The Swatch Group Brand Case Summary
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Case Summary: The Swatch Group.In this case from HBS, we get a detailed and insightful look into the Swatch Group, especially more into Omega, the group’s flagship brand.The case starts off with the mention of success for Swatch Group in 2010. Hayek Jr., the company’s CEO at the time, attributed the success and a high 4-5 year target anticipation to the organization’s 19 multiple brands and to the high technology base that the group had. Company’s results were largely driven by Omega. Hayek Jr. and Stephen Urquhart, pondered about what next strategy to take so that Omega as a brand could surpass Rolex. The discussed whether to trim Omega’s products in such a way so as to minimize overlaps with the group’s other brands, whether to increase Omega collections, how much focus to give on Omega’s Co-Axial technology in the Media and whether to open more US stores or open a Swiss multi-brand watch retail chain. A foray into Swiss watch making history is taken, starting from 16th century, to the world domination of Swiss watches by 1945. Then the quartz revolution is talked about and how it impacted Swiss watch makers in 1960s, shrinking their market and making them cater to only higher end markets. We are then introduced to Hayek Sr., a top management consultant, who in the 1980’s helped merged SSIH and ASUAG to form SMH. Hayek Sr. turned around SMH from a big loss to large positive earnings, by developing mass produced quartz watches made of less components that sold very well from 80’s to 90s. Hayek Sr. brought emotion and positivity into the brand and used that to differentiate with the cheaper Japanese brands.
In the 1990s the Mechanical counter revolution happened and SMH acquired more prestigious brands while its competitors did the same. This turned around the almost extinct mechanical watches and in 2010, they represented a considerable volume and an even higher value. We come to know the 2011 status of Swiss watch brands with an estimated retail value of almost 39 Billion Swiss francs.We take a closer look into the Swatch group in 2011: the group size, how it maintains its Swiss identity, how the Hayek family runs it and its relative better performance during the recession of 2009. We also take a look at the group’s operations worldwide such as in China, Europe and USA. The problem with US market is talked about, especially in concern with the group’s distribution strategy.We come to know how Swatch Group is vertically integrated and the advantages it has in managing its supply chain and also in producing watches made of high technological qualities. The two different kinds of retail stores are discussed: multibrand and monobrand boutiques. Both type of stores had advantages as well as disadvantages for the group such as stores in US which were badly presented and not stocked well. To improve retail issues, the management gave more emphasis on monobrand stores.The Swatch group uses Hayek sr. wedding cake concept where each of the 19 brands of the group were put into one of four market segments so that a strong presence in each market segment could be maintained. The group heavily emphasizes on Intra Brans positioning so as to avoid Brand overlap and utilizes brand DNA, distinctive elements of each brand. Each brand has its own innovation investment. This ensures that the group produces some of the most technological advances in watches such as Co-Axial Technology. Another brand aspect emphasized was the emotional message of the brand.