The Birth of Swatch Case Report
The Birth of the Swatch
During the 1980s, Swatch experienced an outstanding success as a result of careful and well-executed marketing plan, while just a few years earlier there was observed a rapid decline of the Swiss watch industry. For many years Switzerland was world leader in the watch manufacturing industry. By 1945 they accounted 80% of the world total production. Starting from 1970, Japanese manufacturers actively began to produce and assemble quartz watches, which the Swiss mistakenly viewed as a passing fad. In the result, by 1983 the Swiss share of world markets for watches had fallen dramatically to less than 15%.
In 1983 Nicolas Hayek became a CEO of the newly-based company in the result of merging of SSIH and ASUAG. Even though that most people who analyzed the destruction of the Swiss watch industry in the 1970s emphasize price and technology, the base of the problem was an absence of well-developed structure, management and strategy. After analyzing consumer behavior and lifestyle, SMH adopted a strategy that completely changed the concept of a wrist watch. Hayek right began executing a “shift” in the company’s strategy with the purpose in mind to create a “profitable, growing, global brand in every segment, including the low-end” (Yongme Moon, 2004 cited in Marketing Management 2013 Spring by Dr.Young-Ho Sorn)
The “shift” started from structure, namely Swatch determined vertical integration – produce and assemble the low-priced quartz watch entirely in Switzerland. Thus, Swatch had to bring production costs down to Asian levels by redesigning production techniques that enabled to manufacture Swatch on a fully automated production line. Continuing with management changed, Swatch made a goal to become a competitive brand in every price segment and start mass production. Hayek explained the necessity of quality and cost control in the low-end sector first, through the use of, for example, cheap plastic cases, in order to be a leader in all
During the 1980s, Swatch experienced an outstanding success as a result of careful and well-executed marketing plan, while just a few years earlier there was observed a rapid decline of the Swiss watch industry. For many years Switzerland was world leader in the watch manufacturing industry. By 1945 they accounted 80% of the world total production. Starting from 1970, Japanese manufacturers actively began to produce and assemble quartz watches, which the Swiss mistakenly viewed as a passing fad. In the result, by 1983 the Swiss share of world markets for watches had fallen dramatically to less than 15%.
In 1983 Nicolas Hayek became a CEO of the newly-based company in the result of merging of SSIH and ASUAG. Even though that most people who analyzed the destruction of the Swiss watch industry in the 1970s emphasize price and technology, the base of the problem was an absence of well-developed structure, management and strategy. After analyzing consumer behavior and lifestyle, SMH adopted a strategy that completely changed the concept of a wrist watch. Hayek right began executing a “shift” in the company’s strategy with the purpose in mind to create a “profitable, growing, global brand in every segment, including the low-end” (Yongme Moon, 2004 cited in Marketing Management 2013 Spring by Dr.Young-Ho Sorn)
The “shift” started from structure, namely Swatch determined vertical integration – produce and assemble the low-priced quartz watch entirely in Switzerland. Thus, Swatch had to bring production costs down to Asian levels by redesigning production techniques that enabled to manufacture Swatch on a fully automated production line. Continuing with management changed, Swatch made a goal to become a competitive brand in every price segment and start mass production. Hayek explained the necessity of quality and cost control in the low-end sector first, through the use of, for example, cheap plastic cases, in order to be a leader in all