Swatch Group Ltd. Advancing with Time

Transcription

1 GGFBM GGFBM Consultants: Anat Cohen, Iddo Diamant, Oded Harel, Roey Yamin Swatch Group Ltd. Advancing with Time

2 Agenda 1. Introduction 2. Analysis 3. Recommendation 4. Implementation 5. Financial Implication 6. Risks 7. Conclusion

3 Introduction

4 Company Analysis - Strengths Apple Watch New consumption trends Decreasing sales and income Current smart watches are not relevant to the company s current main segment

5 Analysis

6 Company Analysis - Strengths Brand Design Luxury segment Swatch has unique and vital strengths which must be considered at any decision

7 Company Analysis Smartwatch Market Smart Touch Zero One Low price Specific Requirement Bellamy pay-by-the-wrist, NFC technology TISSOT Smart- Touch Middle price Not a full-computing device Swatch has entered the smartwatch market with 3 products

8 Competitors Analysis Wearable Devices Luxury TAG Heuer Apple Edition TISSOT Apple watch Mass Market Touch Zero One A lot of competition Low smartness Advanced smartness Place for Swatch to penetrate new segments

9 Industry Company Competitors

10 Recommendation

11 3 Ways to go for Swatch Group Ltd. Business as usual Focusing on marketing Reducing production costs JV to produce smartwatch Producing luxury smart watch Using existing technology Developing hardware Indepdent smart watch development Producing luxury smartwatch Developing OS Developing hardware

12 3 Ways to go for Swatch Group Ltd. Fits company Profile Business as Usual JV for Smartwatch Independent Smartwatch Risk Revenue Sustainability TOTAL Sustainability as a key factor

13 Best Option for Swatch Group Ltd. Fits company Profile Business as Usual JV for Smartwatch Independent Smartwatch Risk Revenue Sustainability TOTAL Smartwatch is the opportunity for Swatch Group Ltd.

14 JV for Smart Watch JV Marketing Product Supply Chain Comprehensive Strategy for Swatch Group Ltd.

15 JV with Google (Android) Using Android operating system In-house production Giving Google user information for use of OS Joining forces with an open source OS to reach non Apple market

16 The SmartSwatch Luxury Mass Market Smart Swatch Advanced luxury wearable device Connects to all Android Smart phones Selling at 14,000 Low Advanced Launching the new SmartSwatch

17 Supply Chain for te SmartSwatch Designing - Switzerland Manufacturing - China Distribution by outsourcing and Swatch Group Ltd Sales by Swatch and retailers Reducing production costs by moving new production to China

18 Marketing SmartSwatch - timeless luxury, advanced technology Big launch before the end of 2016 Young segment as early adopters Timeless craftsmanship technology

19 SmartSwatch JV with Google Timless Luxury Advanced Technology Unique craftsmanship that connects to Android phones Manufacturing in China

20 Execution

21 Implmentation R&D on SmartSwatch JV with Google Moving production to China Starting Production of SmartSwatch Marketing SmartSwatch Selling SmartSwatch First SmartSwatch hit the Market in Q4 2016

22 SmartSwatches Sold 250 Smartwatches Sold (000) ,000 SmartSwatches sold in 2019

23 Financial Assumptions Luxury watch price at 737 US Smartswatch price at 14,000 US R&D on smartswatch at estimated at US 120 mil in 2016 Sales of luxury regular watches to drop by 5% a year from 2016 Operating cost to drop by 1% in 2016 and US = 0.69 CHF (approx) SmartSwatches compensate for loss of sales in luxury watches

24 Profit 3,000 Net income US mil 2,500 2,000 1,500 1,

25 Risk Mitigation

26 Risk Mitigation Risk Google refuses to sell an access to its operating system A new trend will stop the smartwatches industry s growth China will enters the luxury watch segment, developing high quality products in better prices Action 1. Offering better terms, such as share in revenues. 2. Considering collaborations with other companies, such as Samsung 3. Business as usual 1. Company will invest resources in identifying the next trends 2. Business as usual Marketing strategy that focuses on the Swatch s well known quality and luxury

27 Conclusion

28 Swatch s new strategy Timelessness. Craftsmanship. Technology

29 Appendix

30 Financials Smartwatch Price 14,000 14,000 14,000 14,000 Smartwatches Sold (000) Total Income from SmartSwatch (US mil) ,120 1,960 2,800 Luxury watch Price 1,000 1,000 1,000 1,000 1,000 Total Income from luxury watches (US mil) 11,520 10,944 10,397 9,877 9,383 Other income (US mil) ,169 11,848 12,260 12,632 13,034 Operating Cost (US mil) 10,080 10,282 10,179 10,077 9,976 R&D (US mil) Net income 2,089 1,447 2,001 2,525 3,028