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Logitech, headquartered in Romanel-Sur-Morges, Switzerland, was the worlds

leading provider of computer peripherals in 2010. Personal computer peripherals

were input and interface devices used for navigation, internet communications,

digital music, home entertainment control, gaming, and wireless devices. Between

1998 and 2006, Logitech made many significant acquisitions to expand its product

portfolio. It acquired companies such as Connectix for its line of webcams, Labtec

for its audio business presence, Intrigue Technologies for its Harmony remote

controls, and Slim Devices for its music systems. These acquisitions were

accomplished strategically to help Logitech position itself in all aspects of the

personal peripherals world. Logitech also continued to innovate and grow its core

business: cordless mice and keyboards. Logitech then expanded its Bluetooth

technology to many other products in the digital world, including cordless gaming

controllers and a personal digital pen.

Competitors

As a specialized company, Logitech is exclusively in the industry of personal

peripherals, which it sells to retailers and major computer manufacturers. The

demand of such an industry often depends strongly on the economic stability and

income of its consumers and the profitability of its business customers. This is

because technology products like the ones offered by Logitech are often expensive.

Individuals and companies are reluctant to buy them unless they have the income

to do so. Logitech has three major competitors: Creative Technology Ltd., Microsoft

Corporation, and Royal Philips Electronics N.V.

Creative Technology Ltd. is one of the worldwide leaders in digital entertainment

products for the personal computer (PC) and the Internet. The Creative Technology

product line includes MP3 players, portable media centres, multimedia speakers

and headphones, digital and web cameras, graphics solutions, revolutionary music

keyboards, and PC peripherals. Creative had a net profit margin of 29.58% in FY

2009 and 32.82% in the first quarter of 2010.

Microsoft Corporation provides software/hardware products and solutions

worldwide. Microsoft has since expanded into mice, keyboards, video consoles,

customer relationship management applications, server and storage software, and

digital music players. In FY 2009, Microsoft Corporation had annual sales of $58.4

billion and a net income of $14.5 billion.

Royal Philips Electronics is a Netherlands-based company that focuses on

improving peoples lives through innovation. Philips is a well-diversified company

with products such as consumer electronics, televisions, VCRs, DVD players, fax

machines, light bulbs, electric shavers and other personal care appliances, medical

systems, and silicon systems solutions. With this diversified portfolio of products,

Royal Philips had FY 2009 revenues of $30.76 billion and a gross profit of $11.59

billion (Yahoo! Inc., 2010).

Logitech is the only company of this group exclusively focused on personal

peripheral products. In contrast, all of its competitors have products and resources

invested in a wide variety of other industries.

Trends

Logitech implemented a strategy of innovation mixed with strategic acquisitions to

enhance its products with the technologies and software of other companies to

create the most advanced, innovative, and collaborative experience for their

customers. As Logitech has always been at the forefront of mouse and keyboard

technology, it has also been a leader in video conferencing technology since the

early stages of its mountable computer camera development. Instead of following

market trends, Logitech has often created them. From 1998 to 2004, Logitech made

many important strategic acquisitions to enhance future portfolios and expand the

depth of its peripheral product lines. Its first acquisition was the video camera

division, QuickCam PC, of Connectix Corporation and the second successful

acquisition was the 2001 purchase of Labtec, Inc., an audio peripheral maker.

Logitech used these two acquisitions to expand its multi-business unit corporation

into a diverse and specialized company appealing to many technology users.

Finally, with its acquisition of Paradial AS, Logitech combined its peripheral products

with the software, video effects, and security features. This allowed Logitech to

deliver a complete and intuitive HD video conferencing experience for companies of

any size.

Operations

Logitech made two primary operations decisions that allowed it to increase its

competitiveness significantly. First, Logitech consolidated manufacturing, which

was once widely dispersed throughout China. This helped the company maintain

lower prices on its products, increasing its competitiveness. In addition to its China

manufacturing facilities, Logitech established a second centre for R&D in Cork,

Ireland a prime location for innovation in the technology and IT sectors. Second,

Logitech also knew the industry was changing rapidly and that it would no longer be

able to compete simply by manufacturing computer mice. Logitech thus made a

strategic operational decision to expand its product line beyond the mouse and

introduced a variety of products, including a handheld scanner, Fotoman (a digital

camera), Audioman (a speaker/microphone), and Wingman (the first gaming

peripheral).

The Changing Landscape Ahead

In 2010, Logitech faced a significant challenge: How people interacted with their

devices had begun to change. The iPhone and iPad used touch screen technology

with built-in accelerometers, eliminating the need for mice and Trackpads.

Additionally, cameras and higher quality speakers had become standard equipment

built into the iPhone, iPad, and Windows laptop computers; Apple had introduced

the magic pad to replace the mouse altogether. The need for consumers to buy

add-on peripherals was slowly evaporating as more peripherals became standard

equipment designed into new mobile technologies.

As a consequence, Logitech could someday see its peripherals market disintegrate

completely. Logitech must decide whether to invest more in video conferencing and

television all-in-one remote controls and/or focus on developing partnerships with

computer and telecom manufacturers and mobile carriers such as ATT, Verizon, T

Mobile, and Sprint. Once again, the computer industry is changing, and Logitech will

have to formulate new diversification strategies to ensure its long-term survival.

Answer ALL questions

Question 1:

Critically discuss TWO (2) external and TWO (2) internal factors that may impact

Logitechs competitiveness. Use various analytical tools you learned in this course

to support your answer.

[Total:50 marks]

Question 2:

Justify TWO (2) strategy recommendations that may be appropriate for Logitech to

prepare the company for impending technological and environmental

transformations that could threaten the companys future.