Submitted by: Submitted by wonton555
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Category: Business and Industry
Date Submitted: 11/21/2014 04:21 PM
DIRECTIONS.
Read the Bang and Olufsen: Design Driven Innovation for background. Then, in a word
document, answer the following questions as thoroughly as possible and support your
responses with evidence from the case. Please print out your response and submit in
class. Each question is worth 25 points (total 100).
QUESTIONS.
1. What is your assessment of the competitive situation in which B&O finds itself?
What are they really good at? What should they be worried about?
2. B&O’s radical design driven approach seems at odds with conventional business
wisdom at many points—what are the advantages and disadvantages of this
approach? How does it help the company compete? Is it sustainable?
3. B&O proposes a program to create Beosound 9, a new product extension to
current B&O music systems (Case Exhibit 2). Beosound 9 will be marketed to
B&O’s core customers— liberal arts professionals over 20 years old. The table
below summarizes the three year cash inflows/ outflows for the project:
Investment* Year 1 Year 2 Year 3
$5,000,000 $5,000,000 $2,000,000 $1,000,000
* assume a 7% discount rate
a. Using Net Present Value Risk Adjusted (NPVR) analysis, assess whether B&O
should green light this project. Use Exhibits 1 and 2 to assess the
development category risks and company specific risks. You may then use
Exhibit 3 as a template to record the appropriate risk weights. In your write up,
please include a completed Exhibit 3 that displays the weights you used. After
calculating NPVR, provide a short paragraph to articulate your assessment of
the Beosound 9 project.
b. In a few sentences, describe how B&O would decrease the risks attached for
this project.
4. Select an emergent market (e.g. country) for Bang and Olufsen to enter. First,
rationalize your choice of the market using qualitative reasoning. Second,
quantitatively assess the economic potential of the selected market. Finally,
articulate an appropriate and/or creative...