The paper 'External and Internal Analysis of the Fossil Group" is a good example of a management case study. Fossil group primarily manufactures and distribute watches all over the globe; they are also involved in the production of leather and jewelry. Just like any other organization it has an external and internal environment that defines its operations. An internal analysis focuses on the strengths and weakness whereas the external environment is based on the opportunities and threats presented to the company. A SWOT analysis of Fossil group clearly indicates that the strength of its brand is instrumental in the success of the enterprise.
The use of vertical integration also has helped it produce watches at a lower cost through Asian firms and having entered the Swiss market they have been able to increase revenue. Having that country of origin has an influence over consumer behavior and thus consumers have preferred their Swiss-made watches because the best watches are known to be made in Switzerland. Fossil has a strong distribution network and their manufacturing; marketing and distribution have seen them sign contracts with Google and Intel in order to manufacture smartwatches and expand their watch market.
The Fossil Group has internal weaknesses that may hinder their future operations, there deal with Intel and Google was a clear indication that it does not have the necessary skills to manufacture smartwatches like an apple. Its promotion cost in many retails has been on the rise recently. The leather business is declining and having that it's number two business after watches fossil should be concerned. On the other hand, the external environment presents the company with opportunities and potential threats.
Fossil face threats from a number of manufactured devices that can tell time and the development of wearable technologies is a big threat to its watch industry. Apple’ s smartwatch is an excellent example of the kind of threats that fossil faces. Swatch technologies the world’ s largest watch manufacturer has a greater market share and distribution channels and therefore venturing into smartwatches will prove difficult for a fossil to surpass. On the other hand, Fossil has opportunities that it can exploit to expand. And this ranges from their financial power because they were able to overcome the recession and with the increasing demand for wearable technology.
It has an opportunity to establish a division that can manufacture wearable smartwatches having that they already signed a deal with Google and Intel who have the capability of making the production of smartwatches a reality. Problem/issue analysis While analyzing Fossil’ s inter and external environment, there were a number of strategic issues that we were able to note. The Fossil group has a problem with their expansion strategy on wearable technologies in that their partnership with Google and Intel will give these two giant manufacturers an upper bargaining hand.
Which may hinder future operations of the company in case they decide to back out of the deal. Legal and political forces are a major problem in Fossil’ s manufacturing strategies, and this will affect the sales of watches. Having that prices will be increased because Switzerland has passed legislation requiring the production and assembling of watches be specifically in Switzerland. Therefore, this will need a lot of finances for Fossil to conduct research on the development and how to start the production of parts for their watches which in turn will affect their pricing policies.
David Ingram, The Link between the SWOT matrix and The Grand Strategy Matrix, demand media
Robert kreitner, (2003) Management. 9th Ed, Arizona state university