Swatch

SSIH (Socie’te’ Suisse pour I’Industrie Horloge’re SA) and ASUAG (Allgemeine Schweizerische Uhrenindustrie AS) merged to form SMH SwissCorporation for Microelectronics and Watchmaking Industries headquartered in Biel, Switzerland, SMH became known as The Swatch Group Ltd. In 1998. The Swatch Group produces major’s brands of watches, from Luxury and private labels to basic watches. Each part of the group has its own organization, management, and own building sites thus making it decentralized. In the early 1970s, The Swatch Group was losing market shares to cheap Asian quartz watches in particular those made in Taiwan, China, and South Korea. The decline was due to the Swiss watch industry retaining its outdated or traditional mechanical watch movements and not changing which consumer’s trends. Basically, Swatch watches were high-priced watches during a time low-priced watches became available. Thus to reduce its overall price to consumers Swatch developed or changed the utilization of higher priced materials to plastic materials which subsequently allowed Swatch to lower its prices which enable them to compete with other companies.
Swatch Strengths
• Swatch introduced low end product which was the quartz watch,
• Decrease its production cost to compete with its Asian competitors (labor cost less than 10% of the total cost),
• Number of individuals parts of the watches reduced from 91 to 51,
• Marketing – not just selling another consumer product but an emotional product.
In 1982, the new redesign Swatch watches achieved high success in the US and European markets including Japan. 1983 one-million watches had been produced and by 1988, 50 million watches had been manufactured and 100 million by 1992. As indicated above, this success is attributed to the decrease in parts (91 to 51) which in turn Swatch was able to sell its watches for between $25-35 thus reinstating the company’s philosophy of a high quality product at the best possible price. Swatch was