Bose Case Study

The term privately held company refers to ownership of a business company in two different ways?first, referring to ownership by non-governmental organizations; and second, referring to ownership of the company’s stock by a relatively small number of holders who do not trade the stock publicly.

When he was 13 and in school, he opened a radio repair shop, because his father’s import business failed as there were no shipments due to the World War II.

The shop roved to be quite a success at that time because everybody else who was able to service and repair things was forced to go into the military. Against his will, when he was 6 years old, Oboe’s parents had him learn how to play the violin.

Though he was not particularly pleased about it at that time, Bose is thankful now. If it had not been for the musical sense he developed, he never would have formed Bose Corporation, since acoustics was not his field when he graduated.

Bose moved on to repairing transistors; so he entered Massachusetts Institute of Technology (MIT) with a great deal of practical experience in electronics. After he graduated with a BBS in Electrical Engineering in the early asses, he went on to complete his Ph.D. From MIT and he started doing research on speaker technology in 1956. He had been studying the mathematical side of communication theory.

When he was writing his thesis, he went out and bought a hi-if, on the basis of the excellent features it boasted of. “When I turned it on at home, it sounded terrible.

I wouldn’t have realized how terrible it was if I hadn’t spent so much time on the violin. I was curious the presentation of the product said it was good, and my ears said it was bad,”9 recalled Dry. Bose. He was disappointed to find that speakers with impressive technical specifications failed to reproduce the realism of a live performance. He later began extensive audio research aimed at fixing what he saw as key weaknesses plaguing such high-end systems.

The principal weakness, as he saw it, was how the overall design of the loudspeakers and electronics failed to take into account psychoacoustics.

Bose embarked on a personal crusade to invent a stereo loudspeaker that would reproduce, in a domestic setting, the vivid sound that a member of the audience hears at a great concert hall. He Egan a research project in psychoacoustics, investigating the relationship between reproduced sound as perceived by people and sound as measured by electronic instruments. That research led to the development of new audio technologies which he patented.

Oboe’s early patents won him great respect within the industry; but he needed capital in order to do further research and begin production. In time, Bose received financial support from MIT professor Y.

W. Lee who bet his life savings on the effort. MIT encouraged Bose to start a company to create products based on his patents which eventually led to establishment of Bose Corporation. Eight years later, he founded the company, charging it with a mission to achieve Better Sound Through Research.

I née nana quarters AT Bose corporation was located 20 miles west AT Boston, atop a 1 50-foot-high hill called ‘The Mountain’. At the headquarters of Bose Corporation, philosophical quotations from Einstein were etched on the walls in several places, reflecting the personality of the company’s founder, Dry.

Mar Bose.Bose Corporation As a student at MIT, Bose had learned that 80% of the sound heard by a person in a encore hall is indirect I.E., bounced off the ceiling and walls rather than direct from stage to ear.

Bose capitalized on this notion by inventing the 901 Direct/Reflecting speaker system, one of the first stereo loudspeakers to utilize the space around them instead of 8 The Massachusetts Institute of Technology, or MIT, was a private research university located in the city of Cambridge, Massachusetts, USA.MIT was ranked #2 overall among the world’s top 200 universities by The Times Higher Education Supplement and #1 worldwide in technology.

Psychoacoustics is the study of subjective human perception of sounds. Alternatively it can be described as the study of psychology of acoustical perception. Reproducing sound as if in a vacuum. In 1968 Bose used technology patented for these systems to enter the consumer market with the 901 Direct/Reflecting loudspeaker system. It instantly achieved market success and critical acclaim, paving the way for a regular stream of products from the company that received widespread consumer acceptance.

The company’s first products were high-power amplifiers produced under contract to the US military. Oboe’s 901 speakers remained an industry standard for 25 years.

Bose also developed the Auditioned audio demonstrator, which took the specifications of a given room, hall, or other space and demonstrated precisely how a given Bose speaker system would sound in that space even before it was built. Oboe’s sense of spatial acoustics also helped him conquer the car stereo market, with systems that transformed the on-the-road listening experience. Bose proved that full, rich sound did not require big, bulky speakers; in fact, his products are also famous for their simple and elegant design.

Dedicated research and design by Bose engineers led the way to another revolutionary idea, later to be known as Acoustics speaker technology: a system that delivers room-filling sound without the compromises of conventional solutions.

Bose Corporation had been making noise in the audio products business for over 40 years. The products for homes and public places were available around the world.

In the professional solutions business Bose group provided solutions for varied venues: from Madison Square Garden in New York to General Motors Place in Vancouver; from the Sistine Chapel in the Vatican to the Notational I neater AT Japan. Department stores Like David Jones, Compass, among many, also had Bose systems. They also made car systems, which were custom designed and were factory installed by the car manufacturer.

It made a variety of consumer models for stereo systems and home theaters, including its compact Wave radio system. Bose supplied sound systems for small private aircraft, cruise ships and also supplied sound systems for Anna’s space shuttles.

Exhibit l

Usage of Bose Corporation products Space program Entertainment The automotive industry Home audio Aviation Stadiums, arenas and auditoriums Houses of worship Computers Department stores, restaurants and retail stores Source: Product Development for Masochists, www.Entrepreneurship.Fib. Due For sound professionals, Bose offered loudspeakers and amplifiers, as well as products designed for musicians.

Bose sold its products at more than 100 factory and showcase stores and through affiliated retailers. The company was engaged in the production of audio systems in North America and Ireland and the company’s subsidiaries, distributors, and manufacturing facilities were located throughout the world. Bose had a workforce of about 8000 people in 2006.

Oboe’s way of leadership According to industry experts, the Oboe’s style of entrepreneurship taught two lessons. First, to believe passionately in how one wants to run the company, and ensure his actions were designed 4 to reflect his beliefs, no matter how illogical or non-businesslike it might seem to others. As innovation was everything, it was ideas and not hierarchy which determined the direction of research.

Since Dry Bose was a fierce believer in ethics, every employee learnt to be very circumspect in their behavior? salespeople were sacked on the spot if they were caught criticizing the competition.

Second, to avoid doing what one did not believe in, no matter how logical it seemed to others. Since he wanted to ensure that the Bose Corporation was driven by research and not financial results, Dry Bose refused to take the company public and be bullied by Wall Street. Since he did not start the company for personal wealth, Dry Oboe’s salary was fixed by the HRS department Just as it was for every other employee.

None of his children worked there nor will they inherit it? instead, it was expected that he would pass it on to an education trust.

The company’s product strategy was set Day I s Tonnage, Dry.Mar Bose, winos eccentricity was legendary as per industry watchers. Even after more than 40 years, Dry.Bose, 76, invested all of the privately held outfit’s profits back into research. Bose President, Bob Mares said, “Dry.Bose is extremely eclectic in his research interests.

” Indeed, Mares recalled how Bose invested tens of million of dollars over 19 years to develop headset technology before making a profit. Later headsets were a major part of the business.

Exhibit II

Bose Corporation Philosophy “Since Bose Corporation was founded in 1964 by then Massachusetts Institute of Technology Professor Dry.Mar G.Bose, the original philosophies and founding principles have not changed. Bose maintains an exceptionally strong commitment to research, for it is within the discipline of research that yesterday’s fiction becomes tomorrow’s reality.

We strive to identify things which, when made better, improve people’s lives. But it’s more than Just research. We aim for excellence in everything we do. From the way we run our business to our customer service. From the products to the owner’s manuals you’ll use to set them up.

In everything we do, we truly believe that “good enough” is merely a starting point. We’ve taken our commitment and our passion for innovation and applied them to developing unique sound solutions to meet virtually any audio challenge in any application, even the space program. While many of our products are designed for entertainment and home audio solutions, you’ll find Bose sound is prevalent in both the aviation and automotive industries, too.

We’ve also designed professional sound systems for many applications, including stadiums and auditoriums, houses of worship, retail businesses, department stores and restaurants. Our commitment has served us well.

Today, Bose has operations in the United States, Europe, Canada, Australia, Asia and South America.

Management style Analysts said that this combination of perfectionist attitude and business integrity was reflected even more profoundly in the company’s external dealings. Bose Corporation claimed to have very strong business ethics.

If anybody in sales criticized a competitor’s product in an attempt to 5 sell Bose products, and if that was verified as truth, he lost his Job immediately. “We don’t pay anybody anything under the table, which is a big hindrance to starting our cuisines in India. We’d rather give up business than give in to that.

“

Industry experts and competitors also feared Oboe’s litigious tendencies, and the fact that it patented everything. Several companies had been sued by Bose on similarity in advertising copy and resemblance in design. To fuel this relentless pursuit of quality, as a policy, profits of the company had always been plowed back into R&D activities. According to the company, there was more research going on in sound engineering at Bose tan anywhere else In ten world Another unique policy Tanat ten company ad followed from the beginning was that there was no retirement age for its employees. There were two conditions for working beyond the normal retiring age, if the person wanted to work and if he was physical strength to work. There were two different part of the main premises of Bose Corporation.

R&D and business.

Research leading to development was not an inevitable sequence at Bose Corporation. There were research projects going on there, some for decades, where the product was not yet even defined. Several of these projects had nothing to do with sound at all. These were driven by Dry. Oboe’s relentless passion for research.

He felt that research was like a maze. He said, muff bump into walls, and you back up and you find there are a thousand ways to go. You have to hope that you can choose which way is the next best one and go in that direction. There are a lot of things that you do in research that aren’t going to pan out. But maybe something else will come out of it when you start doing the research. You have to be willing to run that risk.

“

When a team of researchers from Cornell University claimed that energy can be produced from water, six researchers at Bose research lab were put on the trail of cold fusion. ‘ Like several other teams, the company put out a paper that concluded that no excess energy was being produced by the process. Dry. Bose reflected, “In a sense, starting a company is like raising a child, when it’s small, you are thinking about all the problems that it could have, like disease, learning to do things at the right age, etc.

You are looking out for the child .

.. There are some principles that I have. I didn’t name the company Bose Corporation; someone else did. In the beginning whenever someone would mention the name of the company, I would flinch: ‘Oh my god, that’s me! But now, there is no connection between that logo and my name.

The only difference is that I don’t have to put up with politics from above. I only have to put up with politics from below. My main interest in the company is in the research and development side.”

Why were Bose systems so expensive? According to some analysts, they tried to be better than the competition in all of the product categories that they are in. Dry. Bose explained, “Better than the competition involved a lot.

The kind of PC boards that we use and the components, etc., we try to go first-class on that. The kind f quality control that we have on our assembly line, which is one of the most modern in electronics anywhere in the world, is very expensive. And we spend that money not to reduce the price, but to get the quality. You see, a machine does the same thing every time, but a human does not. Even our supplies cost a lot since we reject so much of it.

“

Once Bose Corporation did not ship one of its bread-winning products because the cones for the speakers were out of specifications. The vendor was using the same process and measurements. The problem was eventually traced to the paper used for the cone. Its grains had changed.

Bose says, Mimi get what you pay for.

And if you don’t, then that company is not going to succeed. Not Going Public According to analysts, US companies like Bose almost invariably went public. But Dry. Bose decided not to follow that track with Bose Corporation. He explained that he had interviewed a number of people who were his colleagues on the MIT faculty and had started companies and taken them public in the Route 128 area, the Silicon Valley of he East Coast.

Dry. Bose asked them why they went public and the biggest reasons were personal. They wanted a second house, or a swimming pool, besides the need and opportunity for expansion, and they needed the capital.

Every one of the people he met said, ‘Oh my God, if I had ever known what was involved here. ‘ According to him, they were all technical people, and they were spending 30 to 70% or more of their time on keeping up the public image, instead of working on the object, and none of them were happy about that. There is another overwhelming reason that Bose explained by an analogy.

If you were playing chess with somebody, and I told you that you had to play according to the rule that you would take as many of the opponent’s players as possible on each move, that’s a sure formula for losing the game.

Because you very often want to back up, sacrifice something and then clean up afterwards. Basically, public companies are playing for the short-term. The average tenure for the president of US public companies is five years. If the balance sheet does not look good after the second year, he is at the short end of the average.

You are looking to optimize very quickly and hat is of no benefit in the future you wouldn’t be there in the future anyway. If you want to do things in the long run, you want to be able to back up a couple of steps, to make a giant leap forward later on.

That’s the heart of the reason I don’t want to ever have a public company. “15 Dry. Bose said further, “A key to his company’s success, is that it doesn’t have to answer to shareholders.

“At a time when many public companies were trying to jumpstarted their innovation engines, Bose believed privately held companies enjoyed an R&D advantage precisely because they were not accountable to Wall Street or deader regulators. That was the reason,according to him, why the former MIT professor, who launched his company with a $70,000 stake, could pursue his passion for teaching and research and thumb his nose at conventional business practices.

Marketing approach

Bose products were simple-looking, yet more expensive makes which made it more Doolittle to mar et. K Besides, now sound was perceiver Day aluminous customers could not be measured. Yet Bose had maintained its market leadership over three decades. So how did Bose Corporation explain to a consumer that this speaker that costs three mimes as much sounds much better, when that could not be actually be quantified? Dry.

Bose answered, Mimi can’t explain it. Most of our business comes from word of mouth. The thing about live music is that the composer knew what he intended.

And for any engineer it would be a miracle if he could actually create some buttons and knobs that could improve on the performance. But we can strive to make the performance as close as possible.

When you do get as close as possible, you begin to touch the emotions of the person like the composer had intended. So there is an emotional aspect to very good art paintings or sound. We find that the closer you come to reproducing what the composer created, the more it will touch the people emotionally.”

Mom ibid 7 From the beginning, within the area of audio products, Bose had kept a tight focus on what its audio systems brought to the listener. The company’s fundamental strategy was to make products that came as close as possible to reproducing sounds of live performance.

This strategy set Bose apart from several other leading players in the market. However, Bose Corporation was not the brainchild of a business strategist, UT an ongoing experiment by a brilliant scientist who knew how to use logic to move from assumption to conclusion.

So, in 1968, when the Bose Corporation came out with its first breakthrough product? Speaker which reflected 89% sound off walls and brought live concert-like sound into homes? Dry Bose also decided to come up with a breakthrough marketing strategy to sell the product. He said, “l knew this speaker was better than anything in the market. But, if I had left it to the salesperson, he wouldn’t even try to explain the attributes. So, I name up with the idea of a 7-minute demonstration.

It was like teaching or writing a textbook”

A visit to a Bose products showroom or store would reveal that a typical Bose system did not have too many sound controls that were found on competitor’s systems often priced lower than Bose products. Dry. Bose said, “They call it ‘digital signal processing. ‘ And that’s total nonsense. In an effort to sell products, they put all these buttons and knobs. All of the ones I have seen introduce more distortion than they ever remove.

They do not convert you from one hall to another. It s very unlikely that engineers, through electronic means, will be able to improve on the composition of Mozart or Beethoven, or anyone, for that matter.”

Each retail outlet came with its own demonstration room. Walk-in customers were urged to take in what could only be called a ‘Bose son-et-lumpier’. Customer sat in front of a bank AT Impressive-looking stereo clement Including awesome speakers t at n tantrum Tie- like sound at the customer.

At the end of the show, the salesperson removed the large speakers to reveal that actually all the hi-if sound was coming from the tiny Bose speakers. At this point, the audience remained dazed as per analysts and those who who experienced it .

Exhibit Ill

Three Things You May Not Know About Bose@ Stores

1. Interactive displays make it the perfect place to audition and learn more about a Bose product before you buy it, so you can be sure it’s the right product for you.
2. Local Bose staff can provide you with an in-home audio/video consultation, providing you with recommendations for the entire family.
3. Visiting a Bose store gives you a chance to experience our theater show and to win a Bose product in a quarterly prize drawing.

Bose used research into how a human ear responded to sound to build automated tone control into products.

Many other audio makers’ gadgets required the user to use knobs and dials to adjust volume. With Bose products, sound levels were adjusted by Oboe’s Adapted technology, which analyzed a room’s acoustics and made automatic adjustments aimed at improving sound performance of speakers. There was a lot to be said for Oboe’s sleek design, as per several analysts. Oboe’s Wave music system’s plastic cover had no molding marks – which was a great manufacturing feat.

The company’s Lifestyle home theater in a box had only two speakers, instead of the understanding four, making it easier to set up, explained Ross Rubin, an NYPD Group analyst, “They 17 18 8 have components that look good, don’t take up a lot of space, don’t have controls all over the place.” Market researcher NYPD Group, conducted a survey of more than 600,000 people between April, 2005, and March, 2006, and found that in home audio segment, Bose was not even one percentage point away from No.

1 Sony in terms of customers’ repurchase intent.

A larger proportion of people who bought Bose yester said they were willing to purchase it again than did buyers of almost every other brand. Bose Corporation had entered into an association with Apple Computers. The companies collaborated on a set of speakers for Apple’s digital music player, the pod, and in 2004, Bose released the $299 Sound Dock Digital Music System. Rubin said that Bose pioneered the all-none premium pod speaker system.

According to Envisioning Group , speakers turned out to be the best-selling category among pod accessories, a fast-growing $5 billion market.