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* 5C’s Analysis: Customer Needs - Barco Projection Systems catered to the need of large audience viewing by offering mainly three categories of products - video, data and graphics projectors initially to consumer markets and later to industrial markets. These projectors could be connected to TVs, VCRs and computers. Company Skills - Barco N.V. is one of the top three worldwide manufactures with a focus on expensive high quality products in a niche market.
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    *<insert cover page and executive summary> 5C’s Analysis:   Customer Needs - Barco Projection Systems catered to the need of large audience viewingby offering mainly three categories of products - video, data and graphics projectors initiallyto consumer markets and later to industrial markets. These projectors could be connected toTVs, VCRs and computers. Company Skills - Barco N.V. is one of the top three worldwide manufactures with a focuson expensive high quality products in a niche market. It focuses on graphic projectors, whichhas the maximum growth and revenue in the projector market. Based on Barco’s performance as a product leader it had the ability to charge higher prices than the competition. Barcodesigned and manufactured sophisticated projectors for industrial applications. The projectorshad a reputation among dealers for the best quality final image and excellent reliability onceinstallation was completed. But the major differentiating factor was the much higher scanrates compared to those of the products of its competitors. However, most of Barco ’s products were high end ones and involved unnecessary intricacies. Competition - The major competitors of Barco in the industrial data and graphics segmentswere Sony, Electrohome and NEC whereas in the video and low-scanning data segments,several other firms operate like Panasonic, Mitsubishi and GE. The projector market wasexpected to grow at 8.5% a year. Sony was the market leader in video and data projectors.The products were inferior in quality as compare to those of Barco but were priced at a muchlower rate (15%). Sony leveraged its extensive dealer coverage. In the recently concludedSiggraph trade show, Sony introduced the model 1270 which was a lethal combination of higher performance coupled with low price. When compared to Barco’s existing & proposed  projector, it threatens Barco's market share and its traditional market segmentation. It isestimated that it could erod e approx. 75% of Barco’s forecasted profits for 1990.Electrohome catered only to data and graphics projectors and was the largest competitor of Barco in the graphics segment. It had comparable distribution strengths but was priced at alower rate. NEC operated only in the data and video projectors segments and predominantlyin the Far East. However, it could not perform to its potential due to its inefficient distributionnetwork. Collaborators - Barco had a two-step distribution system, which was composed of 45distributors and about 400 dealers globally. The ratio of fully owned distributors was about11%, but they made up 61% of Barco's total unit sales and 59% of its margin. The reason thata few fully owned distributors were in charge of more than half of unit sales, revenues, andmargins was partially attributed to the complexity of the projectors. To market itsprojectors well, Barco needed to have system dealers that had the know-how of integrate andinstall equipment packages. Because of high margin, the existing dealers liked to sell Barco'sprojects but the intentional product complexity prohibited the expansion of distributionchannel.All of Barco ’s projectors had 3 major components –  tubes, lenses and electronics. Initially,Barco sourced its tubes from Clinton’s in the US but later shifted to Sony’s in -house supplier,Sony Components, due to superior quality, although they compete with the Sony projectors. Context - One of the major factors for projectors was the scan rate which increase with thesophistication of the application. The projector had to match the scan rate of the source toproduce a clear image. Consequently, the scan rates had to be continually upgraded to keepup with the advances in the computer technology. The consumer buying trend was once everyfive years.  Projectors - Market Place Vision Most of Barco’s projections were based on the assumption that other market players would respect their vision of the marketplace. However, in this case Sony seems to have not sharedthe same vision as Barco  –    that of coexisting without eating into each other’s growth opportunities. In a market place a competitor generally accepts another’s “vision” of the market in case the two players have a synergizing and strategic linkage. Here, Barco had a complete dependencyon Sony Components for supplies of the tubes that went into their projectors but at the same time Barco brought Sony’s costs down and provided sales for the industrial segm ent of SonyProjector Components. Barco believed that all the players in the marketplace must follow thesame development path, similar to theirs. There is another case when the competitors follow a single firm if it’s the market leader with the greatest amount of innovation. Here, the competitors assume that the market leader haschecked the pulse of the consumers and hence tend to share the same vision. If the mainplayer in the market is a firm is large with economies of scale, it has the capability to driveout its competition by lowering the prices beyond the costs of the competitors. This is alsoanother case when the competitors accept the vision of the market leader. A competitor may reject another firm’s vision of the market place if it believes tha t its visionis better and has aspirations to be the market leader. There can be substantial evidence frommarket surveys and research that show a market situation much different from what the otherfirm believes in. Sony as a serious threat to BPS Sony’s latest product  –  the 1270 is a credible threat and should be taken seriously. Barco hasusually been the fastest innovator in the market and is driven by technology. They market  their newest innovation to the market and charge a good premium price and the priceseventually come down gradually with time as the competitors catch up.Sony on the other hand follows a market penetration strategy as they see an opportunity  based on BPS’s premium at the high end. They released the model 1270 with a much better  scan rate and priced it lower than the highest selling product of BPS. They also have addedadvantages in terms of their distribution channels and network of 500 dealers, a good productreputation, economies of scale and ease of use of the product. Sony aims to re-conquer thedata and graphics markets wishing to break their market image as a mass producer of low-endproducts.Thus Sony threatens BPS on three main fronts:1.   Product Competition: Loss in revenue of up to 75% of the forecasted profits for 1990and consequently a decrease in market share.2.   Market Segmentation: Sony has tried to break the segmentation between data andgraphics market.3.   Brand: BPS is known to be a technology leader and innovator. Sony has made anattempt to attack  BPS’s technology leader  image head-on. Barco’s strategy so far –  has it worked in a high technology business? Although, pricing strategy may work in short run, “Continuous innovation” is definitely a necessity in high technology industry wherein only innovative products or solutions canenable a company to stay ahead of its competition. However, in such high-tech industry, onealso needs to collaborate with other firms that can complement the skills/expertise of thecompany and add value in its product development cycle. Having said that, BPS had topartner SONY for better quality tubes (the only supplier in the market for such quality tubes)even though SONY was a direct competitor in the same business segment. This led to asevering of relationship with the old supplier of tubes and increased the dependency of BPS
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