BPS - small, batch manufacture, 2nd largest division of Barco N.V.

, (23% of total turnover)

Sony 1270 industry leading performance and low price has posed a big threat to BPS - threat to
its traditional market segmentation
Given that one of the competitor is aggressively grab more market share by launching a new
products, how should BPS react to prevent the competition
Strongly value vision, even turndown customer orders

3. Why did Sony decide to reject BPSs vision of the market in August 1989?
The reason why Sony respected BPSs vision before 1989 was because they made substantial
revenue from BPS as a supplier and they are not interested in competing in data and graphic
projection businesses for a small amount. However, Sony rejected BPSs vision of the market
this time by launching Sony 1270 with the highest performance and a lower price, which posed
a huge and significant threat to the market. They rejected BPSs vision of the market this time is
because that now they have enough competitive advantage to massively reconquer the data
and graphic markets by offering a product with the combination of higher performance and lower
price.

Sony is Barcos biggest competitor in the projector business, however, they dont compete
directly as Sony focuses more on the Data projectors by offering a lower price, while Barco is
more advance in the technology in data and graphics projectors. More importantly, Barco and
Sony shares a mutual beneficial relationship in the industry. Sony is an important supplier for
Barco since BPS is heavily relied on Sonys high performance and low priced projector tubes
when manufacturing projectors. At the same time, Barcos orders was 20% of Sonys turnover in
projector tube products, contributing to Sonys revenue as an gib customer as well. So in
Barcos eyes, this mutual beneficial relationship was reliable and they assumed that Sony will
respect this relationship and wont directly compete with Barco in the graphic projector
businesses. And Barcos future development plan was all built on this assumption.
Usually, whenever a competitor will accept anothers vision of the market is because they dont
compete directly by targeting the same market, or they have a mutually beneficial relationship
that is important to the business. Companies will assess is it more profitable to if they expand
more market share by squeezing out the competitor or is it more profitable if they just maintain
the current competitive landscape. If the latter leads to a higher profit or lower cost, in that case,
the competitor may respect the others vision of the market.

3. Why did Sony decide to reject BPSs vision of the market in August 1989?

Sony respected BPSs vision before 1989 was because they made substantial revenue from
BPS as a supplier and they are not interested in competing in data and graphic projection
businesses for a small amount. However, Sony rejected BPSs vision of the market this time by
launching Sony 1270 with the highest performance and a lower price, which posed a huge and
significant threat to the market. They rejected BPSs vision of the market this time is because
that now they have enough competitive advantage to massively reconquer the data and graphic
markets by offering a product with the combination of higher performance and lower price.
4. How serious a threat is the Sony 1270?(how much lose in profit?) What are Sonys
objectives?

Sonys objectives is to massively reconquer the data and graphic markets. BPS will lose its
market share in data and graphics projection systems and no longer be the leading position in
these services. BPS estimated that this will potentially cause a lose up to 75% of its projected
1990 profit. BPS lost the leader position in the graphic projectio business and they may need to
lower their prices on existing prices.

5. Did Barco make a mistake somewhere along the wayor do things like this just happen
when competing in high technology businesses on a global scale?
Barco should never assumed that competitors would respect their vision of the market even if
they have a mutually beneficial relationship. The technology is changing fast in the projection
industry and any upgrading or improvement in the technology will definitely pose a threat to
other competitors. Innovation and continuous product improvement is the essential to remain
the competitiveness in the market.