Bang and Olufsen Economics
Bang & Olufsen
Written Examination – Economics
Assignment 1
Question 1.1
As mentioned in the text, Bang & Olufsen A/S have to launch several new products. Give examples of fixed and variable costs by developing and selling a new product.
Fixed costs * R&D cost * Marketing cost to campaigns * Building up sales and organization
Variable cost * Production cost * Sales provision, discounts * Distribution directly related to the sales of products
Question 1.2
Analyze and assess by using the subject's concepts ‐ why 2009 was a challenging year for Bang & Olufsen A/S.
The global financial crisis started in 2007 and from 2008 it is called financial crisis. This is considered to be the worst financial crisis since the Great Depression of 1930s. The causes of it is complex and can be several, like high-risk lending, international trade imbalances.
Concerning the situation of Bang & Olufsen in 2009, during the financial crisis, the company also reached a significant and outstanding slowdown in sales and private consumption. The sales of luxury have been impacted by the crises the most. In this situation the company’s market in the European countries was the mostly affected, because they generated more profit in the established market, than in the East and Russia. Sales were unsatisfactory and highly negative, even though in the hotels and real estate departments, it wasn’t affected that much as in case of automotive industry.
However, the company keeps trying to solve and improve its sales from year to year. One method is to account the 25% of their sales for developing new products.
Question 1.3
Analyze and assess which form of competition characterizes the global market for audio/video products.
Competition in an industry is rooted in its underlying economic structure and goes beyond the behavior of current competitors. The state of competition depends upon five basic competitive forces. These
Written Examination – Economics
Assignment 1
Question 1.1
As mentioned in the text, Bang & Olufsen A/S have to launch several new products. Give examples of fixed and variable costs by developing and selling a new product.
Fixed costs * R&D cost * Marketing cost to campaigns * Building up sales and organization
Variable cost * Production cost * Sales provision, discounts * Distribution directly related to the sales of products
Question 1.2
Analyze and assess by using the subject's concepts ‐ why 2009 was a challenging year for Bang & Olufsen A/S.
The global financial crisis started in 2007 and from 2008 it is called financial crisis. This is considered to be the worst financial crisis since the Great Depression of 1930s. The causes of it is complex and can be several, like high-risk lending, international trade imbalances.
Concerning the situation of Bang & Olufsen in 2009, during the financial crisis, the company also reached a significant and outstanding slowdown in sales and private consumption. The sales of luxury have been impacted by the crises the most. In this situation the company’s market in the European countries was the mostly affected, because they generated more profit in the established market, than in the East and Russia. Sales were unsatisfactory and highly negative, even though in the hotels and real estate departments, it wasn’t affected that much as in case of automotive industry.
However, the company keeps trying to solve and improve its sales from year to year. One method is to account the 25% of their sales for developing new products.
Question 1.3
Analyze and assess which form of competition characterizes the global market for audio/video products.
Competition in an industry is rooted in its underlying economic structure and goes beyond the behavior of current competitors. The state of competition depends upon five basic competitive forces. These