Swatch and the global watch industry Business English Final Case

1. LIMITING THE PROBLEM

1. LIMITING THE PROBLEM MANAGEMENT ISSUES The CEO`s (Hayek) management style generated internal conflicts. Key figures in the company and other several directors left the group in the mid 1990’s. Klaus Schwab Drs. Stephan Schmidheiy Pierre Arnold Walther Frehner

1. LIMITING THE PROBLEM MARKETING AND POSITIONING WEAKNESS The group faced difficulties in establishing a strong foothold in the U.S. market primarily because it encountered stiff competition from Timex, Casio, Seiko, and Citizen. Its U.S. market share in the basic and middle price segments was particularly weak.

1. LIMITING THE PROBLEM SALES DECREASE BY THE END OF THE 1990´s It offered more than what the market could bear. It faced increased competition from the likes of Fossil and Guess. The number of stores selling the watches decreased from 3,000 in the early 1990`s to 1,200 in 1998.

2. ANALYSIS SWOT & PARETO´S LAW

2.1 SWOT ANALYSIS Different marketing strategies to position the brand Strengths Being known for quality Superior mechanisms and technology Brand´s value International link between 100,000 fans around the world by the Collector`s Club Different marketing strategies to position the brand “Time is what you make of it” Celebrity ambassadors of the brand New financial strategies From a low-margin, high-volume business  To a high margin, high volume enterprise

2.1 SWOT ANALYSIS High concentration of profits in only 4 brands: Weaknesses Wrong distribution channels Brand´s vulnerability to changes in consumers´ mood Management reengineering needed High concentration of profits in only 4 brands: 82% of total sales 88% of operating profits

Opportunities & Threats Japanese’s high competitive brands: 2.1 SWOT ANALYSIS Opportunities & Threats India offered a great manufacturing location, for its huge domestic demand and low-cost labor. Japanese’s high competitive brands: Seiko, Citizen, Casio Reorganizing the company´s portfolio by expanding to different targets and niches related to luxury and high-tech markets. Growth and positioning in American brands: Fossil Guess

2.2 PARETO´S LAW 20% of the input (time, resources, effort) Accounts for 80% of the output (results, rewards)

2.2 PARETO´S LAW MAIN ISSUES THAT HAVE TO BE TACKLED Corporate flaws in management strategies and communication. Board reorganization. Weak positioning and placement in the U.S. market.

3. RESOURCES

3. RESOURCES A common denominator in all the Swatch Group brands was the good positioning in consumers´ minds as high-quality products. Positive marketing strategies to launch its products into the segments and niches they belong to. Intelligent advertising strategies that positioned its products as top-of-the-line brands. Creative cost reduction strategies to create a high profit margin.

4. SOLUTIONS

4. SOLUTIONS One of the solutions that we propose is to reorganize the management and the board, so conflicts can be avoided when decision-making time comes. Nicolas Hayek has to be removed from his position.

4. SOLUTIONS Also, we also propose different marketing strategies such as diversifying the advertising and the publicity of the group, with a different focus for each single brand.

4. SOLUTIONS In doing so, the company would be able to position the top-of-the-line watches (Omega, Tissot, Blancpain) in high-class segments and the state- of-the-art technology watches (Swatch and Rado) in middle class segments that may produce a higher volume of sales.

4. SOLUTIONS Thus, Swatch Group can achieve the profit margin that it has always tried to pull off.

Thank you for your attention Business English Final Case Víctor Fortún Basauri – Rodrigo Fortún 22/05/2013