Logitech International SA - Essay Example

Logitech is operating in a global landscape exposing it to the fluctuations of exchange rates (Logitech Annual Report 2007). This exchange rate risk makes the company vulnerable to the changes in the value of currencies. For instance, the weakening of the dollar due to the economic recession makes its income in the United States lower when expressed in Swiss franc. This in turn can make investors wary in investing in Logitech noting that exchange rate fluctuations can shrink the company's revenues and profits when expressed in Swiss francs.

Economically speaking, the company is also exposed to the recession in the United States and the food crisis happening in Asia. It should be noted that these are Logitech's major markets. As the disposable income of consumers in these regions is squeezed, IT products become unappealing as they turn to allocate budgets for basic necessities like food and medicine. Opportunities and ThreatsThe whole IT industry is poised to benefit from the economic development of countries like China and India.

Since these advancements require the use of computing equipment, peripherals, and accessories made by Logitech face huge profit opportunities. The emergence of new consumer needs also gives players the opportunity to innovate and beef up revenues. The evolution of consumer requirements as well as the creation of new IT products also provides an avenue for expansion recognizing that the demand for Logitech's goods is derived from the demand for major IT products. This is especially true in saturated and more mature markets.

Looking at the threats, the economic slowdown in the US can be the largest consideration at the moment. This is in recognition that IT companies are heavily dependent on this huge market in their revenue generation. As Americans try to allocate lower income for everyday consumption, the purchase of durables like IT products is postponed. Another threat is the proliferation of cheaper Chinese goods which is expected to eat up Logitech's sales as customers turn to cheaper alternatives in the market.

This is expected to be a concern in developing and emerging economies where customers are more price-sensitive as well as to more developed countries that are expected to suffer from economic downturns.