Swatch and the Global Watch Industry

Swatch and The Global Watch IndustryIssues Facing the Swatch Company:The Swatch Watch Company recovered from near bankruptcy in the early 1980s  

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Swatch and The Global Watch Industry Issues Facing the Swatch Company: The Swatch Watch Company recovered from near bankruptcy in the early 1980s and transformed themselves into a world leader in terms of value by late 1990s. Swatch is once again facing a new set of challenging issues that will affect the company in a changing global economy. The following are the current issues that Swatch needs to deal with: (1) Swatch sales have been flat between 18-20 million units a year. (2) Sales and profit margins levels have been below those levels achieved in 1990. (3) Swatch is facing increased competition from existing markets and new markets. Analysis of the Issues 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. Newly formed companies began to mass-produce low-cost, technologically advanced watches. The emergence of these products dramatically changed...

Type: Public Company

Address: Seevorstadt 6, CH-2502 Bienne, Switzerland

Telephone: (41) 32 343 68 33

Fax: (41) 32 343 69 22

Web: http://www.swatchgroup.com

Employees: 17,729

Sales: SFr 3.05 billion (US$2.03 billion) (1997)

Stock Exchanges: Zurich

Incorporated: 1984 as Sociйtй Suisse de

SIC: 3873 Watches, Clocks, Watchcases & Parts; 5094 Jewelry & Precious Stones; 5944 Jewelry Stores

The Swatch Group SA--known as Sociйtй Suisse de Microelectronique & d'Horlogerie or SMH until 1998--is the world's leading supplier of watch movements and finished watches, accounting for as much as 25 percent of total world production, while capturing more than ten percent of all watch sales. The Swatch Group is more than its flagship Swatch brand--which alone accounts for half of the company's profits, and, in the late 1990s has given its name to a 15-store chain of retail Swatch Megastores. The Swatch Group also includes many of the world's most prestigious names in watch design, including Omega and Blancpain (luxury); Rado and Longines (high end); Tissot, Certina, Mido, Balmain, Hamilton, and Calvin Klein (mid-market); and FlikFlak, Lanco, and Swatch in the 'basic' or low-end market. In addition, the company's exclusive Endura label crafts custom-designed watches.

In an era of increasing market segmentation, Swatch remains a tightly vertically integrated company, manufacturing not only watches, but their movements and motors and other basic components. The company produces components--through a range of subsidiaries, including ETA, itself Switzerland's largest movements manufacturer--for much of the Swiss watchmaking industry, as well as for the member brands of the Swatch group. In total, Swatch has nearly