BM461 - Global Business Environment: Luxury Watch Market Analysis

This report examines the global business environment's impact on the luxury watch market, focusing on Watches of Switzerland. It identifies and evaluates key issues such as inflation, supply and demand, and elasticity of demand, using secondary sources for data collection. The report critically assesses these macro environmental factors, highlighting their importance in routine activities and strategic decision-making. It emphasizes the need for companies to monitor inflation to maintain competitiveness, manage supply and demand effectively to optimize profitability, and understand elasticity of demand to refine pricing strategies. The analysis suggests that Watches of Switzerland can leverage these insights to navigate the global market successfully and sustain its premium brand positioning.

BM461 Global Business
Environment

Table of Contents
MAIN BODY...................................................................................................................................3
1. Background:.............................................................................................................................3
2. Methodology:...........................................................................................................................3
3. Key Issues that need to be considered by luxury watch market:.............................................3
4. Critically evaluating the global macro environment factors....................................................4
REFERENCES................................................................................................................................1

MAIN BODY
1. Background:
There are almost 15 watches of Switzerland showrooms across UK that consists of
prestigious brands of watches including Rolex, Patek Philippe, Breguet etc. Watches of
Switzerland is proud part of worldwide network of official Rolex retailers that helps in choosing
the best watches through leading edge technology to provide customers with class luxury
experiences. Further the report is made to identify the major macro environmental issues that
need to be taken into consideration by the quoted firm and critically evaluating to recommend
better ways to make business decisions in effective manner by providing the ways to overcome it
efficient and effective manner.
2. Methodology:
In this report all the data is collected from secondary sources such as books, journals,
articles, newspapers, blogs, magazines etc. so that accuracy and reliability can be maintained.
3. Key Issues that need to be considered by luxury watch market:
Inflation(Urgent)
Inflation describe decreasing the purchasing power of money in economy since more
money is required to pay for buying the same product with same quantity. High rates of inflation
define that money rotation in economy is getting down it leads to lower level of customer
expending & fall in sales for business organizations. Organization may consider this factor
because it gives negative impact on Watches of Switzerland. Prices of watches is increased due
to inflation in economy & people not prefer to buy watches in this situation. Due to this their

revenue earning is going down & firm may earn losses. If company exports watches to other
countries then their export is also decreased, so the organization need to consider also those
countries' economy situation in which they export their watches. Inflation is not always bad it
may also provide profits to the company. For example inflation is prevailed in Switzerland so the
prices of watches is increased other country has a demand of watches then they buy watches at
high price & company earns profit.
Supply & Demand(critical)
Supply & demand play major important role in every business organizations. Demand &
supply has opposite relationship, if demand increases then supply goes down and vice-versa.
Firm may consider this key issue carefully because whole business successfully running is
depended on that. If demand of watches is increased then supply of watches is decreased but
price of product is increased at some level so the firm has a benefit to earn more profits.
Opposite to that if demand is decreased then supply of product is increased & prices are going
down then firm may earn no profit or losses in this situation. So the Watches of Switzerland
carefully analyse their maintenance of stock according to the supply & demand of products.
Sometime situation is arisen like company has large demand of watches, but they have not
enough stock of that then company may losses this opportunity & not take benefit of that
situation.
Elasticity of demand(routine)

The quantity of demand changes with period as consumer needs and wants changes due
to various factors present in the environment. Elasticity measures how demand shifts when
economic factor changes. Price is the most common factor that is used to measure elasticity of
any product. Other factors such as income level and substitute are some others used for
measurement. Further, inelastic demand occurs when there are substantial or no changes in the
demand even when some factors change. In context of watches of Switzerland Elasticity of
demand is important factor as it helps to identify prices of various factors of production. Further
it helps in forecasting the demand for certain future or existing products. Moreover, the firm is
able to identify the prices of various joint products so that it can be easily sold in the market. In
case of quoted firm the prices do not affect the sales as customers are ready to pay extra for
premium quality products.
4. Critically evaluating the global macro environment factors.
The above three factors are of great importance in carrying out the routine activities and
are its significance is briefly evaluated as below:
Inflation: Organization must consider this factor as it will help to maintain productivity and
increase sales in the future. Further, all the firms prefer inflation to be low and stable as costs
of different factors of production will remains low and profits of the organization are high. Firms
need to keep close check on inflation so that they are able to maintain international
competitiveness in the long run(Zheng , Huang and Yang, 2021). However unexpected rise in
inflation may force the firm to increase wages and prices of goods to meet various costs.
Moreover, if company exports watches to other countries then their export is also decreased, so
the organization also need to consider those countries' where inflation is stable. In case of
watches of Switzerland inflation may be good as it will help the firm to earn higher returns in
future by selling premium watches.
Supply and demand: This factor is of great significance for the quoted firm as if demand of
watches increase in the market than supply would remain same as before and hence the quoted

firm has the option to sell watches at higher prices during festive seasons(Brinca and et.al.,
2020). Moreover, the firm has to ensure that stock of watches is properly maintained so that
regular supply can be ensured and in case of the least demand the firm can develop innovative
techniques to sell the remaining products by offering discounts and engaging in promotion
activities(Munger and Phillips, 2020). Also, greater demand in the market will help the quoted
firm to expand into new areas by hiring new workers and increasing the capacity to match the
demand. Moreover, the demand and supply helps the quoted firm in future planning.
Elasticity of demand : In context of watches of Switzerland elasticity of demand is important
factor as it helps to identify prices of various factors of production. It is important economic
measure for the firm as it helps in identifying how much the buyers will consume when there are
slight changes in the prices of good(Cunningham, 2021). In case of quoted firm prices do not
affect the sales as customers are ready to pay extra for premium quality products. Moreover, the
firm is offering luxury products where the demand tends to remain inelastic for a long period
and hence the firm can slightly manipulate the prices according to competitors.

REFERENCES
Books and journals
Zheng, Z., Huang, C. Y. and Yang, Y., 2021. Inflation and growth: A non-monotonic
relationship in an innovation-driven economy. Macroeconomic Dynamics. 25(5). pp.1199-
1226.
Cunningham, S., 2021. Example: Identifying Price Elasticity of Demand. In Causal
Inference (pp. 10-13). Yale University Press.
Brinca, P.and et.al., 2020. Measuring sectoral supply and demand shocks during COVID-19. Frb
st. louis working paper, (2020-011).
Munger, K. and Phillips, J., 2020. Right-Wing YouTube: A supply and demand perspective. The
International Journal of Press/Politics, p.1940161220964767.
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