2023

BARCO PROJECTION SYSTEMS

CASE STUDY
CONTENTS:

1. Orientation 2

2. Situational Analysis 3

3. Identifying Evidence 3

4. Interpreting the Exhibits 4

5. Applying Theoretical Concepts 4

6. Conclusion 5

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ORIENTATION:

The case revolves around Barco Projection Systems (BPS) facing a significant challenge from
Sony's new product, the Sony 1270 projector. Barco, a renowned player in the data and graphics
projector market, is confronted with the potential threat of losing market share and profitability
due to Sony's superior product offering.

We'll analyze the competitive landscape, market segments, and Barco's position in the market.
Sony's 1270 projector, with its high scanning frequency and advanced features, poses a serious
threat to Barco's existing product line. Barco needs to respond effectively to this threat to
maintain market share and profitability. Advisable strategies include competitive pricing, product
development, and strategic alliances to counter Sony's product launch.

We'll gather relevant data from the case, focusing on Barco's performance, external factors (like
Sony's entry), and employee motivation. This data will help in identifying the root issues and
potential solutions. We'll analyze each exhibit. This will shed light on the market positioning of
Barco, Sony, Electrohome, and NEC. We'll also analyze Tables to understand growth rates,
pricing trends, and Barco's pricing strategy.

In the end, we’ll summarize the analysis and propose multiple solutions based on the insights
gained. These solutions will be supported by logical arguments, market data, and potential
outcomes. We'll present the pros and cons of each solution, concluding with the recommended
course of action for Barco Projection Systems.

In this case analysis, we delve into the competitive landscape of Barco Projection Systems (BPS)
in the industrial projector market during the late 1980s. The situational analysis reveals a critical
moment where Sony's introduction of the groundbreaking VPH-1270 projector disrupts the
market. We explore the implications, potential problems, and strategic alternatives. Through
identifying evidence from financial data, market shares, pricing indices, and products offered by
major competitors, we gather insights into BPS's performance and its external environment.
Interpretation of the provided exhibits underscores the importance of market segmentation,
growth projections, pricing strategies, and market share analysis. Applying business concepts,
particularly game theory, sheds light on strategic decisions that BPS could undertake. The
conclusion emphasizes the need for a strategic response to Sony's challenge, considering pricing
adjustments, product development, and market expansion.

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SITUATUIONAL ANALYSIS:

Barco Projection Systems (BPS) is a prominent player in the data and graphics projector market,
facing a critical challenge posed by Sony's new projector, the 1270. Sony's 1270 projector boasts
a high scanning frequency of 75 kHz, positioning it in the high-performance graphics
applications market, a segment Barco cannot directly compete in. This threatens Barco's market
share and profitability, especially in the U.S. and European markets, which constitute the
majority of BPS's revenues.

Sony's 1270, with its advanced features, including a high scanning frequency and the new 8"
tube, could potentially capture a significant market share. Another problem they were facing was
the pricing challenge. Determining an effective pricing strategy to compete with Sony's
anticipated pricing for the 1270 while preserving profitability Balancing the completion of the
BD700 and simultaneously developing a superior graphics projector (BG800) to counter the
Sony 1270 was also one of the major problems.

Barco should strategically price its BD600 and BG400 projectors to stay competitive with the
Sony 1270 while maintaining profitability. Barco should offer discounts and incentives to
incentivize purchases and retain market share. It should accelerate the development of the
BG800 to surpass Sony's 1270 capabilities and meet the Infocomm show deadline. Focus on
incorporating the 8" tube and achieving a scanning frequency exceeding 75 kHz. It should also
explore potential collaborations or partnerships with other industry players to bolster Barco's
product offerings and market reach. Joint ventures could lead to mutually beneficial outcomes.

Barco should maintain the current product development pace, pricing, and market strategies.
However, this might risk losing market share to Sony's 1270. It should prioritize the BG800
development over the BD700, ensuring a superior product is ready to launch by the Infocomm
show. This might strain resources and impact the BD700's completion. It should also collaborate
with other technology firms to enhance product offerings. However, finding suitable partners and
aligning strategies could be challenging.

Barco needs to develop a groundbreaking graphics projector (BG800) that outperforms the Sony
1270, ensuring a competitive edge. It needs to develop an adaptive pricing strategy to adapt to
market dynamics and Sony's pricing. It should also maintain a delicate balance between
competitiveness and profitability. Barco also needs to work on efficient execution to meet market
demands and stay ahead of competitors.

IDENTIFYING EVIDENCE:

The financial data presents Barco's turnover, direct production costs, total production overhead,
marketing, and R&D expenses. These figures provide insights into the financial health and
resource allocation of the organization, crucial for decision-making. Understanding the market
share of Barco, Sony, Electrohome, and NEC gives a perspective on Barco's position in the
market. Sony's growing market share poses a significant threat that necessitates strategic

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decisions. The pricing index, as shown in Table D, shows the pricing strategies across different
levels of the distribution chain. It helps in understanding the margins and price structure that may
guide Barco's pricing decisions.

Information about tube suppliers, especially the Sony 8" tube, is vital as it impacts product
development decisions. Availability and cooperation with suppliers are crucial for meeting
deadlines. Product information and retail prices of Barco's BD600, BG400, and Sony's
VPH1031, as shown in Exhibit 6, are critical for strategic decisions. It helps in assessing the
competitive landscape and setting a competitive pricing strategy.

INTEREPRETING THE EXHIBITS:

The data in Exhibit 1 shows key financial data for BPS in 1988–1989. It indicates a significant
increase in turnover from 1988 to 1989, which is 1387 to 1983 million Bfr. This signifies growth
and a potentially stronger financial position. However, direct production costs and total
production overhead also increased, which calls for efficiency measures to maintain healthy
profit margins.
The Product Segment Growth, 1988 table provides insights into the growth rate and price ranges
of different product segments like videos, data, and graphics. It's crucial for understanding
potential market growth and adjusting pricing strategies accordingly to maximize profits.
The Geographic Segment Growth Table highlights the growth rates in various geographic
segments, like the US, West Europe, and Asia, to inform market expansion strategies.
Understanding these growth rates aids in deciding where to focus resources and marketing
efforts.
BPS’s Pricing Index table gives a perspective on how pricing is structured within BPS and its
distribution network. Understanding the pricing index helps in strategizing competitive pricing
and maintaining profit margins at different stages.
This table shows the market share of major competitors in 1988. It offers valuable insights into
the market share of major competitors in different regions, such as Europe, North America, and
the Far East. Analyzing this helps in understanding Barco's competitive position and where
efforts need to be intensified to gain a competitive advantage.
Exhibit 6 provides an overview of the products, their retail prices, and other specs. Barco's
BD600 and BG400 are priced competitively compared to Sony and Electrohome models.
Understanding these exhibits aids in formulating strategies and decisions to address the Sony
1270 threat.

APPLYING THEORATICAL CONCEPTS:

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In tackling the challenges presented in this case and leveraging the opportunities, we'll employ
the concept of Game Theory as proposed by John von Neumann and Oskar Morgenstern. They
observed that economics is just like a game, where players predict each other’s moves in advance
and hence require a new concept, game theory. Game theory was further developed in the 1950s
by American mathematician John Nash, who established the mathematical principles of game
theory.

We applied game theory to analyze the competitive dynamics between two major competitors,
BPS and Sony. The decision-making and responses of both companies can be viewed as a
"game" with some rules and strategies. Faced with Sony's new product launch, BPS needs to
respond in an efficient way.

Barco, Sony, Electrohome, NEC, and other competitors are the players here. BPS needs to
determine its strategy, considering Sony's potential moves. The strategies include pricing
decisions for the BG400 and BD600 projectors and options for new product development, like
the BD700 and BG800. The payoff matrix would represent the potential outcomes, such as
market share gain, revenue growth, or profit margins, based on different strategies and responses.

In Nash Equilibrium, neither BPS nor Sony have any right to unilaterally change their pricing
strategy. However, if either player deviates from their strategy, the equilibrium may shift, and a
new Nash equilibrium would be reached based on the new strategies.

BPS needs to strategically choose its pricing and product development strategy, keeping in view
Sony's actions. The pricing should consider Sony's potential pricing for the 1270 projector. If
Sony prices its projector aggressively, BPS might need to adjust its prices accordingly to remain
competitive. However, they must also ensure that the price adjustments do not impact their profit
margins. BPS must also align its product development strategy with Sony's move. If Sony's 1270
threatens their market, BPS should accelerate the development of a new product. This could be
the BG800, designed to surpass the 1270's performance. The main objective here is to maintain a
technological edge over others and attract customers. BPS needs to find the equilibrium where its
pricing and product features strike a balance between attracting customers, maintaining
profitability, and gaining an advantage over Sony.

The application of game theory helps BPS make well-informed decisions that outperform the
competitors and achieve the desired outcomes aimed at Sony's market entry.

CONCLUSION:

The analysis of Barco Projection Systems and its response to Sony's 1270 projector reveals a
complex strategic challenge. BPS must balance cheap pricing with profit margins and accelerate
product development to outclass Sony's offerings. Strategic moves are needed to secure market
position and achieve sustained growth in a rapidly evolving market. Also accelerating product
development to outclass Sony's offerings. BPS needs to move strategically to secure its market
position and achieve sustained growth in a rapidly evolving market.