Logitech: Profile and Environmental Analysis - Essay Example

Running Head: LOGITECH INTERNATIONAL SA Logitech International SA In APA Style By I. Company Profile Summary a. Company Profile Logitech International SA (Logitech) traces its roots in 1981 with its focus on then unpopular computer mouse. Its sensitivity and response to the dynamic information technology market makes it an industry leader in "peripherals for personal computers and other digital platforms." The business organization has been addressing consumer needs by "developing and marketing innovative products in PC navigation, Internet communications, digital music, home entertainment control, interactive gaming and wireless device" (Logitech Annual Report 2007) Aside from its specialization in mice, the company boasts of a broad product line including keyboards, trackballs, 3D control devices, webcams, multimedia speakers, wireless and Internet music solutions for the homes, headsets, headphones, gaming controllers, gaming accessories, and advanced remote controls for home entertainment systems. Recognizing the profitability of the huge global market, Logitech expands from its headquarters in Switzerland to distribute its products worldwide. The company's retail sales and marketing activities are classified into three geographical divisions namely Americas (including North and South America), Europe-Middle East-Africa, and Asia Pacific. In order to minimize production costs and take advantage of the other benefits of business process outsourcing, it has set up its manufacturing plant in Suzhou, China in 1994. Other productions are outsourced from different countries in Asia. During the fiscal year 2007, it reports revenue of $2.06 million and net income of $.229 million (Logitech Annual Report 2007). b. Strategic Intent and Mission The mission statement of Logitech is communicated as follows: "Logitech brings to market tools that enrich the interface between people and information" (Logitech Company Profile 2008) This emphasizes the business organization's commitment in focusing on computer peripherals. However, it should be noted that it did not limit itself to its current lines indicating its openness to changes and willingness to respond to emerging consumer needs. The company' strategic intent can be seen through its growth outlook presented in its 2007 Annual Report. Logitech communicates its major strategy of innovation in order to sustain steady growth and development. The company's goal is to further develop new products and improve existing ones in order to maximize consumers' comfort. Also, the business organization is keen on focusing into growth markets in order to drive revenue. c. Problem Identification The United States is one of the major markets of Logitech. Even though it cannot be possibly identified how much share this market has in the company's revenue, it should be noted that the forecasted economic recession in US will adversely reflect in the company's operation. Logitech thus, needs to take this into in order for it to continue its highly profitable operation. II. Environmental Analysis a. External Environmental Analysis In general, the operation of Logitech is dependent in its ability to introduce innovative products in the market noting that the information technology market is subject to fast product obsolescence. Since the company has global coverage, it is also exposed to the fluctuations in the exchange rates. The weakening of the dollar due to the economic recession makes its income in the United States lower when expressed in Swiss franc. The industry environment of Logitech can be assessed through the use Porter's Five Forces model. Buyers. The evolution of a hypercompetitive business environment heightens the bargaining power of consumers. It should be noted that sales are directly affected by consumer demand. Thus, consumer needs should properly be identified and products should be created to best respond to these needs. Suppliers. Supplier power is also high in the market where Logitech operates. As companies turn to semi-assembled products as inputs, more and more leverage power is in the supplier's hands. New entrants. Being an established market leader, Logitech is insulated from the threat of new players. Computer peripherals operation requires huge capital, alliances with suppliers and other industry players, as well as market image. Attaining this is hard for a new player. Substitutes. The number of players in the market makes substitutes easy to find. Furthermore the proliferation of Chinese companies which are manufacturing the same products as Logitech exposes the company to the high threats of substitutes. It should be noted that these are often priced lower to appeal to the more price sensitive and less discerning customers. Competitors. This portion will present a brief competitor analysis of Logitech's top competitors. 1. Creative Technology Ltd is a Singaporean business organization engaged in the manufacturing of digital entertainment products for personal computer and the internet. The company's current objective is to return to profitability after having a challenging 2007. The company plans to do this by continuing to grow its audio business and high-growth, high-margin segments as well as improve operation efficiency through revamping its supply chain. The company boasts of its huge pool of $723 million and worldwide network of distributors in order to take advantage of the expected market growth (Creative Technology Annual Report 2007). 2. Microsoft Corporation is globally reputed as one of the leader in the information technology in terms of software and hardware devices. The company is also involved in the manufacture of peripheral devices though these accounts for only a small portion of its revenue. The company's objective is to continue to grow by beefing up its product portfolio with more innovative gadgets. Microsoft has $63, 121 million in total assets generating $51,122 million revenues in 2007 (Microsoft Annual Report 2007). The company is wary about the economic condition in US but hopes to perform better in merging and fast growing markets. 3. Philips Electronics has long been engaged in the production of consumer, healthcare and lighting products. With the rise information technology, the company also ventured in computer peripheral devices. The company's objective is to convey sense and simplicity by making innovation the soul of its strategy. Philips has $34 billion sales during 2007 with US as its largest market (Philips Company Profile 2008). The company is quite pessimistic about performance owing to the US's economic slowdown. As discussed, the whole IT industry is expected to benefit from the rise of fast growing economies like China and India which requires computing equipments. Emerging consumer needs also give players opportunity to innovate and beef up revenues. However, the economic slowdown in US is the largest threat for the industry which is heavily reliant on this huge market. Piracy and the proliferation of cheaper Chinese goods are also expected to eat up sales. References Creative Technology Ltd Profile 2007, Creative Technologies Website. Retrieved 15 April 2008, from http://asia.creative.com/corporate/about/ Creative Technology Ltd 2007 Annual Report 2007, Creative Technologies Website. Retrieved 15 April 2008, from http://images.americas.creative.com/docs/fy07.pdf Logitech Technology SA 2007 Annual Report 2007, Logitech Website. Retrieved 15 April 2008, from http://files.shareholder.com/downloads/ LOGI/285087935x0x102007/e0506e6b-710b-47c9-9bf1-eb9808fa0558/2007_AR.pdf Microsoft Corporation 2007 Annual Report 2007, Microsoft Website, Retrieved 15 April 2008, from http://www.microsoft.com/msft/reports/ ar07/staticversion/10k_fh_fin.html Philips Electronics Company Profile 2007, Philips Website, 15 April 2008, from http://www.usa.philips.com/about/index.page Read More