Barco
Projection Systems

Decision case

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Company Background:

Barco
Projection systems is the second largest division of Barco N.V Headquartered in
Belgium. This specific division was formed to pursue the technology of video
projection. It designed manufactured and sold sophisticated video projectors
for industrial use and applications. Those projectors can be used to project
images and information on to large screen. What makes BPS stands out is their
scan rate, which measure the speed at a projector was able to process
electronic signal. BY 1989, BPS has 3 lines of projectors: those are  Video, data and graphics, projector and they
are the leaders in the entertainment, training and presentation market. The
company is currently obtaining 55 percent of the graphic projector market share
with 2 percent annual growth potential

Case Overview:

One month ago the Sony corporation surprised BPS by
unveiling it’s 1270 type projector this projector has a big competitive
advantage over the in terms of video image and resolution and is rumoured
priced 20-40 percent below the established market price in its relative performing
class. Now the company must respond to it and come up with solutions.

 

Strength: and strategy of the company ,

Emphasis and commitment on research and development, in
the last 10 years the companyde votes   10 percent of the company turnover dedicated
to the research and development program. Distribution advantage as Barco’s
projector has a dealer reputation for its high quality and reliability. All
those are a great sign of customer loyalty.

 

Just as stated in the article what makes them stand
out is the scan rate, with three different types of projector, not only give
different user different pricing level option but also the level of combability
is different. The low-end Video projectors was designed for combability with
standard video sources, scan at 16KHZ the data project. The data projector scan
16 to 45 KHZ, and most high-end product the graphic projector scanning from 16
to 72 kHz. It is not hard to see in
Exhibit 6, in comparison to the competitor of Sony Elecrohome and NEC that
both Barco’s model are way ahead of its competitive when it comes Scan rate and
resolution. The wide scan rate range allows the projector to be compatible with
many different devices and therefore increase the flexibility for the users.

The high number in resolution promise a better quality
of final image. The company is also actively upgrading their system and
matching their scanning frequency along with the most recent technology or
devices.

According to table c: BPS takes on more than 55% of
the market share for the highly sophisticated video projector, this is a very
great sign as we can see that they have built the customer loyalty and
reputation

 

Weaknesses:

Consumer friendly: it is known that BPS has good
reputation among the dealers however they lack customer friendliness, it has
been complaint by the end users that sometimes BPS projectors are very complex
to use and understand. Those kinds of complexity slows inefficiency and at the
same time can potential hurt its sales.

 

Mistakes:

The reliance on the Sony’s component, it is very scary that BPS is replying on Sony as their
source of the part tube.

Tube is very important part of the projector, as it
takes around 15 percent of the cost structure. In the late 1985 Sony has became
their only supplier and the company terminated their relationship with their other
suppliers. This is the one of the worst move a company can make, buying parts
from their competitor, not only will Sony know all the potential moves, demand,
inventory capacity and many important information. They will also have a huge
leverage when competing against BPS. Just like what the operation manager said
in the case “Anytime Sony wants to squeeze us out they can just raise the price
of their tubes” In the case study one manager even stated that ” we share a certain
amount of technical and development information with Sony , while they keep us
abreast of their latest development” Obtaining tubes from outside suppliers
might be more expensive but compare to the risk of leaking important R&D
secrets or Sony cutting off the supply, the little increase in cost is minimal.
 BPS must
actively seek independent tube supplier as soon as possible, although it might
cost more in the short run, but it is nothing compare to the potential risk and
cost of Sony terminating the contract for tube supply.

 

The Competition

In august 1989, at the Siggraph trade show, Sony
previewed a projector the 1270 which can scan 75kHz that is 3kHz more than
BPS’s recent model along with that also has better image quality and resolution.
It is rumoured that the price of unit will be 20 percent lower to the standard.

 

Eltrohome: is a private held native Canadian company,
it is third in unit sales behind Sony and BPS, However they only operate in the
field of dara and graphic projectors. On the other hand NEC is the other main
cpmpeitior , however this Japanese electronics manufacturer is not performing
too well as they lack effective distribution channels.  

 

Opportunity:

The Opportunity of the BPS lies in the niche market of
high end graphic projector, it is more expensive and is in a niche market. BPS
has an amazing reputation with the customers and are preferred by the dealers
whom would usually prefer to carry their products. BPS must take advantage of
those strength and expand their product in the high-end market.  According to table A, among all the projectors
graphic projectors has the highest predicted annual growth of 40.2% for the
next 5 years. Sony’s new project’s targeting market is north America and Europe,
however according to Table B, Asia has the highest predicted annual growth, between
1980s and 1990s Asian economy booming rapidly and therefore the demand for industrial
used projector will only rise. Therefore, the opportunity they should focus on
is the graphic projector and target the booming Asian market.

Evaluation: The vision Dejoghe talked
about is that both those company will stay at their own market, agreeing upon
to the established market price and gain profit from that. Where Sony would get
some information about BPS and in return they will supply the tubes for the
BPS. Sony’s projector performance and price are typically lower than BPS as
they are more consumers focused. The reason Sony reject that vision is because
they are no longer satisfied with their current market, market image and their
market share. The want to change the company reputation makes customers believe
that they are not just a low-end cheap products producer, but they want to
reconquer the graphic and data markets

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