Redwan Kabir Case 1 Swiss ArmyIntroduction, Statement and Assessment: Victorinox is known as the manufacturer of the well-known Swiss Army products. This situation focuses on whether Victorinox should diversify into the fragrance industry or not. The primary problem is if the company diversify the business into the fragrance industry will have to they sell it under their current brand name or sell under another brand name.
Victorinox must address these problems because they are new on this sort of matured and competitive industry. The firm has fantastic possibilities with a history associating values of innovation, reliability, functionality, and high-quality to their brand. In the fragrance industry there are some key competitors like Coty, Inc., L’Oréal, Louis Vuitton, Procter & Gamble, and Avon who combined have 39% of market share according to Exhibit 9. Other companies who owns 0.5% of market share will increase from 26.7% to 30.1% over 5 years as shown in Exhibit 9.
In the industry, companies compete using innovation, promotion, pricing as well as distribution strategies. Therefore, Victorinox needs to evaluate a strategic outcome of whether or not they need to diversify into the fragrance industry which might be a long-term investment. This would give Victorinox a possibility to establish a strong presence as clients experience brand loyalty to Victorinox progressive products. The short-term period strategic outcome might be to switch over current brand attributes that they could deliver to the marketplace. This technique would focus on decreasing and saving costs.Situation Analysis (SWOT Analysis)Strengths: Victorinox has a strong brand image and existing dependable customers because of strong brand attributes from the product categories. They have been successful reaching key milestones for the duration of the past as proven in Exhibit 1, a reflection of appropriate management and control.
Having diversified products means an increased range of products in retail locations, similarly to clients and shops being willing to strive the agency’s new product services. As successes have proven within the past with other products inclusive of Swiss army knives, watches, baggage, and style apparel in Exhibit 3.Weakness: Victorinox has no previous experience in the fragrance industry. Operating and making plans under particular rules and regulations, with chemicals, personal care and more can be an overwhelming task. The company ought to come to be aware of handling several minor troubles that won’t be new to a mature competitor consisting of handling substitute products, dealer relationships and nicely innovating. This turns into risk because the corporation might decline its main attributes of nice, innovation, design, and functionality of recent fragrances if it isn’t on par with different merchandise.Opportunities: Victorinox has its brand image that reflect a top class market 65% of 23.
5 billion. The company is nicely-diverse in the European and Western American markets with contemporary product offerings, range of employees in the demographic regions, and keep-in shop retail locations. Globally market share for fragrances is observed exceptionally in the equal operational demographics as Victorinox, that’s why the forecast of the premium market could be in step with capacity opportunities to explore.
In 2005 Wenger had sales of fragrance products at 9 million USD, which is 31% of their total sales observed in Exhibit 2. Evaluating this to Victorinox overall income in 2005, the income of fragrance products provides a further 4% to general income revenue growing it from 217 million to 226 million according to Exhibit 5. The opportunity to diversify into the fragrance industry would increase the company’s overall sales and boom product portfolio.
Threats: The main threats will be the great startup budget to get manufacturing facilities and research & improvement going, local rules and regulations that have to be followed which includes labelling, packaging precise components, as well as the extensive variety of chemical compounds had to operate and work with. The operation and distribution approach have to be properly implemented where the worlds distribution of fragrances includes specially department stores and specialty stores as shown in Exhibit 8. This outcomes in a barrier to entry as every operational store requires particular techniques to be followed.The outcomes of the SWOT evaluation suggests the overall finding that the fragrance market is driven by means of income of consumer based on marketplace location, diversification of merchandise supplied by companies, product recognition via branding and retailing.Evaluation of Alternatives: The primary alternative could be to maintain with the fragrance industry underneath Wegner and to no longer diversify similarly. This primary opportunity will avoid any cannibalization different merchandise. Any capability risk of diluting the brand image wouldn’t have an effect on the organization in a prime way as it’d still be beneath the Wegner subsidiary.
The disadvantage is missed possibilities of no longer expanding which might include in capacity profitability and boom. The second alternative is to diversify into the fragrance and switch over brand attributes similarly to slowly adopting new ones. Management has a success rate of diversifying the company’s portfolio of products which could show high profits in fragrance market category in the premium if executed properly. The disadvantage would be that it takes time to set up the company’s position within the fragrance industry.
Recommendation and Implementation: The final recommendation is to diversify into the fragrance industry and transfer over brand image. Victorinox can use the installed presence of retail shops and their unique partnerships to introduce new product services. A main step would be splitting the premium, mass, and unisex fragrance marketplace in this three special subsidiaries to capitalize on market proportion. For a two years plan is to construct a strong presence inside the fragrance enterprise the usage of capital to innovate fragrances which corresponds with the attributes of the organization.
After that, Victorinox will buy future rising company in the marketplace ideally Botica Comercial farmaceutica Ltda. according to Exhibit 9. By obtaining Botica based in Latin America which has 28% of the worldwide fragrance marketplace can be a strategic first pass as 6.
6 billion in sales came from that region in 2005. Next, Victorinox should create social media trends and advertising strategies consisting of promotions and unfastened trials to inspire new clients to switch over this would effectively re-model newly received businesses closer to comparable brands like. Finally, Victorinox should reconsider company growth and objectives completed, introduce one precise fragrance logo that resembles the company’s brand.
· Should expand. New source· Cost of risks: lack of new experience, established competitors, brand reputation·