Case Study: Swatch and the Global Watch Industry Essay

IntroductionThe Swatch separate had numerous early on advantagees due to repositioning strategies and a boost from acquisitions. On the surface, the Swatch group was the humannesss leading manufacturer of watches in the late 1990s. They had 14 percent of the world securities industry address and it appe atomic number 18d that gross sales and net profits were on the rise however, under the covers, it was a much different story. Swatch was go about a myriad of issues that needed to be re turnd in order for success to prevail. Management issues were plaguing Swatch multiple key figures stepped down from the board in the pith 1990s citing the CEOs inability to listen to his staff. In appurtenance to the management issues, Swatch was as well as facing fierce competition in numerous market spaces, including the largest consumer base space, the United States.In addition to lack of market penetration in the United States, Swatch had too m all fruits, which equ onlyy confuse b uyers and sellers. Lastly, manufacturing approachs continued to soar in Switzerland, the Swatch free radicals place base. Other competitors were speedily cutting their costs by moving manufacturing oversea. The Swatch company was at a crossroad the strategy that had worked so well in the early 1990s was no longer viable the question straight was what to do about it?Management Issues and Potential ResolutionsAlthough Swatch faced many issues, inherent dissension can be the quickest death of a company. Hayek demand to go out the people chosen to replace the board members who stepped down are able to handle his leaders style. Equally as important as selecting a high-performing executive team, Hayek needs to enlighten that traditional organizational principles of functional hierarchies forget inevitably lead to rifts in management. This is a social issue that Hayek necessitate to address. If ex-board members continue to bad oral cavity Swatch it could earn an impact on sa les. To address this issue, Hayek needs to improve his leadership style and management model to actively involve his staff. As an employee, heretofore an executive employee, being flat out told what you possess to do all the time is often the ingredient for an unhealthy work environment, curiously when act to implement change. However, when employees are involved in making a finale it is often easier to put into action the decision that was do.There is sometimes a higher acceptance of the decision when it comes from the ground up and there is a higher probability that the decision give be executed efficiently. The takings of such a change will inevitably be positive. When Hayek has more then one person getting together trying to work on a problem, he will have an step-upd chance at a better solution then if he were trying to solve it himself. The employees bring a lot to the meeting room with them. For instance, they may have inside information about why production i s faltering. By creating a high-performing executive team that works as a cohesive unit versus he has to be the big boss alone, and can never share opinions unit, the Swatch Group should begin to see an improvement in the softer issues, such as employee satisfaction, higher executive employee retention, and a more open communication model. free-enterprise(a) and Product Mix Issues and Potential ResolutionsThe Swatch group as a hearty had an unparalleled ability to abide 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 cunning metal watch Swatch provided products at all extremes. However, certain product forms were more successful then others. The Swatch watch in particular was struggling to hand market share in the United States and elsewhere for some(prenominal) reasons including explosive consumer behavior and a product cab les length 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 give care flies and consumers felt like Swatch had saturated the market with too many products. Worse of all, consumer perception was that Swatch was a fad. Swift decisions need to be do to reverse this before the brand becomes part of a MTV or VH1 I love the 90s television show. Luckily, most of the decisions to be made regarding product mix have very little impact socially and ethically.Omega (part of the Swatch Group portfolio of brands), was facing a similar demise in the early 1990s and successfully repositioned itself and became a major profit device 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-p riced market. This is support by the fact that the number of resellers dropped from 3,000 in the early 1990s to 1,200 in 1998. Swatch needs to apply a SWOT analysis and desexualize which product lines are successful in this market space and drop the rest products. In addition, the Swatch Group needs to look at their consumer base and rig if it would be profitable to launch a vernal 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.A marketing campaign needs to be chosen that cooperates 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 minify 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.Manufacturing Issues and Potential ResolutionsDriven by high demand, offshore manufacturing centers are appearing throughout the world. Many of the Swatch Groups competitors have switched their manufacturing to centers overseas and decreased their fixed costs, which resulted in an increase in profit.The Swatch Group had al steerings 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 make products by measure are present in the timepiece. Although the mix of factors aerodynamic lift 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 outsou rce. 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.Although most headachees can benefit tremendously through outsourcing or manufacturing in another country, the Swatch Group needs to determine if it will be successful and profitable for them. Outsourcing a portion of their value chain is not a quick-fix response to production costs or performance lags. Additionally, the choices for outsourcing locations are many, they are not all equal, differing in several critical areas. Selecting the properly option requires balancing factors such as ethnical affinity, geopolitical risk, cost, and imaginativeness 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 puddle of skill ed, experienced watch workers. These workers have hands-on experience supporting whale industries. Titan is continuing to grow as a company and the pace of resource expansion is dramatically improving in keeping up with authentic as well as future technologies. Additionally, the Swatch Group should center their outsourcing upkeep to the assembly portion of the value added chain. This will ensure that 50% of the fabricate parts are motionlessness completed in Switzerland.The design, marketing, and most of manufacturing of the watches still remain where the expertise is located. The assembly of a watch is an extremely quotable and easily controllable task, which will increase the success for outsourcing. Outsourcing assembly to India will have many positive effects for the Swatch Group. Cost decrement 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. Lower restriction standards in other countries are forcing many companies to outsource much of their manufacturing. This is especially unsettling for individuals who lack the skills to make themselves difficult to replace, such as in manufacturing. If the Swatch Group decides to outsource assembly, there will be no easy way to redeploy the assembly workers. 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 terminus sensitivity will be required as it is possible that generations of families have worked for the Swatch Group. The Swatch Group will need to carefully balance the outsourcing cost reduction possibilities with the social ramifications that may exist.ConclusionThere 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. The Swatch Group will need to take steps to ensure that international integration does not cause domestic social disintegration. no matter of how the issues are resolve, the greatest challenge is going to be finding the right balance between markets and societies.ReferencesSwatch and the Global Watch Industry