BS7114 International Business Strategy with Simulation Assignment Questions and Answers
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Overview of Bulgari
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The intent of this report is to identify and analyse the performance of Bulgari’s core business that is luxury watches and jewellery. In order to do so, the report is making use of different models and theories such as Porter Five Force, Resource Based View, etc. in order to identify what future opportunities and challenges that company can face in the coming years. In the end, the report is providing recommendations for how Bulgari need to gain the opportunities and deal with the challenges.
Bulgari is one of a well-known Italian brand of luxury products like fragrances, leather products, watches, accessories, and jewellery. Where, most of the production, designing, and marketing of the products is executed by Bulgari, but sometimes the company also get into the partnership with other companies (Ethos Watches, 2020). Presently, the company is a part of the LVMH Group. In consideration to the Jewellery and Watch products of Bulgari, the collection of jewellery includes Divas’ Dream, Bridal Line, Serpenti, Parentesi, B. zero1, and BVLGARI BVLGARI (Bulgari, 2020b). On the other side, the collection of watch is for both men and women. For men, the option includes Haute Horlogerie, Octo, Diagono, and BVLGARI BVLGARI, whereas, BVLGARI BVLGARI, LVCEA, B.zero1, Serpenti, and Divas’ Dream (Bulgari, 2020c). The watches of Bulgari are the mixture of Swiss watchmaking and Italian design.
Porter’s Five Forces is considered to be an outline that is used to analyse the business competition. The five forces that are used to determine this are threat of new entrant, bargaining power of supplier, bargaining power of customer, threat of substitute products, and competition among existing players (Safari, Farhang and Rajabzadehyazdi, 2016). The strength of each force in the luxury watches and jewellery industry is presented below in consideration to Bulgari Brand.
Micro Environment Analysis
The impact of this force is threatening for the businesses at the time when customers can very easily move to the substitute product available at reasonable prices or with superior quality (Rachapila and Jansirisak, 2013). The power of threat of substitute products in the jewellery and watch industry is moderate because the brands offering mid-range products pretend themselves to be premium. For instance, it is known that in Paris Place Vendome is considered to be where all the famous and luxury brands operate (Davis and Cordero, 2013). Near to this place there is a Maty Jewellery shop which is not a high-end brand but because of its prime location people consider it as the part of the Place Vendôme community that impacts the position of luxury brands like Bulgari. In addition to this, the brands that are involved in offering similar products in the market like Signet Jewellers is also a threat to Bulgari in the Jewellery industry.
The force of competition is considered to be the main basis that represent how profitability and competition is in the specific industry. In the competitive industry, businesses get involve in aggressive competition in order to gain major market share. In consideration to the luxury watches and jewellery industry, the competition is high because some of the big groups dominate the industry like LVMH Group and Chopard. There are some strong brands in this industry that have maintained a strong image with different strategies such as Carla Bruni is shown in the advertisement of Bulgari, besides this in consideration to the brand heritage the magic of Chopard can be seen in the Disney Collection (The Jewellery Editor, 2012).
Buyers holds the power of demanding low prices of the products or higher quality from the producers at the time of high bargaining power. But, offering low price products to the consumers leads to low revenue for the business, whereas offering high quality means increased cost of production (Tavitiyaman and Zhang, 2011). In consideration to the jewellery and luxury watches industry, the bargaining power of the customers is low because the customers who are loyal to the brand are also emotionally attached to the brand. Besides this, Bulgari is the brand that offer unique designs of this products which are said to be masterpieces which increases the desire of the customer and reduces their bargaining power in the market. Furthermore, the number of customers is also increasing for these brands specially in the Asian countries which again reduces the bargaining power of the buyers.
Porter Five Force Framework
The strong power of bargaining of the suppliers enable them to sell the products at high prices or offering raw material of low quality to their clients. This directly influences the profit of the buying firm since it has to pay high price for the material (Aithal, Shailashree and Kumar, 2016). In the jewellery and luxury industry the supplier bargaining power is moderate to high because in order to offer unique styles to the customer, businesses like Bulgari require the strong commitment of its supplier to provide high quality material. Besides this, in this industry to be exclusive the business needs to maintain good relationship with its suppliers otherwise competitor can gain the high position in the market.
This model is said to be a model that takes into account the resources as the significant aspect for the performance of the company. If the resource of the firm displays VRIO attributes, the resource allows the company to get and sustain competitive advantage. According to this model, it is essential to identify external opportunities with the use of existing resources in new manner in place of trying to attain new skills for all the diverse opportunity (Hart and Dowell, 2011). Under this model, there are two types of resources that are intangible and tangible resources.
Intangible Resources – The intangible resources of Bulgari are strong brand image, high quality of product, friendly environment, customer service, marketing skills, creativity.
Tangible Resources – The tangible resources of Bulgari are human resources, exclusive designs of products, supply chain, etc.
The assumption that has been made is that resources, capabilities, and skills that are hold by the business different from one business to another business. If the businesses that holds the similar type of resources then they will not be able to use different strategies from each other (Lin and Wu, 2014). Therefore, the resources that are specified above of Bulgari Company are different from its competitors.
Another assumption that has been made under the resource-based view model is that the resources are immobile and are not shifted or mote from one company to another in short run (Barney, Ketchen and Wright, 2011). This helps the business that the competitor cannot replicate its resources and copy its strategies.
VRIO Framework is said to be a tool of strategic analysis which is framed to support the businesses in uncovering and protecting the capabilities and resources that provides then a competitive advantage. This framework helps business in identifying the value, rarity, imitability and organization of the resources and capabilities of the company to identify how business achieve competitive advantage in the market (Tresna and Raharja, 2018). The below table is presenting the competitive advantage of Bulgari with the use of different resources.
| Resource | Valuable | Rare | Inimitable | Organized | Competitive Advantage |
| Brand Image | Yes | Yes | Yes | Yes | Competitive Advantage |
| Product Quality | Yes | Yes | Yes | Yes | Sustainable Competitive advantage |
| Environment | Yes | No | Yes | Yes | Competitive parity |
| Customer Service | Yes | Yes | No | Yes | Competitive parity |
| Creativity | Yes | Yes | Yes | Yes | Competitive Advantage |
| Human Resource | Yes | Yes | No | Yes | Competitive Parity |
| Exclusive Design | Yes | Yes | Yes | Yes | Competitive Advantage |
| Supply Chain | Yes | No | No | Yes | Temporary Advantage |
Threat of New Entrant
Brand Image – Yes, the brand image of Bulgari is valuable which support it in developing the customer base and effective at the time of marketing.
Product Quality – Yes, the quality of the product is valuable for the business as it helps in attracting maximum customers in the market and competing with the rivals.
Environment – Yes, this helps in retaining the customers.
Customer Service – Yes, the service provided to the customer is valuable resource as it helps customer in creating a positive image about the brand in their mind.
Creativity – Yes, creativity is one of the resources because it has supported company in attaining leading position in the market.
Human Resource – Yes, the diverse and talented human resources is the main reason who has helped in meeting the goals and objective of the company (Bulgari, 2020a).
Exclusive Design – Yes, exclusive designs of watches and jewellery are the reasons to attract customers.
Supply Chain – Yes, it has supported company in delivering services in different market.
Brand Image – Yes, the brand image of the company is rare as well as challenging for the competitive brands.
Product Quality – Yes, the quality offered by the company is rare in terms of jewellery and watches which helps it in differentiating itself from non-premium brands.
Environment – No, the environment is not rare because it can be achieved by any competitor.
Customer Service – Yes, the service provided by the company is rare in this industry because this resource requires huge investment in the training as well as hiring of good staff.
Creativity – Yes, the creativity that is represented by its employees is rare and attractive.
Human Resource – Yes, the company is always involved in hiring talented and skilled workforce that can contribute in the growth of the business.
Exclusive Design – Yes, the designs of the company is rare that helps the company in representing itself as a unique brand of jewellery and watches.
Supply Chain – The supply chain of the company is not rare, because other players in the market also has strong supply chain like Chopard.
Brand Image – Yes, the brand image is inimitable due to the position that has been gained by the brand against its rivals.
Product Quality – Yes, the quality of the product is also inimitable as the company has contacted with suppliers who provide high quality materials.
Threat Of Substitute Products
Environment – It is tough to copy the environment of the company.
Customer Service – Yes, the customer service offered by the company is inimitable as the company is involved in training its staff who provide best service and experience to the customers.
Creativity – Yes, the creativity that is reflected in the products of Bulgari is inimitable.
Human Resource – No, the skilled and talented workforce can be hired by any of the competitor.
Exclusive Design – Yes, this resource of Bulgari is not imitable as company maintains the copyright of its designs.
Supply Chain – Yes, the supply chain of the company can be copied by any of the player.
Brand Image – Yes, the brand image of the company is organized and linked with its performance.
Product Quality – Yes, the quality of the product is also organized.
Environment – Yes, this resource is organized and a key part of company’s marketing strategies.
Customer Service – Yes, the employees involve in providing service are properly organized.
Creativity – Yes, this resource of the company is organized.
Human Resource – Yes, the human resource of the company receives organized training and work properly.
Exclusive Design – Yes, the designs of the company are organized by the talented team of designers.
Supply Chain – Yes, the supply chain of the company is organized which helps in delivering its high-quality services on time to the customers.
The future opportunity that can be gained by Bulgari in the coming 5-10 years in consideration to its growth is market expansion. The company can plan to expand its business in the Indian and many different Asian market as these markets are considered to be developing. Besides this, people in these markets like to invest in branded and luxurious products like jewellery and watches. Expanding in this market will help company in growing its revenue.
The major challenge that Bulgari Watches and Jewellery can deal with is competition. Bulgari is facing competition from some of the well-known luxury products manufacturers in Italy. The main competitors are Pomellato, Chimento, and Vhernier. In the coming time, this competition is going to be tough because different players are planning to expand in different products like leather, watches, etc. Besides this, if Bulgari planned to expand in Indian market then it can deal with the competition in that market too from Swarovski, Tiffany and Co., and Gitanjali Ciemme Jewels (Bhasin, 2019).
Competition Among Existing Players
Considering the above discussion, the company has the opportunity to expand business in the Asian market and especially in the Indian market. Company can expand in this market by not just offering its mixture of Italian and Swiss Jewellery and Watches. But, along with this, the company can focus on designing Indian traditional jewelleries and watches because most of the time, during any Indian festival or event people like to wear their traditional accessories. This will help company in attracting maximum number of customers.
To deal with the increasing competition, the company is recommended to concentrate on the market penetration strategy, under which it will offer similar products in the same market but will increase the intensity of its promotion.
In addition to this, in order to deal with the competitors in the Indian market, the company can contact with a famous celebrity who is well-known in the Indian market for the promotion of its jewellery and luxury watches.
Conclusion
The above report has provided the detailed analysis the performance of the core business of Bulgari that is jewellery and luxury watches in the market. The analysis of the report represents that Bulgari is one of the well-known brands of jewellery and watches that is not dealing with the pressure of new entrants, but the competition in this industry is high. On the other hand, the analysis of the company represents that the resources that has supported company in attaining competitive advantage are brand image, product quality, exclusive designs, and creativity. In the end, the report has highlighted the opportunity and challenge that company can deal with in the coming future and how it can cope up with that.
References
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