the apple watch – a threat or an opportunity?€¦ · the swatch group - financial results - 2011...
Post on 07-Jul-2020
2 Views
Preview:
TRANSCRIPT
The Apple Watch – A Threat or an Opportunity?Mr Hayek, CEO, Swatch Group Ltd. TeamDerek AndersonTanya KennyCatherine ObrienDeclan Walsh
Smurfit Consulting
Challenge
Battle of Timelessness and Craftsmanship Versus Technology
What is the best Strategy for the Swatch Group Ltd. in this Battle?
Recommendations
Increase Operating
Margin
Smart Swatch
Build Luxury Market
• Focus on core competency
• Seize opportunity industry has created
• Marketing and Brand awareness
Recommendations
Increase Operating
Margin
Smart Swatch
Build Luxury Market
• Export Costs• Currency • Protect Swiss
Heritage
Recommendations
Increase Operating
Margin
Smart Swatch
Build Luxury Market
• Enhance Smart Touch with Touch Zero features
• Compete at mass market lower end smartwatch
Agenda
• Qualitative and Quantitative Analysis• Strategic Options• Recommendations• Implementation Plan• Risks and Mitigations• Conclusion
Text Here
FINANCIAL ANALYSIS
• Sales decline 3% 2015• Operating Results
• 27% - 2013• 17% - 2015
• Net Income• CHF 2.0Bn - 2013• CHF 1.1bN - 2015
Sales Revenue and Profitability in decline
6764
77968456 8709 8451
16141978
23141752 14511276
16041928
1416 1119
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
2011 2012 2013 2014 2015
The Swatch Group - Financial Results - 2011 0 2015 - CHF Million
Net Sales Operating Results Net Income
EXTERNAL ANALYSIS – WATCH INDUSTRY
Rivalry
Supplier Power
New Entrants
Customer Power
Substitutes
Industry disruption is taking place
• Platform force exerted Apple
• Margins are falling• Apple have cut prices of
new watch by $50
EXTERNAL ANALYSIS – LUXURY WATCH SEGMENT
Rivalry
Supplier Power
New Entrants
Customer Power
Substitutes
Luxury Segment is most favourable
• 95% of Swatch profits from this segment
• Customers less price sensitive
• Quality, authenticity
INTERNAL ANALYSIS – THE SWATCH GROUP LTD.
HISTORY / PROVENANCE / BRAND
ENGINEERING / DESIGN / MANUF
MARKETING COMPETENCE
VALUABLE YES YES YES
RARE YES YES YES
COSTLY TO IMITATE YES YES YES
ORGANISED TO CAPTURE ADVANTAGE
YES YES NOT YET
Competencies to lever: Provenance (Brand), Design & Manuf., Marketing
Strategic Options
Business as usual OR directly compete OR luxury plus innovate
Option 1Focus on Luxury Market
Option 2 Directly Compete with Apple and embrace Smart Tech
Option 3Focus on Luxury Market and Develop Mass Market ‘Smart Swatch’ Watch
Strategic Options
Focus on Luxury Watch Segment and Develop Smart Swatch
Internal Alignment
External Alignment
Feasibility Risk Consistency
Option 1 Luxury Watch
Option 2 Smart Watch
Option 3 Luxury Watch and Smart Swatch
Touch Zero and Smart Touch
Recommendations (1)
Build Luxury Segment• Continue to utilize core competencies• Protect existing market• Market luxury high end product – status symbol • Capture new wrist watch customers awoken by Apple
Focus on Luxury Segment Growth
Reduce CostBase
SmartSwatch
Build Luxury Market
Recommendations (2)
Reduce Currency Exposure and Reduce Cost Base• Currency hedging• Cost Base Efficiency
Drive out cost and hedge currency risk
Reduce CostBase
SmartSwatch
Build Luxury Market
Recommendations (3)
Develop Smart Swatch• Leverage Touch Zero and Smart Touch into combined Smart
Swatch• Utilise existing technology competencies• Compete in mass market segment mid advanced• Better Battery, No Pairing, Lower Price
Develop Smart Swatch utilising existing competencies
Reduce CostBase
SmartSwatch
Build Luxury Market
IMPEMENTATION
0 -6 months 6 – 12 months 12 – 24 months
Manage Loyalty of existing customers
• Launch Marketing Campaign• Target existing high end customers – brand loyalty• Emphasise the importance of traditional watch – timeliness & craftsmanship
• Engage Investment Bank to advise on currency hedging
IMPEMENTATION
0 -6 months 6 – 12 months 12 – 24 months
Increase margin & develop for the future
• Set up task team to reduce costs of existing high end watches • Launch new division to develop “Smart Swatch”
• Battery Life• Price • Pairing
IMPEMENTATION
0 -6 months 6 – 12 months 12 – 24 months
Acquire the next generation of customers
• Launch new “Smart Swatch” to acquire some customers from new segment • Source cheaper components for “Smart Swatch” offshore• Commence marketing to new customers
• Cross – sell the luxury traditional watch
FINANCIAL IMPACT
2015 yr 1 yr 2 yr 3
Net Sales 8,451 8,451 8,874 9,761
increase 0.00% 5.00% 10.00%
Net Income 1,119 1,183 1,509 2,147
% of net sales 13.20% 14.00% 17.00% 22.00%
Increase sales & increase margin
Impact
Probability
Mitigants
RISKS & MITIGATIONS
Death of Traditional Watch
Smart Swatch Fails
Marketing – Craftsmanship & fashion
Price & Battery Margin decline further
Currency Hedging, cost cutting & import “Smart Swatch” parts
top related