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Swatch and the Global Watch Industry

Powerful Essays
Swatch and the Global Watch Industry

In the 1980's, Swiss watchmakers began to realize they needed to change their business model to fit into a new global market place. They needed to not only change their views of the market but the infrastructure of watch manufacturing. In order to compete on a global level they needed to improve their technology, design products that would appeal to new markets and be able to compete with other companies on quality and cost. During this time, a merger of two companies helped create a new market for Swiss watches. Asuag and SSIH merged to create Societe Micromecanique et Horlogere (SMH). They developed a line of watches called "Swatch" that appealed to a younger target audience. Their new design, distribution and production strategies created a niche market that became popular worldwide. The Swatch Watch Company transferred itself from near bankruptcy in the early 1980's to a world leader in terms of value by the late 1990's, at this time facing again new sets of challenging issues that would effect their future in a fast changing global economy. These issues included: -Sales being flat between 18-20 million units a year. -Sales and profit margins below levels achieved in early 1990's. -Increasing competition in existing markets 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 needed to establish a strong presence in the United States market since Timex, Casio, Seiko and Citizen comprised over 50% of the share. The company also became too diversified in producing fourteen (14) different brands even th...

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...t was only when it responded to the global threats it was successful again and how it had to chose again between short term social obligation or long term survival obligations.

Competition in the past did everything it could to gain market share and penetrate new markets and would not stop or change expanding strategies because they felt sorry for the Swiss. Competitors will continue to do everything possible to expand markets, defending their existing markets, and fighting the Swiss from trying to enter existing or new markets. Competition will even try to compete with the Swiss on their world leadership in the high range price segments; and just like in the past if the Swiss were not ready for such competition, they will lose that leadership without a fight. Loses of such leadership in this segment will mean an end to the Swiss watch industry again.
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