Thursday, April 3, 2014

Tiffany & Co and Swatch Group finally get divorced with $450 million in Swatch Group's pocket.


Tiffany & Co and Swatch Group - Yes it's finally over.

 Not too many people, who do not follow the world of luxury, knew that Tiffany & Co. and Swatch Group had once a relationship, which was supposed to last for 20 years. Tiffany & Co. signed a contract with Swatch back in 2007 but broke it off in 2011. Swatch Group accused Tiffany for blocking and postponing the new business development while Tiffany said that Swatch Group did not follow the contract's terms. Nobody would know what the true reason behind the breach was but the consequences of it are already known. Swatch Group will receive $450 million in damages according to the three-member arbitration panel in Netherlands. 

Tiffany & Co Watch

         Let us try to figure out what actually went wrong and why the venture did not work in the way everyone thought would make Tiffany & Co one of the major players in world of Luxury Watches.
First of all, the launch of the new 2009 Tiffany & Co. Watches collection at the Basel World did not reflect the major idea behind the brand. I think the watches did not suit the brand at all. They were too simple, did not look high end and simply were not as elegant and classy as Tiffany & Co. envisioned its watches. This happened because the biggeset jewelry maker could not influence the design of the timepieces. Swatch Group definitely had an idea behind the line but somehow i feel they could do so much better for the launch. It just seemed that Tiffany & Co. deserved to be in a more luxury segment among other watch brands that Swatch Group incorporates. 
         So in the statement by Swatch Group that I have mentioned above it is really unclear what the company is actually not happy about. There are no specific details that are available for general public but one can only suggest that Swatch Group blamed Tiffany & Co. for not advertising the new watches and placing them in a bad spot in the stores so that there were very little sales genreated from the watches. Tiffany & Co. in turn also sued Swatch Group. Their statement also does not clearly explain what went wrong. I believe the company was not satisfied with the design of the watches that the two initially agreed upon. Since Tiffany had no say in the design, and they simply let Swatch Group take care of this part of business they could not do much to alter things. 
          If we look at these unclear explanations of what was the true reasons behind the split, I can only think of one big fat problem that ruined everything. EGO. Both companies could not realize that in order to make something work jointly, both parties have to be equally involved. If there is a problem initially, it can be solved through simple dialog without trying to figure out who is doing a favor to who. In this case it is obvious that the two companies simply thought that they were better than the other. Tiffany is very proud of their name so they thought just by giving the rights to use their name they already were doing a huge favor to Swatch, although the Group has much stronger watch brands. Swatch also thought they were helping Tiffany build their watch business by the best possible strategy. None of the companies stopped for a second to check back on each other. 
            I believe the two companies learned their lesson through this unsuccessful business venture. So Tiffany & Co. announced that they were going to produce their own Tiffany watches and will find alternative ways to do so. Swatch Group is definitely the biggest winner here. Not only did they get money (although much smaller than initially sued for), they also acquired another luxury Jewelry brand HARRY WINSTON. Good Job! I truly hope their relationship will be mutually beneficial. 

You can check out what the 2009 Tiffany & Co Watch collection was here BASELWORLD 2009 Tiffany & Co.

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