Swatch Strategic Analysis

Topics: Watch, Clock, Seiko Pages: 5 (994 words) Published: January 27, 2013
The Swatch watch was basically launched to re-capture the entry level market share lost by Swiss Manufacturers during the explosive growth of Japanese watch companies, such as Seiko in the 1960s and 1970s, and also in order to re-popularize analogue watches in a time when digital watches had reached wide popularity. The first steps of the new Swatch brand in 1983 were marked by bold new styling and design. The quartz watch was redesigned for manufacturing efficiency and fewer parts. This combination of marketing and manufacturing expertise restored Switzerland as a major player in the world wristwatch market.


Technological :
The Swiss watch industry dealt with huge losses due to the use of old and outdated production processes whereas competitors incorporated latest technologies in their products. However, the CEO of ETA, Ernst Thomke, managed to turn things around by having the idea of bonding watch parts to the case which resulted in creating the world's thinnest watch. This innovation helped swatch to regain technological edge over its competitors.

Other manufacturers incorporated advanced technologies in their products whereas swiss watch manufacturers continued to use out-dated tech. Introduction of the electronic watch by other manufacturers.

Long history of high quality watches.
Delirium project provided innovations that leaded to swatch's development. Reduction of production costs due to using molded cases.
Management team composed of talented and innovative members Innovative design and low-cost production

Poorly suited structure for absorbing new electronic technologies.

Economic :
The Swiss watch industry suffered from competition due to the arrival of Asians in the market. As a result, the Swiss watch industry had to adopt several changes in order to survive.

Domination of segments based on older technologies.
Third world countries and newly industrialized nations offer unexplored markets. Extension of sales outside of the European market.

Adverse dollar exchange rates caused Swiss watches to be more expensive in the United States. Increase in sales of electronic watches.
Massive loss of market shares to other watch manufacturers. Arrival of Asian manufacturers.

Declining financial reserves and risk of debt.

Social :
Due to the intense competition, the Swiss watch industry faced its misfortune which resulted in large scale layoffs and bankruptcies, job losses led to regional unemployment rates unknown in Switzerland since 1930.

Large-scale layoffs and bankruptcies caused by the industry's misfortune.


Threat of new entrants :
High threat of Asian manufacturers entering the market due to rapid market growth and increasing demand, also, technological barriers might stop new companies from entering the market; however that is not the case for Asian companies since they have the required technology to enter the market.

Bargaining power of buyers :
Buyers have moderate bargaining power since there are a lot of brands to choose from, they are mainly composed of retailers and consumers.

Bargaining power of suppliers :
Suppliers have medium bargaining power because the customers (watch manufactures) have high negotiation power; therefore they are important to suppliers.

Rivalry among existing firms :
Rivalry among firms is high in the watch industry, because the market is rapidly growing demand is rapidly increasing and there isn't much brand differentiation either. The watch industry attracts many new companies especially Asians, since they have low production costs. Also companies set attractive prices to their products while still keeping generous profit margins.

Pressure of substitute products :
The pressure of substitute products is moderate because it's relatively easy...
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