The Swatch Group
Maryam Tahririha
GSB576 L. Grant
Swatch and the Global Watch Industry
Case Analysis
July 13, 2005
THE SWATCH GROUP: COMPETING IN AN INCREASINGLY GLOBAL MARKET FOR WATCHES
Nicholas Hayek and Ernst Thomke formed the Swatch Group (the Group) in 1983 by merging two bankrupt watch-making groups. The merger gave the Group ownership of many of the Switzerland's dominant watch brands. Swatch, their first product initiative, was so successful that it helped pull the squandering Swiss watch industry out of a slump. In June 1999, with its 14 brands, the Group was the world's largest watch manufacturer (in value terms). However, the global industry had changed and would continue to change dramatically in the new millennium. The Swatch Group was at a strategic crossroad and had to analyze the industry's past and future in order to determine its next move. What proceeds is an in-depth analysis of the Swatch Group's competitive position the global watch industry. We will identify a problem and offer several alternative actions to address this problem. Finally, we will discuss how to implement and evaluate these suggestions.
Industry Snapshot: 1999
Historically, the watch industry had been fragmented and protected by the national governments of many countries. In the 1980s and 1990s, however, the competitive environment began to change. First and foremost, newly formed companies began to mass-produce low-cost, technologically advanced watches. The emergence of these products dramatically changed the way people bought and sold watches. Another dominant factor for change was consolidation. As companies merged, they improved their competitive positions through improved distribution, R&D, marketing, and economies of scale. These conglomerates slowly became major global players against which many watch manufactures could not compete.
Initially, Swiss watch manufactures chose not to respond to many of these changes. They valued the inherent art of
GSB576 L. Grant
Swatch and the Global Watch Industry
Case Analysis
July 13, 2005
THE SWATCH GROUP: COMPETING IN AN INCREASINGLY GLOBAL MARKET FOR WATCHES
Nicholas Hayek and Ernst Thomke formed the Swatch Group (the Group) in 1983 by merging two bankrupt watch-making groups. The merger gave the Group ownership of many of the Switzerland's dominant watch brands. Swatch, their first product initiative, was so successful that it helped pull the squandering Swiss watch industry out of a slump. In June 1999, with its 14 brands, the Group was the world's largest watch manufacturer (in value terms). However, the global industry had changed and would continue to change dramatically in the new millennium. The Swatch Group was at a strategic crossroad and had to analyze the industry's past and future in order to determine its next move. What proceeds is an in-depth analysis of the Swatch Group's competitive position the global watch industry. We will identify a problem and offer several alternative actions to address this problem. Finally, we will discuss how to implement and evaluate these suggestions.
Industry Snapshot: 1999
Historically, the watch industry had been fragmented and protected by the national governments of many countries. In the 1980s and 1990s, however, the competitive environment began to change. First and foremost, newly formed companies began to mass-produce low-cost, technologically advanced watches. The emergence of these products dramatically changed the way people bought and sold watches. Another dominant factor for change was consolidation. As companies merged, they improved their competitive positions through improved distribution, R&D, marketing, and economies of scale. These conglomerates slowly became major global players against which many watch manufactures could not compete.
Initially, Swiss watch manufactures chose not to respond to many of these changes. They valued the inherent art of