A. INNOVATION KNOWLEDGE INTEGRATED
Logitech has several internal strengths that has attributed to the company’s success. Logitech has created for itself a strong reputation through its innovative products and excellent customer service. Innovation is Logitech’s top strengths. Because an innovation is cover throughout the paper, I will not be providing detail examples of in this section, but rather be focusing other key factors. Logitech has stood the test of time, the company can quickly respond and adapt to changes in technology or market conditions. Because Logitech’s product and brand is recognized worldwide, the company has a strong channel coverage and efficient worldwide distribution. In 2009, Logitech’s business retail accounted for 85 percent of its revenue and distributed its product in more than 100 countries worldwide. Strength for Logitech would be their strategic acquisitions and industry partnerships. In 2009, Logitech acquired LifeSize Communications. LifeSize is an innovation leader in HD-quality video communications. The acquisition allowed Logitech to enter an untapped business segment and gave them a competitive advantage in that market by bringing videoconferencing to an even broader audience. In 2010, with the help of Google, Logitech entered the digital home market by combining Harmony Remotes, Logitech Revue with Google TV to create a and peripherals associated with the Google TV platform. Logitech report the launch of Logitech Revue and the Google TV peripherals made a significant contribution to growth with sales of $23M (Q3 Fiscal Year 2011). Another great strength is that Logitech focuses on being a cost leader. They are obsessed with developing very affordable, yet quality products. About 95 percent of Logitech’s retail products sell for less than $99 and most of them for under $49. Over the years they have liked innovation to cost in its culture. Being a cost leader allows them to offer a great product at reasonable prices to everyone worldwide. Weaknesses
While enjoying great success in many ways, Logitech also has internal weaknesses it must consider. Although their major strength is innovation, it is also their biggest weakness. To put in simple terms, if they cannot create new products that consumers want, the company sinks. Because Logitech places great emphasis on being a cost leader, as the company moves to provide higher price products (example top-end speakers that sell for $300 or $400 range) they might lose track of low price products (mouse that retails at $9) and those targeted consumers as well. Logitech depends on heavy retail sales and it account for three-fourths of their annual revenue. A slight miscalculation in forecasting consumer demand or a defective product could result in adverse effect on inventories and finances. Also, Logitech highly depends on retailers such as Best buy, OfficeMax, and others to generate revenue. If one of the retailers decides to eliminate Logitech’s products shelf space, it could affect Logitech’s revenue and market shares. Opportunities
Logitech has the ability to take part of many different emerging opportunities. The first opportunity is the emergence of Non-PC platforms. In the future, they should focus on different types of non PC products such as video game consoles, MP3 players, tablets and mobile phones. Another opportunity would be to focus on different distribution channels. Most of Logitech revenue is through the retail channel. They could distribute their product to universities, schools, hospital, corporations, government agencies, etc. The last opportunity would be for Logitech to open retail stores like Apple did in 2001. Apple has over 320 retail stores nationwide today. I will be discussing this opportunity in greater detail later on in the paper. Threats
Logitech operates in a market that is extremely competitive. Major players with larger financial resources, such as Microsoft, Sony, and others, seek to...
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