Corporate Strategy : a Look at Swatch
1. Conduct an industry (five forces) and environmental (PESTEL) analysis of the watch industry
When Swatch emerged in 1983, it was a prime time to enter the watch industry. Existing rivalry and the threat of new entrants were medium, allowing Swatch to thrive.
Not one of the many competitors held more than 15% of the total global market, thereby creating medium concentration. In addition, cost conditions, excess capacity and exit barriers, and product differentiation were also medium. Although there was high diversity among competitors, Swatch’s strategy of differentiation, complemented with the other industry factors, allowed them to enter the industry and profit.
Although there were barriers to entry and a high threat of substitute products, Swatch was able to forgo the barriers and create a niche to avoid threats. While low concentration and extreme price sensitivities of shop buyers created high buying power; the power of suppliers was extremely low, enabling efficiencies in production to emerge.
Economic and political tensions were low when Swatch emerged. Swiss political barriers had fallen and the Swiss global reputation remained positive. In addition, economically an increase in consumers’ spendable income, and recent sociocultural desire for fashion, created an opportunity for Swatch to create a niche in the global culture. Constant technological advancements in the industry required innovative teams, legal barriers to protect copyrights and patents, and isolating mechanisms to protect resources and capabilities.
2. Use Mintzberg’s 5 Ps framework to analyse Swatch’s strategy. How did its strategy evolve?
Swatch’s strategy evolved over time through many different stages and most of the 5 Ps of Mintzberg’s strategy framework, see Appendix 3. Overall, however, the strategy began as a strategic perspective change and eventually evolved into a strategic position that Swatch still maintains. The first step in the evolution of Swatch
When Swatch emerged in 1983, it was a prime time to enter the watch industry. Existing rivalry and the threat of new entrants were medium, allowing Swatch to thrive.
Not one of the many competitors held more than 15% of the total global market, thereby creating medium concentration. In addition, cost conditions, excess capacity and exit barriers, and product differentiation were also medium. Although there was high diversity among competitors, Swatch’s strategy of differentiation, complemented with the other industry factors, allowed them to enter the industry and profit.
Although there were barriers to entry and a high threat of substitute products, Swatch was able to forgo the barriers and create a niche to avoid threats. While low concentration and extreme price sensitivities of shop buyers created high buying power; the power of suppliers was extremely low, enabling efficiencies in production to emerge.
Economic and political tensions were low when Swatch emerged. Swiss political barriers had fallen and the Swiss global reputation remained positive. In addition, economically an increase in consumers’ spendable income, and recent sociocultural desire for fashion, created an opportunity for Swatch to create a niche in the global culture. Constant technological advancements in the industry required innovative teams, legal barriers to protect copyrights and patents, and isolating mechanisms to protect resources and capabilities.
2. Use Mintzberg’s 5 Ps framework to analyse Swatch’s strategy. How did its strategy evolve?
Swatch’s strategy evolved over time through many different stages and most of the 5 Ps of Mintzberg’s strategy framework, see Appendix 3. Overall, however, the strategy began as a strategic perspective change and eventually evolved into a strategic position that Swatch still maintains. The first step in the evolution of Swatch
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