Swatch Analysis

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12/03/2012
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Strategic Analysis
The Swatch Revolution

Sommaire
I.Macroenvironment analysis4
1.Economic environment4
2.Technological environment4
II.Industry environment: Porter 5 strengths5
1.Threat of new entrants5
2.Bargaining power of buyers5
3.Bargaining power of suppliers5
4.Threat of substitute products6
5.Rivalry among Existing firms6
III.Mission, goals, objectives, social responsibility and ethics7
1.Mission and Vision7
2.Goals7
3.Performance8
IV.Business Unit Strategies and Functional Strategies9
1.Vertical growth strategies9
2.Horizontal growth strategies9
3.Diversification strategies10
4.Portfolio strategies10
5.Parenting strategies10
V.Strategy Implementation11
1.Structure11
2.Organization11
VI.Strategic control13
1.Critical issue: Swatch fails to create a distinctive image in the customer’s mind.13
2.Financial analysis13
VII.Recommendations for future action15

The Swatch Revolution

The Swatch comes out in Switzerland to contrast the crisis of the national watch industry blew up in the 70s because of the arrival of hundreds of quartz watches at a low price, coming from Japan and from Hong Kong, and for the decision to adopt not the quartz technology the Swedishes themselves had invented. There were, moreover, strategic, structural and managerial problems too. The success of Swatch took place despite the other branded goods’ equal desperation for growth and the value-conscious consumers’ resistance to price increases in an era of low inflation (Noella, 2002), and are opting for high-quality private label goods instead of brands (Devincentis and Kotcher, 1995). Thus, Swatch’s innovative evolution had essentially had broaden their consumer base.  For Swatch, the recuperation and improvement from their diminished market share due to their high-priced watches and the availability of low-priced brands can be attributed to these three factors. First, the development of their product from the use of classy materials to plastic cased watches and the subsequent cost reduction that they garnered allowed for lower prices. This enabled them to compete with other brands.

Our strategic analysis gives us the opportunity to learn more about Swatch Group, to point out the factors that lead to its success and to give recommendations in order to improve what seems for us going wrong.

I. Macroenvironment analysis

1. Economic environment

The first aspect we have to point out is the hard competitive environment. In the early 80's, the world of Swiss watchmaking has undergone a profound change because of the arrival on the market of Asian watches using quartz and also because of other vagaries of economic conditions. Resizing the branch was unconditional as evidenced by these figures: * 90,000 employees in 1970 against 30,000 in 1984. Stabilized to 40,000 currently. * 1,600 companies in 1970 against 600 now.

Threat|
Arrival of the Asian industry|
Recession of the watchmaking industry in Switzerland|
*
2. Technological environment

The Swatch Company, continuing the innovative technology created by Maurice Grimm changed the watchmaking’s standards. The strategic choices and efforts in marketing and communication undertaken by the brand have enabled a rapid and continuous development over the years since its inception in 1983. Swatch's strategy is based on an innovative process generalized. More than mere technological, innovation focuses on the work covering the development of branding and marketing approach. Opportunities|

* Extremely thin, simple, strong and durable  * Focused on the Italian Customers who were crazy for fashion and looking for something innovative. * Appointed artists, architects, designers. Proposed more than 3000 designs. * First watch to introduce see-through watch and scented watches.| II. Industry...
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