Swatch’s plans to cut back component sales to competitors and supply chain impact

A New York Times article (Dec 10, 2011) describes a decision by the Swatch Group to cut back sales (to 85 % of 2010 levels and ultimately to zero) of components to competitors. Buying these components from Swatch had enabled competitors to claim a “Swiss made \” label.  As a result, competitors will be forced  to invest in their own facilities or join consortiums to produce components.  Will this move by Swatch make the Swiss watch  industry more competitive as a whole ?  Since the growing demand for Swiss made products in Asia has driven up demand for Swatch,  is it acceptable for Swatch to use its upstream capacity to satisfy its own demand rather than expanding to prop up competitor component demands ?  If this decision results in a reduction of the number of competitors, is the Swiss watch supply chain better off with this pruned set of watch brands ?

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About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues and tagged , , , , , , , , , , , . Bookmark the permalink.

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