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Swatch Watch |
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Issues Facing the Swatch Company: The Swatch Watch Company transferred it self from near bankruptcy in the early 1980s to a world leader in terms of value by late 1990s, at this time its facing again new set of challenging issues that will effect the company future in a fast changing global economy; theses issues are: (1) Swatch sales have been flat between 18-20 million units a year. ... (3) Swatch was facing increased competition in existing markets and new markets. Analysis of the Issues: The Swiss watch industry was the world leader in manufacturing timepieces in both units and value in the late 1960s. Early in the 1970s the watch industry was taking on a new shape and dynamics due to the creation of new players in the world market, such as the Japanese watch manufactures, and the American watch manufactures. ... The Swatch group understood the need for cost effectiveness and high quality when it was formed in the early 1980s; and with that understanding it was able to turn the watch industry around in Switzerland; once it adapted the new quartz technology, and companied cost efficient production with high quality in its manufacturing of the Swatch watch it had an immediate success in 1983. In the next decade the watch industry was going through many changes due to tough competition among the three major watch producers the Japanese, the Americans, and the Swiss. In the 1990s, the global watch industry had steady growth of about 4% annum. ... The global watch industry experienced downward profit pressures in the 1990s, as many watchmakers increasingly cut prices- driven in part by a push for economies of scale. Overcapacity and tough head to head competition led prices of basic watch movements to be slashed by over 30% in 1998 alone. In the three largest markets in the world Japan, North America, and Europe which accounted for 14% of the world’s population and 56% of the global watch demand (See Exhibit 4) the Swiss were unable to establish foothold in North America like the Japanese who did this through partnership with American watch manufacture such as Citizen with Bulova, and through economy of scale through manufacturing in areas such as Hong Kong and Twain. |
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Title: Swatch Watch
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