Background
To begin with, the Swatch Group manufactures and distributes watches. They are the largest manufacturer in the world and have 156 production facilities around the globe (Deshpande et al., 2012). They did not limit themselves to producing and assembling watches for brand retailer companies. The company also provides different pieces and components to the entire global watch manufacturing sector. In addition to watches, Swatch Group introduced several new goods onto the market; one of them was jewelry for consumers (Deshpande et al., 2012). It boosted market share and revenue while improving the company’s reputation in the marketplace. They targeted international markets, such as those in China, the United States, Japan, India, Switzerland, and Brazil. Because the CEO firmly believed in innovation and creative problem-solving, he was always enthusiastic about using technology effects in product strategy to allow customers to enjoy high-end technologically based products.
SWOT analysis
Strengths
In order to increase demand for the genuine mechanical watch components produced by SMH’s subsidiary, Swatch Group introduced the earliest non-quartz mechanical watch. In addition to having 160 manufacturing facilities in Switzerland, Swatch Group was also placed on the Swiss stock market (Deshpande et al., 2012). They were acknowledged as the best and largest sales locations for the Swatch Group in 2010 after achieving the most significant sales in Europe and Great China (Deshpande et al., 2012). The Swatch Group’s 2010 revenue totaled a billion, all of which came from China. Facilities for research and development were up to par and significantly contributed to the Swatch Group’s efficient and successful expansion. The management claims that the manufacturing and electronic systems divisions demonstrated the company’s assets.
Weaknesses
In order to increase demand for the genuine mechanical watch components produced by SMH’s subsidiary, Swatch Group introduced the earliest non-quartz mechanical watch. In addition to having 160 manufacturing facilities in Switzerland, Swatch Group was also placed on the Swiss stock market (Deshpande et al., 2012). They were acknowledged as the best and largest sales locations for the Swatch Group in 2010 after achieving the largest sales in Europe and Great China. The Swatch Group’s 2010 revenue totaled a billion, all of which came from China. Facilities for research and development were up to par and made significant contributions to the Swatch Group’s efficient and successful expansion. The management claims that the manufacturing and electronic systems divisions demonstrated the company’s assets.
Opportunities
Omega had the chance to expand its distribution network to between 30% and 40% with the rising sales in the niche market and take as much market share as possible to establish a competitive edge there (Deshpande et al., 2012). The Swatch Group had a solid and favorable relationship with its retail partners and had its multi-brand chain.
Threats
Switching to cheaper brands can be caused by the high manufacturing costs associated with Swiss brands. Fierce rivalry in a crowded market from other watch companies that present themselves as trendy and young. Teenagers prefer digital watches over Swatch watches, which are primarily dialogues in design. The market for luxury timepieces has seen an increase in high-end wearables and smartwatches.
VRIO analysis
Valuable
Swatch Group’s financial resources are precious since they enable investment in newly presented prospects outside the company. These aid Swatch Group in fending off challenges from without. Employees at Swatch Group are a vital asset to the company. A sizable fraction of the personnel has received advanced training, which boosts the organization’s output productivity. Additionally, the workforce is devoted, and the company enjoys strong employee retention rates. For the Swatch Group’s final customers, all this becomes better value. The distribution network of Swatch Group is an important asset. This enables it to connect with an increasing number of clients. This guarantees increased sales for Swatch Group. Additionally, because the products are readily available, it ensures that promotional efforts result in sales.
Rare
Swatch Group’s financial resources are precious since they enable investment in newly presented prospects outside the company. These aid Swatch Group in fending off challenges from without. Employees at Swatch Group are a vital asset to the company. A sizable fraction of the personnel has received advanced training, which boosts the organization’s output productivity. Additionally, the workforce is devoted, and the company enjoys strong employee retention rates. For the Swatch Group’s final customers, all this becomes better value. The distribution network of Swatch Group is an important asset. This enables it to connect with an increasing number of clients. This guarantees increased sales for Swatch Group. Additionally, because the products are readily available, it ensures that promotional efforts result in sales.
Imitable
Since other businesses can teach their staff to become more skilled, the Swatch Group’s personnel are also not prohibitively expensive to copy. These businesses can attract workers from the Swatch Group by providing them with greater pay, perks, and employment prospects. As a result, Swatch Group personnel become a resource that offers a short-term competitive advantage. Since it is illegal to copy a protected product, the Swatch Group’s patents are exceedingly challenging to replicate. Creating comparable resources and obtaining copyright for them is similarly expensive. The Swatch Group’s distribution network has been established gradually over the years, making it incredibly expensive for competitors to copy. If competitors want to copy a comparable distribution method, they must invest much money.
Organization
The Swatch Group’s financial resources are managed strategically to invest where opportunities exist, take advantage of threats, and capture value. The Swatch Group’s patents are not organized efficiently, so the company is not making the most of them. Swatch Group’s organized distribution network is utilized to connect with customers by ensuring that goods are offered at all of its retail locations.
Recommendation
Swatch operates in an industry where other watch firms enjoy lower manufacturing costs. This makes it more challenging for Swatch to compete in the same price ranges as its rivals. Watches are also tiny in size, making international shipping relatively inexpensive. Given the preceding, Swatch should implement the first option, which calls for shifting the value-added chain’s activities to nations with low production costs. Swatch needs to work with the companies which produce in the same market category and are searching for a responsible partner, to minimize the expenses of such action and maximize the possibility of success.
Action Plan
The main tasks in the Action Plan would include maintaining targeting benefit advantage, matching competitors’ prices in the low-cost and midrange category, and assessing a premium for watches that are considered to be of higher quality. In order to get a first-mover advantage over rivals that have just begun component manufacture, practical strategies for SG include entering the wristwatch market, building brand equity, reiterating its presence in the US, and investing in additional product and manufacturing improvements.
Reference
Deshpande, R., Misztal, K., & Beyersdorfer, D. (2012). The Swatch Group. SSRN.