Logitech Case Analysis

870 words - 4 pages

Logitech is an innovative global provider for several technological accessories and peripherals. Logitech become incorporated in the early 1980’s and nearly three decades later it had roughly 40% of the market share in arenas such as Mice, Webcam, and Remotes. In order to fully understand Logitech’s success it is important to understand their strategy for growing but also their strategy for the issues they have faced. And ultimately deciding what will be their competitive advantage in the future.
In order to understand the strategy of Logitech is it imperative to conduct a brief external analysis, beginning with the general environment. The general environment focuses on ...view middle of the document...

This strategy was seen through the acquisition of QuickCam PC in 1998, Labtec, Inc. in 2001, Intrigue Technologies, Inc. in 2004, etc. After Logitech’s initial product, they realized that they would have to be proactive in finding innovative ways to grow and in 2000 they introduced their first gaming console controller. Followed quickly by the production of Logitech’s io Personal Digital Pen. Logitech’s competitive advantage has been the first- mover advantage, allowing them to build a rapport with buyers enabling them to have larger market segments. This is seen with their pioneering of the computer mouse and keyboard, as well as having been on the forefront in video conferencing. The case also states, “Instead of following market trends, Logitech has often created them.”- an indicator of their first- mover competitive advantage.
Although Logitech had much success with its strategies of innovation and acquisition, they have also had their fare share of implications, some of which they have overcome and others that remain. One critical issue that Logitech faced was the recent financial crisis of 2007/2008. Because technological products are a luxury good, consumers tend to cut back when there is less disposable income. This can be seen in the 9% decrease, 29% decrease, and 39% decrease for sales, operating income, and net income respectively from 2009 to 2010. One method that Logitech maneuvered the crisis was by reducing its workforce by 15%. Additionally, they cut dividends causing their earnings retention ratio to increase, which give them excess cash for R&D as well as excess cash for acquisitions. Another issue that Logitech faced was having numerous manufacturing plants dispersed globally. After Logitech...

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