Watches of Switzerland: Impact of Macro-Environment on Long-Term Plan

This report addresses the macro-environmental changes in the global economy that Watches of Switzerland needs to factor into its long-term planning, as requested by CEO Brian Duffy. It identifies the top three major macro-environmental issues: inflation, global economic product (GDP), and major currency exchange rates. The report discusses the impact of each factor on the company, including decreased purchasing power due to inflation, the effect of GDP changes on the stock market and employment, and the transactional risks associated with currency exchange rate fluctuations. It emphasizes the urgency of addressing these issues to mitigate organizational risk and ensure the company's financial stability and growth. The report also provides critical discussion points for the board of directors and references academic sources to support its analysis.

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Briefing Note
Globalization & Strategic Planning Directorate
Requested by Brian Duffy, CEO Date requested: Action required by: TBC
Action required Other attachments for consideration
For approval With correspondence Chief Executive’s
authorisation
Authority to publicise
For meeting For Information letter of advice
BRIEFING NOTE FOR INFORMATION
This briefing note is written to provide information for discussion and use at subsequent meetings by the
management team on the subject matter outlined below.
Covid-19 has presented unique challenges to the Watches of Switzerland company. In order to plan for the
recovery of the global economy the CEO, Brian Duffy, has requested this briefing note for use at the next
board meeting to discuss actions with fellow board members.
Version August 2011
SUBJECT: What macro-environmental changes in the global economy can the
organization expect to face over the next 12-24 months that it needs to factor into long-
term planning?
Proposal
To set contextual background for why the report is required, to outline how the report
was constructed and what tools, models and evaluation were applied, to identify the top
3 major macro-environmental issues that will impact upon the organization, rank the
issues in terms of urgency, provide critical discussion points for the board of directors
and list the sources used to evidence the argument.
Urgency
Rank the key issues as:
Critical (major or significant organizational risk because of no action)
Urgent (compelling or requiring immediate action or attention)
Routine (action required within next 3-6 months)
1. Background
Department Rec/Find No: Business Planning &
Intelligence
Division/District Global
STUDENT NAME
STUDENT I.D. Number
File Ref No: 1/3

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The luxury watch market has been valued at USD 23.623 billion in 2020 with a
CAGR of 2.35%. Due to Covid-19 pandemic, the watch market has seen a slow growth
because of many restrictions that were imposed on movements. People were reluctant
to spend heavy amounts on luxurious watches because of decreased earnings during
Covid-19. Using Accessories in order to improve one’s personality is a very common
fashion trend which is used by many people. Companies are purposely using various
marketing tactics which has led to increases in consumers’ expectations from watches,
especially luxurious ones.
Watches of Switzerland is British company retailer of Swiss watches which is
listed on London stock exchange with a constituent of FTSE 250 index. It has given
strong performance and even decided to repay £3.3m of support money it received
during lockdown time.
2. Key issues
a. The purchasing power of people has decreased due to Covi-19 pandemic.
b. Company should consider the waste management because now-a-days people
are more concerned about environment and wants to protect it any cost.
c. Company should try to have online presence because in today’s time people are
preferring to buy from online websites instead of visiting brick & mortar shops.
3. Global Macro-Environmental Factors Critical Discussion Point
The major macro-environmental factors are discussed below:
 Inflation: Basically, inflation means rise in prices, that is, the cost of goods and
services rises which makes it difficult for consumers to purchase it and consume
it. After covid-19, inflation has risen and it is for real. The cost of products has

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risen because of shortage of goods and created a brunt for companies. This
leads to decrease in purchasing power of consumers and thereby decreasing
companies’ profits. Such lower profits restrict the company’s ability to grow and
expand further and puts them in financial risk. At times of inflation, Watches of
Switzerland cannot even take long term loans and advances because it raises
the cost of borrowing and becomes a greater issue in future which cannot be
handled properly.
 Global Economic Product: GDP is the most common indicator to examine the
nation’s health which represents the total dollar value of all products and services
produced in an economy during a particular period. GDP gives information about
how well an economy is performing and what is the size of an economy. If GDP
increases, it means a country is doing well in terms of production and vice-versa.
A significant change in GDP may lead to changes in stock market which directly
affects bigger companies listed on stock exchanges. When GDP increases,
companies started hiring more worker and employees and public have more
funds at their hands to spend which increases employment levels of country and
benefits company by enhanced profits and profitability. On the other hand, when
GDP falls, it is very bad for nation because it means economy is growing and
companies are not performing well enough to accelerate the growth in the
economy. Sometimes, it also leads to economic crisis and periods of recession
which are not good country.
 Major currency exchange rates: Exchange rates leads to transactional risks for
Watches of Switzerland which is reflected in operating profits of company.
Operational risks directly affects profit earning capacity and net cash flow.
Exchange rate fluctuations affects competition level also because depreciation in
local currency will make imported goods more costly which will lead to decrease
in imports. On the other hand, domestic companies will benefit from this because
of enhanced sales, profit and employment levels. Such fluctuations in exchange
rate can be avoided through proper management of foreign exchange. Such
control will protect company from losses, will improve cash flow position and
stabilize cash utilization rate.
4. Resources & Evidence Used in the Completion of the Briefing Note (Reference List
in Harvard Format)
o This section served as the appendix and reference,
o At least 6 references please
o Not included in the words count

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Donzé, P. Y., 2020. The transformation of global luxury brands: The case of the Swiss watch
company Longines, 1880–2010. Business History. 62(1). pp.26-41.
Tamimi, O. and Orbán, I., 2020. Hyperinflation and Its Impact on the Financial
Results. Intellectual Economics. 14(2). pp.5-16.
Dias Jordão, R. V., Barbosa, C. R. and de Resende, P. T. V., 2018. Domestic Inflation, Cost
Management and Control: A Successful Experience at a Brazilian Multinational. Revista
de Educação e Pesquisa em Contabilidade. 12(1).
MARIADAS, P. A. and et.al., 2021. The Effects of Economic Uncertainty on Multi-National
Companies (MNCs) Investment in Malaysia. The Journal of Asian Finance, Economics
and Business. 8(5). pp.1-9.
Simionescu, M., 2018. The impact of Brexit on the UK inwards FDI. Economics, management
and sustainability. 3(1). pp.6-20.
Andrikopoulos, A., Dassiou, X. and Zheng, M., 2020. Exchange-rate exposure and Brexit: The
case of FTSE, DAX and IBEX. International Review of Financial Analysis. 68.
p.101437.

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