Swatch Company Case Study

INTRODUCTION

The Swatch Company is known as one of the best wristwatch companies worldwide; however, in recent years, its sales revenue has constantly been declining. After the success of the Swatch wristwatch introduced in 1983, Swatch began to venture into other projects beyond simply producing watches. Swatch invested millions of dollars to manufacture a Smart Car with Mercedes Benz; however, the endeavor proved a failure. It also attempted to expand into telecommunication, only resulting in failure as well (137-140).

If Swatch continues to expand into different ventures outside of its leading, quality watch lines, it will continue to lose both money and customers, as supported by current reports. Swatch is created on the foundation of giving each customer a "cultural and joy of life" experience with its watches. As such, Swatch must reorganize and refocus its strategy on producing watches that align with its early goals and values.

SITUATIONAL ANALYSIS

Company

Swatch was on the brink of bankruptcy in the early 1970s due to low sales revenue and increasing competition against new rivals. In 1980, the Swiss watch industry was facing a huge crisis because its market share in the watch industry had fallen under 15% and banks in Switzerland discontinued its loans (134). Luckily, it was able to recover from bankruptcy after Nicolas Hayek, an engineer and architect businessman who is currently the Chairman and Chief Architect of Swatch, created a new product line called "Swatch Watch." The new product line heightened Swatch's popularity and revenues increased tremendously (137).

Beyond watches and components, Swatch has long flirted with high technology, fabricating microprocessors, smartcard technology, portable telephones, and other future-oriented designs, such as wristwatches that double as telephones, credit cards, and even concert tickets. In October 1998, Swatch debuted its latest venture--or adventure, as some would have it--the Smart Car, a project in partnership with the Daimler Benz Corporation (139).

Strengths

Swatch has three key strengths: innovation, quality, and price. Innovation is its strongest strength, as a personalized message is delivered with each watch. In order to know what its consumers want, the research and development department continuously brainstorm innovate and creative designs to appeal to its consumers.

Swatch's second and third strengths are quality and price, respectively. Quality is an extremely significant aspect in product lines, especially when competing against companies that are able to produce and retail watches at a cheaper price and quality. However, Swatch has a slight advantage in this area, as the majority of Swatch watches are produced in Switzerland. As such, there is a "Made