financial situation. From having their NIM around -58.46% in the 1 st quarter, it increased
23
camera industry?
________________________________________________________________________________________________________
to -21.40% by the of the 4th quarter leaving GoPro better off at the end of 2016.
Although GoPro did not suddenly start earning profits and remained making losses, but
there was a gradual increase, indicating the impact of this alliance. Similarly there was a
minor increase to firm’s GPM between 1st quarter and 4th quarter of 2016, an estimated
6.7% increase. GoPro was also able to greatly increase its Operating Income Margin
from -66.16% in Quarter 1, 2016 to -4.91% by Quarter 4, 2016, GoPro saw a total
increase of 61.25%. In the financial year of 2017, GoPro was able to significantly
improve their profit margins. Making constant losses in 2016, in 2017 GoPro was
significantly able to improve their profit margins. In Quarter 3, 2017, GoPro was finally
able to make profits after their failed launch in 2016 which pushed GoPro over the
tipping point. This is a sign of the company's adept management, effective growth plans,
and sound financial situation34.
34
Mitchell, Julian. “The Rise, Fall, and Rise Again of the Illustrious GoPro.” The Beat: A Blog by PremiumBeat, 22 Sept.
2021, www.premiumbeat.com/blog/rise-fall-of-the-gopro.
24
camera industry?
________________________________________________________________________________________________________
Conclusion
These are the main conclusions drawn from my research and analysis, answering the
question “To what extent has the equity strategic alliance between GoPro and Red bull,
helped GoPro remain competitive in the action camera industry?”
1. Brand Recognition: GoPro has access to Red Bull's well-established reputation
for affiliation with extreme sports and adventure events. The partnership has
given GoPro access to Red Bull's audience and reputation, boosting brand
recognition and visibility in the action camera industry.
2. Joint marketing initiatives: Red Bull offers GoPro new marketing and distribution
channels owing to its extensive media presence and strong social media
following. The businesses have taken use of their collaboration to produce and
release top-notch footage showing the possibilities of GoPro cameras. As a
result, there have been increased sales and creative consumer engagement.
3. Gaining New Customers: GoPro has been able to gain a new audience and keep
hold of its current customers by capitalizing on Red Bull's standing in the action
sports industry. The partnership has also served to set GoPro apart from its rivals
and provide the business a differentiator in the congested action camera market.
Business tools like Porter’s five forces and SPACE matrix allowed better analysis of
the impact of the alliance on GoPro and also to measure the potential of this
alliance. The limitations of the alliance could be:
25
camera industry?
________________________________________________________________________________________________________
1. Dependence on Red Bull: GoPro's dependence on Red Bull for marketing and sales
channels may make it more difficult for the company to seize fresh possibilities and
expand independently.
2. Limited Control: The partnership with Red Bull would limit GoPro's ability to decide
on its brand and marketing tactics because it might have to work with its partner.
3. Resource Restrictions: The alliance will demand a large amount of time and money,
which could prevent GoPro from investing in other parts of its business.
4. Brand Identity: GoPro's brand identity may be impacted by its strong relationship
with Red Bull because Red Bull may start to be seen as the company's primary
brand.
To conclude, the alliance with Red Bull has brought GoPro a number of advantages,
but it also has some limitations that must be properly addressed if it is to succeed in
the long-run.
___________________________________________________________________
26
camera industry?
________________________________________________________________________________________________________
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Ansoff Matrix.” Corporate Finance Institute, corporatefinanceinstitute.com/resources/management/ansoff-matrix. Accessed 2 Feb. 2023.

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Hayes, Adam. “Profitability Ratios: What They Are, Common Types, and How Businesses Use Them.” Investopedia, 11 July 2022,
9.
www.investopedia.com/terms/p/profitabilityratios.asp.
10. Schmidt, Jeff. “Profitability Ratios.” Corporate Finance Institute, 14 Feb. 2023,
corporatefinanceinstitute.com/resources/accounting/profitability-ratios.
11. “GoPro Launches HERO4 Session: The Smallest, Lightest and Most Convenient GoPro, Yet.” GoPro Launches HERO4 Session: The
Smallest, Lightest and Most Convenient GoPro, yet | GoPro, 6 July 2015, gopro.com/en/us/news/gopro-launches-hero4-session-the-
smallest-lightest-and-most-convenient-gopro-yet.
12. Soin, Gaurav. GoPro: How a Hero Is Losing Millions - IJRAR. 2019, https://www.ijrar.org/papers/IJRAR19K1900.pdf.
13. Cipriani, Jason. “GoPro Drops Price of Hero4 Session for Second Time.” Fortune, 24 Apr. 2021, fortune.com/2015/12/04/gopro-session-
price-drop.
14. 10 Years Later: Remember When Red Bull Sent HD HERO2 + a Human to Freefall From Space. gopro.com/en/us/news/red-bull-stratos-
video-10-years-later.
15. Zamanian, Kavon. “The Best GoPro Alternatives in 2016.” The Beat: A Blog by PremiumBeat, 13 Sept. 2016,
www.premiumbeat.com/blog/best-gopro-alternatives-2016.
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16. Richardson, Jillian. “Will GoPro Content Knock Redbull From Its Content Marketing Throne?” Contently, 3 Feb. 2017,
contently.com/2015/09/15/why-gopro-could-replace-red-bull-as-the-new-king-of-content-marketing.
17. Withers, Brian. “1 Thing GoPro Is Doing Right.” The Motley Fool, 29 Aug. 2017, www.fool.com/investing/2017/08/28/1-thing-gopro-is-doing-
right.aspx.
18. “How Smartphones Devastated the Camera Industry.” World Economic Forum, 8 Feb. 2020, www.weforum.org/agenda/2019/09/impact-
smartphones-had-camera-industry.
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stories-with-google-trends-using-pytrends-in-python-a11e5b8a177.
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21. La Monica, Paul R. “GoPro Shares Down More Than 20% From Their Highs.” CNNMoney, 14 Oct. 2014,
money.cnn.com/2014/10/14/investing/gopro-stock-bubble-burst/index.html.
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12x3110xk.htm.
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26. Graziano, Dan. “GoPro, Red Bull Partner to Capture the World of Extreme Sports.” CNET, 24 May 2016,
www.cnet.com/tech/computing/gopro-and-red-bull-partner-to-capture-the-world-of-extreme-sports.
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puzzlelondon.com/2016/09/06/red-bull-sponsorship-marketing-content.
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33. GoPro. “Annual Report - 2016.” Document, 2016, https://www.sec.gov/Archives/edgar/data/1500435/000150043517000036/gpro2016-
12x3110xka.htm.
30
camera industry?
________________________________________________________________________________________________________
34. Mitchell, Julian. “The Rise, Fall, and Rise Again of the Illustrious GoPro.” The Beat: A Blog by PremiumBeat, 22 Sept. 2021,
www.premiumbeat.com/blog/rise-fall-of-the-gopro.
______________________________________________________________________
31
camera industry?
________________________________________________________________________________________________________
Appendices
Appendix 1: Extracts of Consolidated Balance sheet from GoPro’s Annual report of
2016
32
camera industry?
________________________________________________________________________________________________________
Appendix 2: Extracts of Consolidated statements of operations from GoPro’s Annual report of 2016
33
camera industry?
________________________________________________________________________________________________________
Appendix 3: Extracts from Consolidated Balance Sheets from GoPro’s Annual report of 2017
Appendix 4: Red Bull event in Laax, Switzerland (2010)
34
camera industry?
________________________________________________________________________________________________________
Appendix 5: Red Bull Crashed Ice Yokohama 2018
35

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Business Management

Title: Strategic alliance of Go Pro and Red Bull

Source: https://worldvectorlogo.com/downloaded/gopro-hero and https://www.freepnglogos.com/images/red-bull-logo-2826.html

Red bull, helped GoPro remain competitive in the action camera

Session: May 2023

Word count: 3999

extreme environments such as, extreme temperatures, underwater, skydiving or even in

by being recognized as one of the most successful brands of all time.

undisclosed percentage of equity in GoPro, while allowing GoPro to be “Red Bull’s

exclusive provider of point-of-view imaging technology for capturing immersive

moments from the energy drink’s events.”3

promotion. Unregistered restricted shares of the Company's Class A common stock

work in different fields have formed the following research question:

helped GoPro remain competitive in the action camera industry?

becomes exceedingly difficult to acquire a sample that is even relatively unbiased.

data of alliance and after.

 Online articles/blogs cannot always be trusted as they might be out of date or

 Go Pro is a public company5, thus financial records can be found on USA’s

SEC’s website which is usually synthesized.

 Online articles of different writers, might differ and be biased.

 Selective coverage of news, might impair the research.

analysis, SPACE matrix, Profitability ratios and Ansoff Matrix.

to analyze a company's strategic position and determine appropriate actions based on

can be classified into one of four quadrants: aggressive, conservative, defensive, or

competitive6. Each quadrant is associated with a different set of recommended

position and make informed decisions about future actions.

Porter’s five forces

Forces Framework.7 It helps decide the level of competition and profitability of a

are five forces:

1) Threat of new entrants

3) Bargaining power of suppliers

4) Bargaining power of buyers

new products. Each quadrants depicts, market development, market penetration,

diversification and product development. All quadrants represent a different growth

informed decisions about how to grow its business.8

Prior to the alliance, reasons causing formation of this alliance

understanding of this case study.

GoPro’s need for the alliance

its previous product.

their net income turned out negative.

Gopro's key financials

to enhance their brand as a leader in action camera technology.

Red Bull’s need for the alliance

sponsoring sporting events, sponsoring extreme sports athletes, sponsoring influencers,

marketing strategy Red Bull’s expenditure had sky-rocketed. A collaboration would

access to a larger audience of extreme sports enthusiasts who were previously

Threat of new entrants

and extensive distribution network. Reliability or trust of consumers, is a significant

Bargaining Power of Suppliers

companies as switching suppliers could disrupt their operations.

have a lot of negotiating leverage.

the suppliers' dependence on the companies as well.

Bargaining Power of Buyers

phones better utility and its multipurpose usage.

The level of competition between already-existing businesses in a market is called

boost its competitiveness through greater brand recognition.

Popularity of top brands in the action camera indus-

GoPro: (Worldwide) Garmin Ltd.: (Worldwide)

consumer dissatisfaction, and attempts to increase sales by extreme reductions in sale

campaigns helping maintaining stability in GoPro’s recognition and awareness in the

Financial strength (FS)

from a high of $98.4721 in October 2014 to a low of $4.04 in December 2018.22

Formula Calculation Answer