International Business Analysis - Swatch
|2.2.||History and Operations||3|
|4.2.||Structural and Operational adjustments||11|
This international business analysis shows how European company Swatch can do its business in Mexico. Main mission is to increase sales in America. Swatch sells only 12 % of its production to America. European companies mainly want to produce in Mexico and export the United States, because of North American Free Trade Agreement which makes costs lover for imports and exports. The most important issue The Swatch will face is cultural difference. Doing business in Mexico is different than in Europe. The values, social practices, managerial methods, and belief systems of the Mexican worker and Mexican manager are different. This work helps to understand those differences and adjust managerial operations.
The Swatch Group is an international group active in the manufacture and sale of finished watches, jewelry, watch movements and components. The Group supplies nearly all components required by its eighteen watch brands(Blancpain, Breguet, Leon Hatot, Omega, Rado, Longines, Tissot, cK Watch, Certina, Mido, Hamilton, Pierre Balmain, Swatch, Flik Flak, Lanco and Endura), and Group companies supply movements and components to third-party watchmakers in Switzerland and around the world. Swatch Group is also a key player in the manufacture and sale of electronic systems used in watch making and other industries. The Group's activities are carried out in Europe, North America, Central America and the Caribbean, South America, Far East, Middle East, Oceania and Africa. The Group acquired WIGE Data GmbH and Leipzig in 2006. The Group employs more than 20,000 persons in over 50 countries. Gross sales in 2005 increased by 8.3% from the previous year to 4.497 billion Swiss francs, net profit by 21.3% to CHF 621 million.
History and Operations
Swatch is a brand of quartz watches held by The Swatch Group Ltd. Swatch was originally intended to re-capture entry level market share lost by Swiss manufacturers during the aggressive growth of Japanese companies such as Seiko in the 1960s and 1970s. The launch of the new Swatch brand in 1983 was marked by bold new styling and design. The quartz watch was redesigned for manufacturing efficiency and fewer parts. This combination of marketing and manufacturing expertise restored Switzerland as a major player in the world wristwatch market.
The name "Swatch" is often misconstrued as a contraction of the words "Swiss Watch", but Nicolas Hayek, the Chairman of the Swatch Group, affirms that the original contraction was "Second Watch" -- the new watch was introduced with a new concept of watches as casual, fun, and relatively disposable accessories.
The first collection of 12 Swatch models was introduced on March 1, 1983 in Zürich, Switzerland. Initially the price ranged from CHF 39.90 to CHF 49.90 but was standardized to CHF 50.00 in autumn of the same year. Sales targets were set to 1 million timepieces for 1983 and 2.5 million the year after. With an aggressive marketing campaign and a very reasonable price for a Swiss-made watch, it gained instant popularity in its home market. Compared to conventional watches, a Swatch was 80% cheaper to produce by fully automating assembly and reducing the number of parts from the usual 91 or more to only 51 components.
Swatches enjoyed their peak popularity in the United States during the mid-1980s, when a series of "Swatch Stores" were founded for the express purpose of selling Swatches - mainly located in major big city malls and uptown marketplaces such as The Galleria. Such 80s fads included wearing two Swatches and using a Swatch as a ponytail band. Some models, like Pop Swatch, allowed wearers to attach Swatches directly to clothing. During this same time, Swatch introduced the idea of partnering with noted artists, including Keith Haring and others. Artist watches gave a new cachet to what had previously been a trendy youth article.
Also in the mid-80's... mainstream Swatch fashion statements came about in the rising hip-hop scene with the introduction of various colored and interchangeable watch faces and wrist bands (made of vinyl). Colours included bright, day-glow and pastels. The key standard accessory was the so-called "face-guard", a braided rubber-band like "twistie" that would stretch over the watch face. A good number of "Swatches" sported two face guards (one horizontal, one vertical). Whether or not these "guards" really protected the watch face from breaking and/or scratching remains to be addressed.
Although sales of Swatch watches are now considerably lower than in previous years, the Swatch Group remains the world's largest watch company, and the Group has accelerated its acquisition of Swiss luxury brands in recent years. These brands include: Breguet, Blancpain, Jaquet Droz, Glashütte Original, Union Glashütte, Léon Hatot, Omega, Rado, Longines, Tissot, Calvin Klein, Certina, Mido, Pierre Bal-main, Hamilton, Flik Flak and Endura. Swatch itself has also diversified its offerings considerably, and the company now sells more than a dozen different types of watches, including metal-bodied watches (the Irony series), diving watches (the Scuba series), thin and flat bodied watches (the Skin family) and even an Internet-connected watch that can download stock quotes, news headlines, weather reports, and other data (the Paparazzi series).
They have now become fashionable objects, generating specialized models (the "Flik-Flak" for children, semi-automatic movements, and even diamond-decorated Swatches). The company also produces watches with seasonal themes.
Swatch was official timekeeper to the 1996 Summer Olympics, 2000 Summer Olympics and 2004 Summer Olympics.