1.

Problem Statement:
BPS was in first place with 55% of the market in the graphics and second largest in data
projection in the year 1988. But, in 1989, Sony came up with 1270 superdata projector at the
Siggraph trade show and seized the first place as industrys highest- performing projection at a
low price from BPSs BG400. BPS is in a dilemma about how best to respond in a very short
span of time with limited resources at its disposal to its rival firm Sonys unexpected move which
threatened to collapse its traditional market segmentation as well as take away 75% of its
forecast 1990s profits.
2. Situation Analysis:
5C Model:
Customers:
BPS has variety of markets like entertainment, training and presentation.
For training: training centers, IBM and Group Bell etc
For entertainment: we have markets like resorts, entertainment rooms and airplanes
For presentation: board rooms, class rooms and betting shops
Context: There is a wide development in technology. Consumers basically require user friendly
high performance (scan rate) in a reasonable price. And by 1994, world -wide market for
projectors was expected to grow 8.5% per year.
Company: BPS is into niche markets and into 3 product lines: video, data and graphics. It is 2nd
in market share in data field and 1st in market share in graphics field. Has a strong R&D base.
Collaborators/complementors: BPS has 45 distributors and 500 dealers worldwide. Moreover,
dealers preferred to sell BPS products over sony because of high profit earning. But, BPS
projectors are complex and not end-user friendly.
Competitors: Major competitors include Sony, Electrohome and NEC.
Sony is major player in data segment. It is reputed for reliability and low prices.
Moreover, has in-house production of tubes.
Electrohome is competitor for BPS in graphics and priced just below BPS
NEC couldnt capture market share as expected

SWOT Analysis

Strengths
Strong reputation
High market share and video and
graphics line
Dealers preferring BPS over Sony due
to high profits
Opportunities
Can explore new markets (like Asia)
Can have their own in-house
production of tubes

Weaknesses
High price and not-user friendly
Dependence on Sony for tubes

Threats
Sony started producing high
performance products at low price and
may capture most of the market share

3. Options:

Continue with production and development of BD700 and come up with BG800 at
earliest possible time without compromising quality.
Price reduction for BG600 and BD400 to meet the target.
Suspend production of BD700 and focus all efforts on BG800 to meet the Infocomm
deadline.
Exploring potential markets beyond US and Europe.
Stepping down the value chain to ensure supply of quality tubes to end dependence on
Sony.

4. Decision Criteria:

Barco can continue with the development of BD700. By doing so, it would be able to
fulfill the advance orders and hence maintain customers belief in the company and
generate revenue even by continuing the production. This would also upbeat morale of
the engineers. Barco can start its R&D on BG800 right after the development of BD700.
Responding to the fears of European distributers, Barco can provide them with some kind
of rebate or concession. It will help Barco in keeping them away from any further deals
and thus maintaining the present market share till the prices by Sony are announced.
Barco can immediately start working on BG800 so as to provide itself edge over SONY
in Infocomm as it would be going into the exhibition with a projector that would surpass
1270s performance. Barco would have to stretch itself to the extremes, but it would help
in retaining its market share.
Barco can explore the Asian market as it has shown growth of around 18%. This would
help it extend its scope to these profitable markets.

Barco can consider step down integration option and work on R&D of tubes. This would
help Barco in overcoming its dependency on Sony.

5. Decision:
The most optimal option for the company is to carry on the production of BD700 and fulfilment
of pre-orders received as cancelling the product would anger the loyal customers and also
hamper companys reputation. And along with that BPS should focus on developing its market
changing product, BG800 as the product will be superior to Sonys 1270 and also would cement
the companys reputation of being ingenious when it comes to technology.
6. Tradeoff :
The biggest trade-off is that we are letting go of the opportunity of showcasing BG800 at the
Infocomm in front of all the dealers and industry analysts. But, we cannot disappoint our existing
customers who have pre ordered BD 700. Additionally, rushing on BG800 might lead to a
compromise with its quality. Barco might not be able to capture back the market from Sony after
the 1270 launch , if it turns out to be low priced. Barco might lose 75% of forecast profits. Barco
is also dependent on Sony for supply of tubes till it develops its own tubes or outsource it to
another company.
7. Back-up plan:

Assumption 1: No limit on 8 inches tubes supply from Sony for the production of
BG800.
Far superior quality of tubes manufactured by Sony is the prime reason as why BPS is
inclined towards using them. Although Sony has confirmed that it could begin supplying
the tubes immediately but in future if Sony decides not to supply raw material to BPS
anymore to choke their business, the company must have around 3 months of emergency
inventory. This will help BPS to continue its operation and look for alternate supplier of
tubes in the meantime.

Assumption 2: Japanese firm, Fujinon will supply lenses to BPS in future.

Since Sony is already purchasing lenses from Fujinon, Fujinon may not find itself in the
condition to supply lenses to BPS and hence BPS production process of BG800 might
succumb. Moreover, its traditional lens supplier also doesnt have a product compatible
with BG800. In such a case, BPS should be on a lookout for an alternate supplier of
lenses to keep the operation running. BPS should ask its traditional supplier to develop
lenses customized for BG800 by leveraging its historical relationship with it.