Problems and Issues
In the 1980's, Swiss watchmakers started to realize they needed to change their business structure to fit into a new global market place. That they needed to not simply change their very own views in the market nevertheless the infrastructure of watch manufacturing. In order to remain competitive on a global level they needed to improve their technology, style products that might appeal to new market segments and be able to compete with other companies in quality and cost. During this time, a merger of two companies helped create a fresh market pertaining to Swiss wrist watches. Asuag and SSIH combined to create Societe Micromecanique et Horlogere (SMH). They created a type of watches named " Swatch" that appealed to a young target audience. All their new style, distribution and production strategies created a niche market that shot to popularity worldwide. The Swatch Observe Company transported itself coming from near bankruptcy in the early on 1980's to a world leader regarding value by the late 1990's, at this time facing again new sets of challenging issues that would impact their foreseeable future in a fast changing global economy. These issues included:
-Sales being smooth between 18-20 million devices a year.
-Sales and profit margins below amounts achieved at the begining of 1990's.
-Increasing competition in existing market segments and new markets.
Analysis of the Issues
Although the Swatch Group was the world's leading manufacturer of watches; they were faced with many issues. They will needed to establish a strong existence in the United States marketplace since Timex, Casio, Seiko and Resident comprised above 50% of the share. The organization also started to be too diversified in generating fourteen (14) different brands even though that strategy established a occurrence in all industry segments and price categories. The Swatch Group lost sight of their placement in the marketplace looking to be everything to all people, and as such, had to focus on the combo of products.
The interior reorganization types that were used by the Swatch Company in the 1980's, and through the 1990's, which provided the Sample Company their world value leadership, getting less and less powerful facing the challenges of flat revenue, and margins and revenue below recently achieved amounts. It failed to help either that competition was raising for Swiss watches in existing marketplaces and in fresh markets.
Trend, lifestyle changes, and changes in consumer tastes were areas that needed to be resolved by the Sample Group in determining the best markets. Additionally , most enjoy companies had shifted manufacturing to Southeast Asia as it offered lower cost production alternatives. They continued to be the only watch group to keep to produce wrist watches in one of the priciest countries on the globe. At this point on time, the Sample Group needed to consider checking out India, which will had a huge domestic require and cheap.
Potential solutions to the issues / how these types of solutions will certainly resolve the problems
As they would in the early 1980's, the Swatch Group must undertake new global strategies to achieve success again. This can include increasing sales by better penetrating current markets and establishing new markets, bettering margins simply by cutting production costs, applying company-wide guidelines to achieve the highest level of performance, and guarding existing markets by creating local manufacturers.
1 . Creating niche products -
The Swatch Group's focus on producing fourteen (14) different brands had used their emphasis off client behavior and lifestyle changes. Swatch Group will need to focus on the top four items (Omega, Sample, Tissot, and Rado), mainly because these four brands produce more than 82% with the company's product sales and 88% of the functioning profit. Throughout the world, the Swatch Group a new 14% reveal of the extravagance watch section with brands like Omega watches and Scarso. 1 They have to focus on these types of luxury brands which might prove good in the Japanese market. Japan consumers are known for their knowledge about name brands and possess a...
Mentioned: 1 . Arrangement, Cyril. " Swatch as well as the Global Watch Industry. " Ivey Supervision Services, 1999. Page 17.
2 . Thakran, Ravi. Enjoy Market Review, http://www.watchmarketreview.com/interview, Sept-Oct 02 Issue, Page 6-7.
3. Kual, Pummy. " Swatch Models Time Certain Growth Agenda. " American indian Express Magazines, 2001, http://www.expressindia.com, Page forty five.
4. Bridal bouquet, Cyril. " Swatch and the Global Enjoy Industry. " Ivey Administration Services, 99. P. 17-18.