Swatch - strategic management Case Study Example | Topics and Well Written Essays - 2000 words

Swatch - strategic management - Case Study ExampleThe introduction of the Swatch watch is not simply a single- community success it revolutionizes the whole Swiss watch industry. It is a brand name associated with panache and fashion that has sold over 200 million units within a decade obtaining sloshed bearing in all big marts.By 1998 the watch industry is shifting to the mature phase of its bread and butter cycle, bringing new challenges to Swatch and the other watch manufacturers. Swatch management team is facing the necessity to reconsider strategy, touch by several major developmentsBy 1998 the watch market is reaching its matureness phase. What is typical for the maturity stage in an industry is change magnitude sales growth and tougher competition (Thompson, 1996). Persuasive promotion and strong brand identity are key success factors for market leaders and this is one of Swatchs competitive advantages that smoke be used to counteract competitive pressures.Increased com petition in the maturity stage of the liveliness cycle means more companies adopting the Swatch strategy in terms of pricing and brand positioning, competing on the homogeneous market segment. Swatchs major competitors are The Timex Corporation with a number of watch brands positioned distinctly to cover different market segments Guess, already part of The Timex Corporation Fossil, and Casio.There are several factors that influence the intensity of competition (Porter, Competitive Strategy, pp. 17-21). In the watch industry intense rivalry is fuelled by the slow market growth, callable to life-cycle maturity stage and an increasing number of companies competing with equal offers on a market that is limited and decreasing in size. The lofty volume mass market segment is carely to attract further market entrants - other low cost manufacturers from Far Eastern countries. Additionally, on the low-price mass market segment carrefour and brand switching is very easy, especially for fashion-driven proceedss. According to Figures 3 and 5 in the case study, the players in the watch industry can be put in several categories. Cheap Hong Kong brands - low priced product associated with low prestige and no design exclusivity. Up-market segment dominated by watches like Rolex, Rado in the high prestige, high-priced category. Because of the specific market niche, these watches are sold in smaller quantities and earn high proceeds margins.Medium prestige, medium price category between the two market extremes - dominated by companies like Seiko and Citizen. Swatchs strategy is in the low-price but strongly branded category, competing with brands like Benetton, J. Boxer, Timberland, Kickers etc. 1.4. Changing consumer radixThe function of customers is one of the five competitive forces, as identified by Porter (Porter Competitive Strategy, 1980). The changes in the consumer base are caused by demographic and fashion developments. The watch market is strongly influen ced by changing life-style and fashion. Preference to more durable metal watches makes the standard Swatch plastic watch less attractive. To respond to this change, the company has introduced the Irony brand that is in line with new trends. Another pressing factor is changing demographics that ordain lead to decrease in customer base over the next decade. This means that Swatch will have to compete for fewer customers in the present market