Corporate Strategy : a Look at Swatch
1. Conduct an industry (five forces) and environmental (PESTEL) analysis of the watch industry
When Swatch emerged in 1983, it was a prime time to enter the watch industry. Existing rivalry and the threat of new entrants were medium, allowing Swatch to thrive.
Not one of the many competitors held more than 15% of the total global market, thereby creating medium concentration. In addition, cost conditions, excess capacity and exit barriers, and product differentiation were also medium. Although there was high diversity among competitors, Swatch’s strategy of differentiation, complemented with the other industry factors, allowed them to enter the industry and profit.
Although there were barriers to entry and a high threat of
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For Swatch to create and sustain its competitive advantage, unique valuable resources are needed to maximize their organizational capabilities. These resources are comprised of tangible, intangible, and human assets, Appendix 7. The combination of their capabilities derived by these resources and the industry key success factors helped Swatch develop a strategy which provided advantages over others. The four cornerstones of RBV (resource heterogeneity, ex ante barriers, ex post barriers, and resource immobility) provide insight as to how their advantage was gained. Swatch’s engineering and partnership with fashion designers provided a key asset. Also, their product innovation which created a market niche allowed them to gain early mover advantages. Furthermore, patents, advertising, promotions, and continuous product innovations created barriers for duplication. Promotions of key individuals, patents, and copyrights also protected their assets.
Appendix 1: Five Forces Analysis
Appendix 2: PESTEL Analysis
In addition to the elements described in the contextual layer for the PESTEL analysis (political,