Competitive and Product Mix Issues and Potential Resolutions The Swatch group as a whole had an unparalleled ability to provide consumers with a wide range of products in all market segments. They could provide hi-tech watches that functioned as ski passes, fashion watches such as the Swatch, or an exquisite diamond studded precious metal watch – Swatch provided products at all extremes. However, certain product lines were more successful then others. 2.Swatch customers are urban trendsetters who prefer changes and are unpredictable. So if swatch fails to produce innovate style it can make huge loss on its sales. 3.Europe is currently the biggest market for Swatch watches, however due to the economic recession and price fixation its position is threatened. Heyek had an important role in the success of Swatch. Heyek wanted to give a whole new meaning to buying and wearing a watch, create value out of it. He decided that the Swatch would have a unique message, one unlike that of any other watch brand in the market. The fact that the company was not only selling a watch, but an important part of people’s self image, in my opinion, is the main reason for which the Swatch succeeded.
The productivity of Swatch Group is $0.2Million Compared to $0.3 Million of its competitor’s Seiko. 4.The production costs of company headquarters are too high. Swatch’s competitors locate manufacturing activities in low-cost countries t. But Swatch had always committed to its Swiss home base. It is a big disadvantage to make watches in one of the most expensive countries in the world.The Swatch Group will need to take steps to ensure that international integration does not cause domestic social disintegration. Regardless of how the issues are resolve, the greatest challenge is going to be finding the right balance between markets and societies. References Swatch and the Global Watch Industry. The Swatch watch in particular was struggling to gain market share in the United States and elsewhere for several reasons including fickle consumer behavior and a product line that was daunting to consumers and resellers. The Swatch product was quickly loosing its competitive edge against other players such as Fossil, Guess, Timex and Seiko. Resellers were dropping like flies and consumers felt like Swatch had saturated the market with too many products. Introduction The Swatch Group had many early on successes due to repositioning strategies and a boost from acquisitions. On the surface, the Swatch Group was the world’s leading manufacturer of watches in the late 1990’s. They had 14 percent of the world market share and it appeared that gross sales and net profits were on the rise; however, under the covers, it was a much different story.>This is supported by the fact that the number of resellers dropped from 3,000 in the early 1990’s to 1,200 in 1998. Swatch needs to apply a SWOT analysis and determine which product lines are successful in this market space and drop the remaining products. In addition, the Swatch Group needs to look at their consumer base and determine if it would be profitable to launch a new product line that captures past consumers who have now progressed to the next stage of their lives and are desiring a more expensive and sophisticated watch.4.Plastic and metal is the main raw material for Swatch watches. Recent price increase in crude oil and metal is making the raw material expensive and production cost very high which leaves a very low margin for profit. 5.Technology of smartwatch (The watch has) is becoming more and more mature, its fashion design and hi-tech functionalities would grab the market share from traditional watches.Manufacturing Issues and Potential Resolutions Driven by high demand, offshore manufacturing centers are appearing throughout the world. Many of the Swatch Group’s competitors have switched their manufacturing to centers overseas and decreased their fixed costs, which resulted in an increase in profit. The Swatch Group had always remained committed to its home base, partly because their home base possessed centuries of expertise in watch making and partly because a timepiece cannot be stamped with “Swiss Made” unless at least 50% of Swiss manufactured products by value are present in the timepiece. The company also used special events and product placements to promote the Swatch brand. I think that SMH did really well in terms of promotional strategy because they managed to succeed in being viewed as a trendy, fresh, new company in the eyes of the consumers by using promotional techniques as the one used in Frankfurt with the gigantic watch. The price of Swatch was probably the factor that played the most important part in their success. The Swatch was different from the other watches in many ways but the factor that distinguished it the most from the rest is the fact that it could add genuine emotion to the product. It basically changed the consumer’s perspective of the product. Previously, watches were considered to be timekeeping instruments which had no personal meaning. Selecting the right option requires balancing factors such as cultural affinity, geopolitical risk, cost, and resource availability. To help narrow their focus in their analysis, initially, the Swatch Group should look to India for their outsource location. India has a large talent pool of skilled, experienced watch workers. 1.The watch market is becoming very fragmented which makes the promotion of the brand difficult. 2.Swatch has been facing a very low turnover of its assets compared to its competitor’s parent company. 3.The productivity per employee is weak hence affecting the financial profits of the parent company.AN OVERVIEW OF THE COMPETITION The single largest player was Titan, with a brand share of 20.6% in 2009. 12 The next player worth mentioning was Swatch, with a relatively small share of 5.9%. 13 Timex was a relatively strong multinational brand in the market. Rolex, PA Time, Citizen, and Casio had small significant shares, and HMT was also present in the Indian market.Swatch was facing a myriad of issues that needed to be resolved in order for success to prevail. Management issues were plaguing Swatch; multiple key figures stepped down from the board in the mid 1990’s citing the CEO’s inability to listen to his staff. In addition to the management issues, Swatch was also facing fierce competition in many market spaces, including the largest consumer base space, the United States. The idea of introducing a low cost watch, which would be targeted to the low end market, was an excellent work. Swatch quickly gained popularity due to the previously mentioned competitive advantages, which shows that targeting the lower end market along with the added meaning to the product was a very effective strategy. SMH decided to distribute their product differently than every other watch brand. Swatch started to design and sell watches that allowed customers to show their individuality, “they featured witty, sometimes outlandish designs that used brash, intense colors”. 2) Do you agree with the original product strategy? The channel strategy? The promotional strategy? What about the pricing strategy? The Swatch Group will need to carefully balance the outsourcing cost reduction possibilities with the social ramifications that may exist. Conclusion There are many issues facing the Swatch Group and there is no right way to solve any of the issues. Each issue comes laden with ethical and social consequences that will also impact the company. In addition to lack of market penetration in the United States, Swatch had too many products, which equally distracted buyers and sellers. Lastly, manufacturing costs continued to soar in Switzerland, the Swatch Group’s home base. Other competitors were quickly cutting their costs by moving manufacturing overseas.The first main reason why Swatch managed to gained so much popularity in the watch industry is because they managed to cut costs. Heyek had started a low-end product initiative and was fully committed to vertical integration, that is, he intended to build and assemble the low-price quartz watches entirely in Switzerland. This, along with the decision to encase the watch with cheap plastic, helped the company lower costs substantially whilst managing to maintain a high quality opinion from the customers (as it was made in Switzerland).Outsourcing assembly to India will have many positive effects for the Swatch Group. Cost reduction remains the primary objective of outsourcing; the Swatch Group will have the ability to provide a good at a lower cost and should be able to make the assembly cost more predictable and controlled. Ethically and socially, outsourcing has a caused many individuals and increase in job insecurity. Branding has its own associative values, for example “Rolex” watches are seen as very prestigious and extravagant timepieces while a “Casio” is also a timepiece but is seen with less prestige and value. A “Rolex” timepiece can fetch large sums of money even for the cheapest model while a “Casio” at its most expensive is still worth a fraction of the price of a “Rolex”. The “Rolex” can be said to be a Symbolic brand while the “Casio” is more of a functional brand. Omega (part of the Swatch Group portfolio of brands), was facing a similar demise in the early 1990’s and successfully repositioned itself and became a major profit driver for the group. It achieved this by carefully selecting its marketing programs and drastically trimming its product line from 2,500 to 130. This strategy needs to be applied to Swatch, which focuses on the basic and middle-priced market. Although the mix of factors raising the possibility of outsourcing varies from company to company, there are a few themes that the Swatch Group needs to explore regarding the pressures to outsource. The Swatch Group needs to recognize that general concerns regarding cost and quality are the main drivers for outsourcing. In addition, outsourcing can turn a fixed cost into a variable cost, which will significantly help a company with varying volumes. The Swatch Group was at a crossroad; the strategy that had worked so well in the early 1990’s was no longer viable – the question now was what to do about it? Management Issues and Potential Resolutions Although Swatch faced many issues, internal dissension can be the quickest death of a company. Hayek needs to ensure the people chosen to replace the board member’s who stepped down are able to handle his leadership style. A marketing campaign needs to be chosen that helps attract new consumers in the basic and middle price market focusing on the smaller number of brands and a separate campaign should be created that focuses on keeping their existing customer base. These campaigns should be replicated to other countries to ensure the Swatch brand remains visible. Neither of these resolutions will be easy to implement; however, if done successfully Swatch will decrease their production costs because there are fewer product lines and increase their sales based on marketing campaigns to two separate groups: new customers and existing customers. Of the entire population, 98% of the Jordanians are Arab, while only 2% of the population consists of Circassions and Armenians. Arabic is the obvious language of the country, and the major religion of Jordan is Sunni Muslim, which is practiced by 96% of the population. The other 4% of Jordanian religion is Christian, which to me is quite shocking considering the fact that the Holy Lands are so close including the major holy city of Jerusalem. A man had leaned In toward Jordan to mumur “ Mr Gtasby requests your presence , Ms Baker.” “Me?’ Jordan was dually incredulous and fascinated. “Well , a girl must go where she’s wanted, “ she laughed and winked at Nick , as though they now shared a special Secret. Watching Jordan walk away Nick felt a special attraction to Jordan but brushed it off as though to say he would just be another fling to her.They can setup a redeployment pool for those resources and try to redeploy them elsewhere in the company. However, if this is not possible, a business decision will have to be made to lay those workers off. The utmost sensitivity will be required as it is possible that generations of families have worked for the Swatch Group.