Grutzen Watches a new watch production and distribution company. It aims to target niche markets in the luxury watch industry. It will take advantage of the German manufacturing and engineering used in the creation of the watches. This industry offers many opportunities for those who desire stylish and high-quality goods but cannot afford them.
The firm plans to expand and export its products into the United States. This will make GrutzenWatches the most popular European watch in America.
The Company
Grutzen Watches (international corporation) is privately owned. Production is done in Germany, and sales and marketing are geared towards the United States #8211 California #8211 for the near-term.
The initial investment makes up three of the owners. These include Franz Grutzen’s head of production, Henry Winster’s head of American and sales and market divisions, and Walter Young’s vice president for American division.
German factory is located at Frankfurt’s 210 Autoroute 17. The factory covers 1,000 square meters. It should be sufficient for the company’s first three years of growth. Henry Winster’s Los Angeles home at 343 Palm Avenue will be the place where the watches will be distributed. The watches will initially go on sale in San Francisco and Los Angeles upscale watch stores.
Grutzen’s sales team will be Henry Winster and two independent sales representatives. Henry Winster from the U.S. will communicate with Franz Grutzen in Germany to process orders.
The products
The first product line will consist of elegant analog watches that have sporting characteristics and can be worn to 100m below water depths. The company plans to release two versions, the “sport†watch and the “night†watch.
The pricing strategy for our main competitors will be to first undercut them by 10%. We will then use a market penetration strategy. The pricing strategy will then be modified to be competitive with other major competitors. The price per watch will be approximately $100-$200
The Market
A favorable time is right for entry into the high end watch industry. In the United States, mid-level European watches have seen a 50 percent increase in purchase over the past two year. This trend is expected to continue.
One of the most important recent trends is that potential watch buyers are willing to spend higher amounts on watches because of the enhanced image appeal. It is important to have a strong brand image in this business sector. This gives you a significant competitive advantage. Grutzen strives to be a brand builder by leveraging its high quality products and low prices.
Financial Considerations
The startup costs of the company will amount to $226,000. Owners’ equity will provide $171,000. A further $30,000 will be provided by owners’ equity. The rest will come from long-term loans. The majority of the start-up costs will consist of rent, research and development, initial inventory, and a strong cash account. Grutzen Watches will make a steady profit within the second year, according to the Break-even Analysis.
1.1 Objectives
- Grutzen Watches will be the number-one selling European watch.
- To produce luxury watches, in addition to the more moderately priced lines.
- To achieve a 55% profit margin.
- To attain a 20% marketshare in the U.S.
1.2 Mission
Grutzen Watches is a watch company that produces wrist watches for sale in the United States – initially in California. The company will first build its image as an excellent watch manufacturer, before it starts selling more luxury watches at a higher profit.
1.3 Keys to Success
To succeed Grutzen Watches must:
- Create and sell quality products
- Achieve 100% customer satisfaction.
- Marketing is a way to increase brand equity and brand image.