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Swatch

In: Business and Management

Submitted By vicki1991
Words 1120
Pages 5
With fierce global competition in the industry of watches, many competitors try to improve their existing operation by moving their production overseas to cut labor and manufacturing costs. However, the Swatch Group still sticks to manufacturing products in Switzerland, the Swatch Group’s home base. Expensive labor in Switzerland makes the costs of producing a timepiece outrageous, which makes the Swatch Group gradually lose its competitive advantages. In order to keep its leading position in the world, the Swatch Group needs to consider moving its manufacturing to other cheaper countries. The “Swiss Made” label plays an important role for the Swatch Group, which can be regarded as the assurance of quality. The “Swiss Made” label regulates that at least 50% of components should be manufactured in Switzerland. To keep the “Swiss Made” label, Swatch only can move low skilled and unnecessary activities, such as the production of batteries and cases, to a low cost production location and keep the required sections in Switzerland. With over a 1.2 billion population and a 487 million labor force, India is considered as one of the world’s fastest growing economies. Compared with 58 dollars/h of production labor cost in Switzerland, the production labor cost is around one dollar/h in India. Considering the huge domestic market and low-cost labor, India is a suitable option for Swatch to locate its production. At the same time, Titan, an Indian company, is looking for key foreign partners to learn designs and technology. Having cooperated with Timex, Titan has the relevant experience and the ability to satisfy the requirements of Swatch. Thus, it is feasible for Swatch to establish a joint venture with Titan in India, producing batteries and cases for the basic and middle-priced products of Swatch. This is a win-win way for both parties. Since Titan has already built

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