Barco Projection System

a) Problem Statement
There were two major decision problems for Barco
i.

ii.

Product Pricing The change, if any, to implement, the market to

target, the promptness of the change, the duration to aim for and the
adverse effects on BD600.
Product Development Whether to continue with development
schedule as had been planned, or to transform the BG700 into a new
digital graphics projector or to concentrate on developing BG800
immediately.

Even with limited information available about Sonys 1270, every decision
Barco took had to be implemented before Infocomm in January, 1990.

b) Situation Analysis
Following is a SWOT analysis to analyze the situation faced by Barco -

Weaknesses
1. Dependence on Sony for tubes
2. Concentration on projectors for industry
applications only
3. Profits dependent on Product Differentiation
4. Unavailabity of digital graphics in its projectors

1. In-depth knowledge of Projection System

technology
2. Strong committment to R&D
3. Global expansion campaign
4. Strong market reputation
5. Dedicated distribution network
6. Among world leaders in distinct, but
complementary, niche markets

Strengths

SWOT
1.
2.
3.
4.
5.
6.

Products with superior scan rate

Collapse of market segmentation
Cost Leadership of Sony
Large budget publicity campaigns of competitors
January deadline of Infocomm
Uncertainty on supplier of required Lens

Threats

Opportunities
1. Asian Market has 18% growth rate for next 5 five
years.
2. Sony is not bringing out 1270 in every market
3. Scope of reducing prices since margins are very
high
4. Time window available to engineering team for
BG800 development

c) Options Available
The options available to Barco are
i.
ii.
iii.

iv.

Reduce the prices and get into a prospective price war with Sony.
Keep existing prices unchanged, continue with current development
schedule and complete and service the orders of BD700 on time.
Keep existing prices unchanged and focus on transforming BD700 into
a new digital graphics projector BG700, causing delay in BD700
project.
Keep existing prices unchanged and focus all resources on successful
development of BG800 by January.

d) Decision Criteria (200)

The decision criteria will be
i.
ii.
iii.

iv.

v.

Barco will not be able to win a price war against a giant like Sony.
Sony has not announced its price officially and the features of BD400
and 1270 are comparable with scan rates of 72 and 75 KHz.
BD700 has a price of 16000$ and Sony 1270 is expected to be priced
at 15000-20000$. If Sony prices 1270 at 20000$, BD700 will have a
price edge over 1270. Moreover, BPS has already invested 180 man
months in BD700 and it is ready to be launched in October 89.
Transforming BG700 from BD700 will require less effort since it uses
the developments already made. However, BG700 is inferior to 1270 as
a product and will also postpone the introduction and delivery of
BD700.
Although, it would cost a fortune to let go of BD700, yet if BPS invests
in BG800 and develops it by Infocomm, it can help BPS retain its
market share. Because, what steals the show at Infocomm in January is
what sells throughout the year. However, it involves a great deal of
risk.

e) Your Decision (100)

Our decision is to keep existing prices unchanged and focus all resources on
successful development of BG800 by Infocomm, because getting into a price
war will be unfavorable for Barco. Although, this measure involves risks and
has a 40% estimated chance of making the deadline, yet it can help Barco
retain its market share as well as compete with Sony to the greatest extent.
Moreover, information about Lens manufacturer is already available with
Barco, thus helping to strike a favorable deal with the same. Also, Barcos
R&D measures, which have always been its forte, will help Barco achieve the
target successfully.

f) Tradeoffs
The tradeoffs for our solutions are
i.

ii.
iii.
iv.
v.

There will be indefinite postponement of BD700 project. This means

the existing orders will be delayed and customer morale might go
down.
Resources, including 180 person months, which have already gone into
the BD700 project will be of no use.
Barcos market reputation might be tarnished because of nonfulfillment of its delivery commitments.
In case Barco is unable to make the Infocomm deadline, it stands to
lose a great deal of market share.
Due to the compression of its development, the quality of BG800 might
not be at par with 1270.

g) Backup Plan
If the development of BG800 does not work out as planned, the backup plan
would be to revert to the BD700 project. Barco can develop the product
successfully, building upon the advancement it had already made in the field,
and service the existing orders subsequent to that. At the same time, R&D for
BG800 should be continued to be able to eventually develop a product that is
comparable to, or even better than, Sonys 1270. Moreover, Barco should
keep a close check on the pricing of 1270 and decide on alterations, if any, to
its own policies.