Tuesday, September 16, 2003

Quotes of the Day from Karel Cool's Industry & Competitive Analysis [on Henry Mintzberg's attack on business education in today's Financial Times] "This guy used to be a respected member of the academic community, and now he is the public embarrassment of the world.  When you read this, you just have to say that it is wrong." [on Haagen-Dazs' entry into Europe, starting with the German markets in Frankfurt and Cologne] "Well typically, if you go looking for trouble, you will find it." [on Haagen-Dazs' eventual rout by Unilever in Europe and subsequent acquisition by Nestlé] "I save you the rest of the story... it was a bloodbath for several years..." Today's class discussed the Bang & Olufsen case.  The summary of the Karel's analysis: B&O needs more products, but R&D spending is flat. Distribution has budget priority and is consuming more and more resources. Distribution centers on the "Bang & Olufsen Store" (the "B1" concept) However, analysis of sales data from the four largest countries (by revenue) in Europe indicates that B1 stores do not contribute to growth. Non-exclusive distribution and "store-in-store" have both proven to work for B&O. B&O was not able to build brand value in US, and thus was unsuccessful in their US entry. The B1 concept was not sustainable given B&O's size and available resources. Losses were avoidable had anyone analysed the source of B&O revenue growth and correlation to B1 store rollout. Further, B&O holds a tenuous competitive advantage vis-à-vis their design capabilities - if Sony or Philips enters the luxury home electronics market, B&O will be "wiped out in three years".   2:47:38 PM    comment []