The case describes the development of Bang & Olufsen, their strategic decision in the nineties to focus on luxury electronics, their innovation and branding strategy, their investment program in exclusive retail shops (B1 stores) and their large scale entry into the US market in the 1998 - 2003 period. By 2003, the company was very profitable, but had to deal with a declining share price, prompted by concerns over its future.
The case is very well positioned to allow a discussion of: - Niche vs. mass market business models and strategies and the sustainability of each. - The identification of competitive advantages and disadvantages of a firm. - Outsourcing vs. insourcing of competencies (e.g. design). - The process of resource accumulation (e.g. branding). - When vertical integration (in retail stores) is justified or not.
- NICHE STRATEGY
- DIFFERENTIATION STRATEGY
- LUXURY PRODUCTS
- VERTICAL INTEGRATION
- FOREIGN DIRECT INVESTMENT
- COMPETITIVE ADVANTAGE: SCALE VS. SCOPE