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Swatch is a Swiss company that specializes in the manufacture of watches. The company came into being in 1983 after the merger of ASUAG and Hayek Engineering. Formerly known as SMH, it was renamed to Swatch in 1998. The two companies were forced to merge due to the stiff competition they were facing from low cost Japanese watches made from quartz technology in the 1970s. Swatch is one of the largest market shareholders in the watch industry. To keep at bay upcoming small competitors, the company with two other major Swiss companies has tightened the requirements that have to be met before a company's product is considered to be Swiss made. Their products are exported mainly to developed countries where there is a high purchasing power.
The Swatch Company has been able to maintain a tight grip on the wider market due to the following strong measures it has put into place: The Company has endeavored to protect new ideas that are being developed. This is necessary to protect the company's reputation and continue to have a strong market share. Research in the company involves use of codes and people involved in any research are not supposed to discuss their research findings with anyone else. Researchers are expected to sign an oath of secrecy when new products are being developed and tested. When a new product is developed, the company acquires patents, trademarks and registers designs. This patenting enables the company to be able to finish the research and roll it to the market and be able to reap fruits for their efforts before the product is imitated. The company also puts into use fashion designers and artists so that the new products have an aesthetic touch and can be appreciated by the consumers.
Swatch has a registered trade mark, Switch©, which it uses for its customers to re cognize its brands. Trade marks help shoppers to know what standards or quality they expect. They purchase a certain product with full knowledge that its quality is controlled. This goes a long way in protecting the company's reputation. The Switch© made an initial big impression on their entrant into the watch industry. They became to be known as a creative, imaginative, young and visionary. The different watches made had their own distinguishing characteristics. The company strives each year to roll to the market at least two new products.
The swatch has also established strong selling characteristics within itself. The features of its products that it can be identified with include; watches made of quartz that are cheaply priced; watches that are advanced in technology but made up of minimal parts, the cheap priced watches have characteristics (water resistant, shock resistance and accuracy) that are only available in expensive watches manufactured by other companies. Even though replication is a major problem countrywide, the company has managed to keep such people at bay. Their quartz watches are also user friendly and many people opt to buy them. This in turn translates to high sales and in the end a big profit margin.
The company is a risk taker in that it is not market driven but product driven. Instead of carrying extensive research on the market, the company manufactures a new product and then carries out appropriate advertising. Very few companies would venture into such enormous risk. They advertise through exhibitions, sponsoring sportsmen/women, mosaics and interactive games. The company, however, needs to focus on increasing its market capture area. It needs to start production in Hong Kong or India to lower production costs. Other measures that it can put into place are: increase margin, be flexible and allow funding for research. To maintain a competitive edge, they should learn to target also the older generation and continue focusing on lower and middle income earners.
PatekPhilippe, the Expensive Line of Design
Patek Philipe is also a Swiss watch manufacturer based in Geneva. It was established in 1839 and its watches are well known for their mechanical complicated design features. Manufacture of mechanical wound watches is quite expensive and this in turn is passed down to consumers. These kind of watches will therefore most of the time, find their way to the luxurious population. The implication is that the number of customers will be limited. However, the company has its own strong points that have enabled it to stay in the world market and will continue to do so.
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The main reasons include among others; the company has established the Patek Phillipe Museum in Geneva where watches of the early centuries especially the 18th and the 19th are exhibited. This helps to build their reputation and confidence among its customer members. The company had established its trade relationships with china long time ago and the watches made usually depicts themes ranging from religion, myths and the secular world. They thus help to reveal the early cultures and the present ones thus adding content to the evolution theories.
The company's consistency in not shying away from the mechanical watches due to the advent of new watches has helped to cement its trademark in the world business community. Many people are thus either buying the watches for collection purposes or for use in their homes. The fact that the watches consists of hand made parts, it has made it easier for people to be able to repair them in case of failure. One does not necessarily have to throw away these types of watches as compared with quartz watches.Most of these watchers are tailored for ladies. Ladies have been known since time immemorial to be good buyers of products. Their products thus find a ready market from ladies who never seem to mind about a price of an item. They would not want to look cheap in the eyes of their friends.
The company is no longer striving to make wristwatches more accurate but instead it is actively involved in production, marketing and research on materials. Marketing involves sourcing new customers especially through internet advertising and selling. The company also seeks to add functionality to their watches and at the same time experimenting with new materials for making their watches so as to remain unique. Competition from other watch manufacturers has been very stiff especially from new entrants. There are even cases of replica of the company's watches that are being manufactured by other people. Consumers might be confused and not be able to identify the original products of the company. This translates to hurting the reputation of the company and some people shying away from its products. Reading mechanical watches and interpreting can be quite tasking to some individuals. To read these types of watches, you must master them. Not many people like to undergo such a painstaking act and would rather opt for an easier option. This in turn impacts negatively to the selling power of the company.
Switzerland as a Country
Switzerland itself as a country has contributed in large strides towards the success of these two watch making companies. Some of the favorable factors contributed by the country include: It has a strong National Business Environment (NBE) and is ranked 3rd in the world (GCI, 2009). The strong NBE is necessitated through demand conditions, related and supporting industries, input factor conditions, context for firm rivalry and strategy. The country, although land locked, is surrounded by economic powerhouses. These developed countries have provided a ready market for the Swiss market including the watches. The country has also a stable price due to the monetary policy it has have put in place.
The inflation rate has been maintained fairly below 2 percent. This has helped to prevent the need in increase of wage demand. The cost of production is therefore significantly low while the profits remaining high. The tax policy has also been very favorable to the manufacturers. This has even encouraged other international companies such as Google to relocate to Switzerland. The country's workforce is also skilled, thus retraining of new employees, which translates to high expenses is eliminated. Collaboration of institutes involved in research work is also encouraged and a fair platform is provided for researches that have been carried out to be commercialized.
Swatch produces quartz based watches while PatekPhilippe produces mechanical watches. Some people will find it alright to use quartz watches while others will prefer mechanical watches because of the following reasons. An electronic circuit is used to control quartz crystal and thus time accuracy is controlled within a few seconds limit in a month. The quartz watch is powered by a battery and the quartz crystal oscillates at about 32,000 times per second, which controls a motor that drives gears and wheels within the watch. The quartz watches are not affected by dropping them but their main disadvantage is that they are not long lasting. Mechanical watches on the other hand are very delicate. They get affected by temperature changes and exterior vibrations. It is not as accurate as a quartz watch but long lasting such that it can even last over a decade if handled well. Whichever watch one uses will depend on his/her preference and thus a company may gain either positively or negatively.
The companies have therefore continued to have customers due to their variation in productions. Since they are producing the same product of a different make, they will need to increase their capacity in marketing strategy, rebrand their products to be more appealing, target new audiences and take their production to other powerhouse countries that surround Switzerland so as to reduce on costs while at the same time increasing profits. Their presence in these other countries will be a plus since their presence will be felt and at the same time marketing and advertising especially road shows will be easier to achieve to capture a wider audience.