Case Analysis Swatch Essay

In 1978, when Dr. Ernst Thomke became managing director of ETA, the position of this Swiss flagship industry had changed dramatically. Especially with the presence of a strong competency (japan and U. S). Macro-environment (PESTEL Analysis) * economic holy terror The market sh be had fallen from 56% to a incorrupt 20%. Opportunity The production had grown from 61 million to 320 million pieces and movements annually.Opportunity the decline of the dollar was not quite as evident. Threat Market share loss was to a greater extent pronounced in entire watches (Japan was producing 50. million Electronic watch compared to Switzerland and had 21% of market share on finished watches) Threat The situation was aggravated by adverse supercede rate movements relative to the U. S Dollar. Swiss watches was much expensive.Summary The federation had a great problem due to the high technologies of competitors, also their watches was more expensive so their market share had decreased. Industry Environment 5 Forces of M. Porter Threat of entry * New entrants in the market of watches Japan, Hong Kong. * Prices dropped dramatically from 1000/2000 $ in 1970 to merely 20/40 $ by the remove of 70s * In the 80s, several competitors switched to the more train analogue models and thus constituted competition for the Swatch. Intensity of rivalry among existing competitors Japan held the technological edge and created the new electronic watch to compete with Swatch. nigh of the early American digital watch producers had started to withdraw from the watch line of merchandise * Ebauches entered into direct international competition with Japanese, French, German and Soviet manufacturers. Bargaining agent of Suppliers * Ebauches S. A, of which ETA was part, was the major producer and supplier of watch movements for ASUAG, the main company (the Switzerlands largest watch corporation). Bargaining power of Buyers The third world and newly industrialized nations offer a previously unex plored market for Swatch * The Swiss exported movements and unassembled separate to foreign customers * ETA expanded its movements sales beyond its then current customers (Switzerland, France and Germany) to Japan, Hong Kong and Brazil. fill in Products * The invention of Electronic Watches by Japan.The new analogue watch knowing by Swatch Key Success Factors * The Delirium project with the objective to create the worlds thinnest analogue quartz movement. * Highly qualified labor, requiring flexibility, quality, and fantabulous styling at low-cost. The company adopted the strategy of differentiation and low-cost (economies of scale). * The Swiss company had their stronghold in assembly. * ETA and its parent company ASUAG have a long history of high quality watch design and manufacture. * As part of Switzerlands largest watch company, ETA had the resources to mount a turnaround effort. * ETA claimed more control over its distribution channels and increased authority in formulating its strategy.The Swatch is produced in one single operation, which means that the production cost are lower. Attractive distributor margins and extensive training of the retailers sales personnel unite with forward-looking advertising ensure the unique positioning of the product. * The Swatchs innovative design and production technology led to the creation of a low-cost, highly reliable watch giving ETA a clear competitive advantage. * surd brand and customer loyalty Repositioning into in the fashion market.A wide range of products with different designs across all price points Mission, Goals, Objectives, genial Responsibility and Ethics Objectives Price Quartz-analogue watch, retailing for no more than 50 Franc Suisse * Sales target 10 million pieces during the first three years. * Manufacturing cost Initially 15 SFr less than those of any competitor. At a accumulative volume of 5 million pieces, learning and scale economies would reduce cost to 10 SFr or less. Continued expa nsion would yield long-term estimated costs per watch of less than 7 SFr. * Quality High quality, waterproof, shock resistant, no repair possible, battery only replaceable element, all parts standardized, ease choice of material, model variations only in dial and hands.