Less than a decade since the start of the company, Logitech Inc. became one of the top corporate giants in the computer mouse/pointing device market with big rivals such as Microsoft and KYE. Founded on October 2, 1981 by Pierluigi Zappacosta and Daniel Borel in Switzerland, Logitech was initially in the business of developing software, which soon extended to hardware after winning large contracts with Ricoh and Swiss Timing. In 1982, less than 6 months since the company was founded, Logitech quickly secured the rights to market a mouse that was developed by Depraz, a Swiss watch company. This launched Logitech into the mouse/pointing device business. In 1984, Logitech secured a contract with Hewlett-Packard for OEM mice, which were mice manufactured by Logitech but sold and marketed under Hewlett-Packard. In order for Logitech to better operate under their newly secured contract they took over the rights to manufacture and market their own mice. This was a major step in Logitech’s emergence as a corporate leader in the OEM mouse market. It led to additional contracts with several well-known companies such as Apollo and AT&T and helped Logitech branch out into different segments of the computer technology industry. Symptoms
Logitech took pride in being global and operations orientated. Logitech saw themselves as a global business with a culturally diverse workforce. Operations were also an important aspect of Logitech’s corporate culture. Product developments were oriented around technical components and cutting edge design. These same orientations were also transferred to the workplace. At Logitech the workplace atmosphere was usually informal and free-spirited. Projects at Logitech were not strictly organized or managed by a central authority. It was common to work on multiple unrelated projects, official or ‘unofficial’, in different stages at the same time. Using ‘gut feeling’ instead of research and analysis to make critical development decisions was also the norm. Logitech’s free-spirited corporate culture gave employees a lot of room for creativity and innovation, which was one of Logitech’s greatest assets. However, the lack of structure may have also caused issues for the company. Although Logitech’s business strategy is to “recognize major trends and technologies early” and “move fast in bringing quality products to the market” (1992, Smith, 389) on several occasions Logitech had not reacted quick enough to market changes such as the launch of Microsoft’s ‘white mouse’ in 1987. The issues arise not only in the business strategy but also in the aspect of the corporate culture and structure that lacks central control and authority. This had also in part led to the failure to capture the large corporate consumers, which makes up a large portion of the mouse market. EXTERNAL
The Changing Market
Computer technology has a relatively short life cycle. Over the course of only a decade computer technology became more of a commodity and consumers became more and more sophisticated and knowledgeable. Critical evaluations were made and more questions were raised about the impact of computer technology. What this meant for Logitech were more price-sensitive and feature conscious consumers. With computer technology easier to share and understand, there was also an increase in competitors. Competition
Logitech’s competitors in the consumer market segment were Microsoft and KYE. Microsoft was the industry leader for computers in respect to market shares and KYE was the leader of the OEM mouse market in the European market. Since Logitech specialized in a niche market, the overall market share relative to industry size was not the greatest concern. As for KYE, although Logitech had some presence in Europe that presence was abysmal in comparison to KYE. Additionally, Alps and Mitsumi were Logitech’s two major competitors in the OEM mouse...