Tiffany and Swatch: Lessons from an International Strategic Alliance
(9 pages of text)
Case (Pub Mat)
On November 23, 2018, the US jewellery maker Tiffany & Co. (Tiffany) received the final verdict in a years-long legal battle with the Swiss watchmaker The Swatch Group Ltd. (Swatch), which required Tiffany to pay Swatch millions of Swiss francs in damages (plus additional legal fees). The subject of the conflict was a strategic alliance the two companies had announced in 2007, which had once been called a "historic agreement" and a "pathbreaking strategic move." The alliance’s objective was to design and manufacture luxury watches under the Tiffany brand name and distribute them across Swatch's vast retail network and through Tiffany's own stores. How did this once-promising alliance come to be terminated in 2011, less than four years later? What lessons could be derived from the failure of this alliance?
This case is suitable for undergraduate- and graduate-level courses on global strategic management, international business, leadership, organizational behaviour, and strategic alliances. After working through the case and assignment questions, students will be able to
- identify the relevant factors to determine the “fit” between alliance partners, based on a tripodal framework that combines strategic, operational, and cultural fit;
- determine the relative balance of bargaining power of the parties involved;
- assess how the organizational design reflects matters of control and influence;
- recognize that even through factors in the cultural fit dimension can be subtle, they are as important to consider as the other two dimensions of fit; and
- derive and review approaches that can contribute to building an effective working relationship with the alliance partner, manage conflict, and conduct an amicable termination if necessary.
Switzerland; United States, Large, 2018
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