Swatch Case Essay





International Strategic Managing

1st year master's degree student:

Inarkaeva Lamara

Supervisor: Ekaterina Makhnovskaya


10. 12. 2014

Key tactical issue

The Swatch Group is the world's leading maker of watches with 16 per cent reveal of the world market, which was the first Switzerland company started to compete within a low price section. In 1998 Sample increased their net profit by 7. 5%. However , after key statistics left the business, the Swatch Group started to face prolonged difficulties in management and its placement on the market. Furthermore, company's strategy started to be unclear for the shareholders, because they have a doubt that current strategy is still sustainable in rapidly changing competitive industry. In view of the aforesaid, it is very important for Swatch to change its current advancement strategy so that up with their very own rivals and avoid a decline in sales and market share.


There are lots of ways intended for Swatch to address the issue of changing its current development technique. First substitute for Sample is to move the value-added chain activities to countries giving low production cost. Having manufacturing activities in Switzerland, which is the most expensive country on the globe, does not area company to successfully take care of its bills. The benefit of this plan is that Swatch will noticeably reduce the price for materials, labor and operational costs. It will also allow Swatch keep competing with low cost manufacturers on a wrist watches market. Likewise, moving production activities to other countries will give Swatch access to new markets, in which demand for its products is substantial and the competition is little. Often developing countries offer incentives to get the companies that move their particular manufacturing actions. It will bring about increased transact through export products and imports and to a rapidly growing volume of intermediate contribution between several countries. At the same time, there are some potential threats from this approach. Shifting the value added chain activities means that managers will have much less control over the expense and production processes as they do in Switzerland It may well result in bigger costs, lesser product quality and inefficient production techniques. It will also have an effect on customer's attitude and Sample may reduce part of its market share. Individuals are convinced that Swatch watches are completely made in Swiss, which means the excellent quality and confidence in the product. The quality of product could possibly be a determinant when choosing designer watches and customers may not be willing to pay the higher prices for a item which parts were manufactured in developing countries. The second alternate for Sample is to reorganize the company's portfolio, as the latest product line is too complex pertaining to the company's inside possibilities. The organization needs to eliminate the brands and product lines which provide less profit and possess low market share in very competitive markets where their very own rivals are definitely more successful. Particular number of advantages of this tactic. First of all, it will eventually allow Swatch to keep up with the competition. Swatch generate their merchandise is a market that faces constant changes and it is essential to update the merchandise collection which will reveal the latest needs of customers and up-to-date tendencies in the technology. Reducing the product range of brands and items Swatch companies will help the business to become more sensitive to the changing needs of customers. Restructure the company's stock portfolio will also support Swatch to choose key revenue drivers, give attention to them and make them a lot better than any other goods on the market in order to increase the product sales and eventually, the revenue. As the company spends all methods in development, it will make it better to better deal with the high priced materials...

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