Review, Analysis and Reflection On

Kathmandu University School of Management

(KUSOM)
MBA Fall 2021

Submitted to:

Mr. Shashi Raj Bajracharya

Submitted by:

Ankit Bhandari Kshetri (21107)

Kabir Krish Jindal (21117)
Ritu Maharjan (21124)
Parisha Mahat (21125)
Rose Pahari (21128)

May 15, 2022

 Table of Contents
Introduction of the company 1

Background of the case 2

Central Issues 2

Firm’s Goals 3

Constraints of the problems 3

Logitech Shift from OEM to Retail 4

Identifying Alternatives 4

Implementation Plan 6

Question no 1: 7

Elaboration of the issue 7

Problem Identification 7

General Solutions 8

Critical Analysis 9

Theory/Model/Framework 11

Application of the framework 13

Question no: 2 15

Elaboration of Issue 16

Problem identification 16

General Solutions 17

Critical Analysis 17

Theory/Model/Framework 18

Application of the framework 19

Question number 3: 21

Elaboration of the issue 21

Problem Identification 22

Generated solutions 22

Critical analysis 23

Theory/Model/Framework 25

Application of the framework 25

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Conclusions and recommendations 26

Lessons Learnt 27

Boundaries and Limitations 27

Assumptions 27

References 29

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 Acknowledgements

This Review, Analysis and Reflection on the success of “Logitech” would not have
been possible without the help and support extended by various people. We would like
to take this opportunity to express our appreciation and gratitude towards all involved.

We would like to express our sincere gratitude to Mr. Shashi Raj Bajracharya, faculty
of Kathmandu University School of Management (KUSOM), for assigning us this
dissertation as a part of the course Entrepreneurship and Innovation (ENT 601). This
paper has helped us expand our research skills and abilities and better understand the
reason behind the success of Logitech. It would not have been conceivable without his
direction, help, and support.

Next, we would like to acknowledge Kathmandu University School of Management

(KUSOM) for including this course as a part of the MBA curriculum. This was a
wonderful opportunity for us students to learn about how tactfully a company navigated
through its issues and came out on top and became successful.

Finally, but not the slightest, we would like to recognize our companions, family,
seniors, and other well-wishers for their coordinated or backhanded help and ethical
back for completing this paper. This extent would not have been the same without them.

Group-6

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Introduction of the company

A Swiss company focused on innovation and quality, Logitech was founded in October
1981 in Lausanne, Switzerland, by two engineering students as a software development
and hardware architecture company. Logitech established itself as a quality software
development company and soon after that saw a new hardware product opportunity that
was emerging in the mid-1980s: the computer mouse which was a turning point for the
company’s future. This is when the inability of the suppliers to meet the demand for
computer hardware and software was identified.

In the early 1990s, Logitech identified a larger market opportunity for computer
peripherals and began growing its business beyond the mouse. Logitech had massive
OEM sales and sold its products through other companies like HP. It later identified
opportunities in the retail market and moved there. Currently, 85% percent of
Logitech’s business is through retail sales and 15% is divided up between our OEM
businesses, in more than one hundred countries. The infrared cordless mouse, the
thumb-operated trackball, the laser mouse, and more are credited to Logitech as an
industry first.

Between 1998 and 2006, Logitech made a number of significant acquisitions to

diversify into different product lines. These acquisitions helped Logitech attain
substantial growth and also helped introduce the industry’s first retail pointing device
with Bluetooth wireless technology.

Logitech has transformed into a multi-brand company designing products that bind
people together through music, gaming, video, and computing by selling products in
almost every country in the world. Logitech G, ASTRO Gaming, Ultimate Ears,
Jaybird, Blue Microphones, and Stream labs are all a part of Logitech. Logitech was the
world’s leading provider of computer peripherals such as input and interface devices
that were used for navigation, internet communications, digital music, home
entertainment control, gaming, and wireless devices in 2010. Logitech has maintained
its product leadership by combining continued innovation, award-winning industrial

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design, and excellent price-performance with core technologies and continues to lead
the market.

Background of the case

Central Issues

The central issues that plagued Logitech were cost inefficiency, increased competition,
and high dependency on the OEM market.

Cost Inefficiency

Cost Inefficiency is a flaw that can bring down major players in the market. Price is the
first thing that a customer compares between products. Logitech confronted a major
issue regarding operations which added to the cost inefficiency. It had numerous
manufacturing locations dispersed throughout the world. The countries where these
facilities were located were expensive to operate, and the labor costs for qualified
employees were high.

Increased Competition

Logitech had many competitors such as Creative Technology Ltd., Microsoft

Corporation, Royal Philips Electronics N.V, AT&T, and Apple. Logitech exclusively
focused on personal peripheral products, whereas all of its competitors have products
and resources invested in a wide variety of other industries which suggests more
expertise and cost advantage. Increased price pressures from large competitors such as
AT&T and Apple forced Logitech to relocate production functions to Taiwan and
Ireland.

High dependency on the OEM market.

Logitech also had a high dependency on its OEM sales. It was dependent on another
company for sales which isn’t good for any company and also the fact that the OEM
market is extremely cost, quality, and reliability driven, Logitech soon needed to look
for alternative revenue sources as well. This would come in the form of retail sales.

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Firm’s Goals

So, the firm’s goals now were very simple things: minimize cost and diversify.

Minimize Cost

Logitech had to find a way to minimize the costs. It was one of the biggest challenges
for Logitech. The increasing pressure from the competitors in the production cost, as
well as the market, was getting to a point which if ignored could mean the downfall of
the company.

Diversify

Logitech had relied on the OEM sales for too long, they understood that the industry
was changing, and just relying on one product i.e., mouse and OEM sales would not
suffice. Thus, Logitech had to go for diversification.

Market Leader through Innovation and Acquisition

Logitech saw that the only way to survive and grow in the market was to innovate and
strategically acquire companies. This would help with the diversification of product
lines as well as help Logitech get into the retail market.

Constraints of the problems

Diversifying is not easy

It is a known fact that diversification is not easy. It required a huge amount of expertise
and a wrong step could push back the company as not only would the new segment
suffer but also the company’s reputation and the existing line of business.

Intense Competition

Intense competition is another constraint as the competitors don’t make it easy to

innovate. There is always the risk of investing too much into a product just for the other
company to do it first and lose all the money. They also make it hard and expensive for
companies to acquire other businesses by increasing the bid for the company. The
timing factor is very important in such cases.
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Logitech Shift from OEM to Retail

The sales of OEM were highly dependent on the sales of its VAR products. In the Mid
2000’s the sales of PC desktops drastically dropped which highly affected the sales of
Logitech’s OEM products as well. For many years, Logitech provided computer mice
to OEMs for them to market as their own, but it had become a low-margin sector due
to the high level of a drop in sales and integrated market trends of the time. According
to Chief Executive Bracken Darrell, “While the OEM business has been an important
part of Logitech's history, it provided limited opportunities for a profitable growth”.
With no experience in a retail business, Logitech attempted to partner with Microsoft
on a bundle with its software. This initiative of Logitech failed after two years of
negotiation. Logitech went on to launch its own mouse, the Logitech C7 which then
turned out to be a massive success.

Identifying Alternatives

Alternatives deal with the different ways the problem can be resolved. The
management/teams develop different options through which the problem can be
resolved. These ideas are frequently already in hand with management or have been
redeveloped from the ground up through intense brainstorming. Apart from the
company switching from OEM to Retail which supported the success of the company,
here are some of the alternatives that Logitech could’ve adopted:

 Strategic partnership and acquisitions

 Innovate products according to market trends

 Expansion into the software industry

Strategic partnership and acquisitions

Though successful, Logitech entered the retail market with no prior experience which
was a huge risk for the company. Hence, by developing strategic partnerships and
acquisitions Logitech could acquire the available expertise of the key innovator
companies which could have increased the probability of success and reduced risk when

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Logitech entered the retail market. Furthermore, some of the key benefits of strategic
partnership are

 Increased synergy of companies which could improve overall performance

efficiency
 Reduced competition by acquiring a larger market share.

Innovate products according to market trends

With time, the market demand and trends have changed from the use of peripherals to
high functioning integrated devices. Companies such as Apple and Samsung are
developing built-in peripherals that eliminate the need to purchase additional
peripherals. As a result, the market need for computer accessories, which is the
foundation of Logitech's success, is steadily diminishing. In the late ’80s, Logitech
produced varieties of products such as FotoMan (an early digital still camera),
AudioMan (a speaker/microphone that enabled people to insert audio clips into certain
applications), WingMan (the first gaming peripheral i.e. a joystick), and Video Man (a
Web camera on a flexible arm). These products were only peripherals and did not
provide a complete one-stop product which was an ongoing market trend at the time.

Expansion into the software industry

Logitech is a well-known developer and manufacturer of computer and other device

accessories and equipment. However, if the company succeeds in becoming a software
developer, this transformation will improve the company's competitive position over
time. By expanding into software, companies can retain more control over the execution
of their projects which can strengthen the company portfolio further. Many retail
companies such as Logitech before shifting into the software industry must recognize
how their software, data, and connectivity can create value for specific customer
segments, including end-users. They must understand particular customers’
experiences, pain points, and needs. Logitech’s main focus has been on consumer
experience and how to make the experience better and more individualistic for each and
every user. By expanding into the software industry, Logitech’s focus would be
strengthened as well as the company could expand and diversify itself into the software
industry with ease.

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Implementation Plan

Logitech after expansion from OEM to the retail market, further developed strategic
partnerships and acquisitions as mentioned in the alternatives. From 1998 to 2004,
Logitech made many important strategic acquisitions in order to enhance future
portfolios and expand the depth of its peripheral product lines. Logitech’s first
acquisition was with Connectix Corporation, with whom the company launched Quick-
Cam PC (a video camera). This resulted in a surge in peripherals like cameras and
wireless cameras, as well as a very early introduction to Logitech's present video
conferencing division. The purchase of Labtec, Inc., an audio peripheral manufacturer,
in 2001 was the second successful acquisition.

With two successful acquisitions, Logitech wanted to expand its product focus even
further and in 2004, Logitech acquired Intrigue Technologies Inc. which positioned
Logitech as a leader in advanced remote control-making. Furthermore, Logitech went
on to acquire Slim Devices and expand its product line into music systems. Logitech
used these two purchases to diversify and specialize its multi-business unit firm,
catering to a wide range of technology consumers. Logitech was able to merge its
peripheral devices with Paradial's software for video effects and security measures.
After acquiring the company, Logitech was able to provide a complete and
straightforward HD video conferencing experience for businesses of all sizes as a result
of this.

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 Question no 1:

How innovation drives competition in the industry with respect to Logitech and the
computer peripherals industry.

Elaboration of the issue

In this era of rapid technological change, companies are driving competition through
various innovative products. Citing a classic example, the competitive rivalry between
Apple and Samsung is not a new story. Soon after Apple's introduction of Apple
watches and air pods, Samsung doubled down on innovation around these devices
giving a hint that innovation from one company pushes the other for further greater
innovations.

Logitech’s proactiveness in terms of innovation, drove competition in the computer

peripheral industry since the three major competitors at the time being were equally
striving to stay ahead of the market with innovative revolutions. Creative Technology
offered products such as digital and web cameras, graphics solutions, and PC
peripherals. Microsoft Corporation provided software/hardware products and solutions
worldwide and has since expanded into markets such as keyboards, mice, storage
software, and digital music players. Philips Electronics offered a diversified portfolio
of products such as consumer electronics, televisions, VCRs, DVD players, etc.

When competitors aforementioned are providing similar products in the same industry,
competition is inevitable. Also, demand for such products in the mentioned industry
often depends strongly on income, the economic stability of its consumers, as well as
the profitability of its business customers since technological devices are often
expensive and are not purchased often. In a competitive market structure where you are
not a price maker, a number of competitive factors can put pressure on the price
structure.

Problem Identification

Though Logitech was excelling in the mouse business with its launch of the P4 mouse
for graphic software users in the mid-1980s, it had to face strong competition in the
mouse business in 1990s since innovations in the peripheral sector created competition
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in the industry. Technological globalization has integrated the organizations,
economies, and nations across the world and companies like Logitech have to think
above simply innovating personal peripherals to lead the market. Some of the
competitive challenges that came across Logitech in the race of innovation were as
follows:

Keeping up with competitors

With the add-on peripherals market slowly moving to a saturation stage, Logitech
realized the changes in customers’ interaction with Logitech products. This can also be
attributed to the evolving buyers' needs. With standard built-in devices getting
embedded, customers' need to buy add-on peripherals was slowly evaporating. To
exemplify, the built-in accelerometers in Apple’s touch screen technology eliminated
the need for mice or track pads in 2010. Similarly, high-quality cameras and speakers
in products developed by Windows and Apple diminished the need for Logitech
products.

Dynamic personal peripheral industry

Competition based on a single product line reaps no benefit when technological

upgradation occurs at an exponential rate. Thus a broad-based strategic operational
decision is of utmost importance for companies that are based upon a single product
line. In the meantime, competitors have had products and resources invested in a wide
variety of other industries while Logitech was the only one in the group exclusively
focused on personal peripheral products. This indicated Logitech's lack of product
portfolio in its earlier stages in the industry.

General Solutions

Logitech came up with a few challenges while leading the innovative trend. In order to
address the above-mentioned issues, here we present some of the solutions identified
and somehow implemented in its case.

Innovation focusing on customer experience

Consumer needs are ever evolving in terms of technology. They demand convenient,
user-friendly, and efficient solutions over time, and this was what it realized in the
8
process of becoming an industry leader. As consumers became more conscious and
connected, Logitech tapped into tailoring its products towards the uses of video
communication and high-speed internet capabilities.

Also, it recognized that wireless technology was into the trend when the personal
peripheral sector was moving into a new digital era. Focusing on customer experience,
it improvised and introduced wireless technologies for their convenience. Even the
subtlest of design details were a matter of concern which made its products personal,
giving reasons to millions of customers worldwide to cherish the brand.

Diversification

Companies that adopt diversification strategies are more likely to sustain cutting-edge
competition than those companies engaged in a single industry. Realizing that in a
dynamic industry, it would be no longer able to compete simply by manufacturing
computer mouse, Logitech made a strategic operational decision to expand its product
line beyond the mouse and introduced a variety of products, including a handheld
scanner, a digital camera named Fotoman, microphone termed as Audioman and the
first gaming peripheral named Wingman.

Research and Development

Customer needs are ever evolving and competitors such as Apple and Windows could
strategically address them on hand, diminishing the need for Logitech peripherals.
Logitech must continue to decide the strategic direction of its future with enormous
investment and attention in technological research and development and in addition
come up with more new innovative solutions that are continuously accepted by
customers in the near future.

Critical Analysis

Critical analysis of each of the solutions is enumerated with the merits and demerits.
Considering term implications, these solutions require continuous improvement over
the industry life cycle. Regarding financial implications, it depends upon the amount of
budget allocated by specific company in the related industry.

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Innovation focusing on customer experience

Innovation focusing on customer experience can reap greater benefits since customer
satisfaction is vital to the success of any company. Also, this solution addresses the
issue of keeping up with competitors. However, the application of this particular
solution can have both merits and demerits.

S.N Merits Demerits

1. A high level of customer loyalty and Difficulty keeping up with customers’

satisfaction leads to customer expectations which keep on
retention in the longer term. increasing.

2. It helps in leading the consumer trend Each customer and their requirement
in any industry through continual can be different. Thus, it can be
improvisation. difficult to generalize.

Diversification

Diversification helps reduce the risk of over-dependence on a single product line during
the time of competition. The merits and demerits of this proposed, as well as
implemented solution in the case of Logitech, are tabulated below.

S.N Merits Demerits

1.

It makes optimum utilization of There is a possibility for the company

unrecognized resources and to lose out on specialization in specific
minimizes risk. industry segments.

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Research and Development

Research and development is an indispensable component today in relation to

technological development. It opens up the gateways for the identification of
unobserved possibilities. Research and development along with innovation focusing on
customer experience can have a synergistic impact to solve issues related to
competition. Both the merits and demerits related to this solution is tabulated below;

S.N Merits Demerits

1. Brings new capabilities and

opportunities into the gaze.
Allocation of budget in substantial
amounts is needed along with human
resources with greater expertise.

Theory/Model/Framework

In order to evaluate the relative importance of resources to the firm, VRIO Framework
was first developed by Jay B Barney. In terms of resources, VRIO stands for value,
Rareness, Imitability, and organizational efficiency. The analysis is based on the
assumption that a company's strategic resources can provide it with an opportunity to
build a sustainable competitive advantage over competitors in the industry and earn
above-average profits. The four identified resources or internal capabilities listed below
are placed in the VRIO parameters to yield a sustainable competitive advantage for
Logitech.

 Pricing Strategies
 Brand Positioning in comparison to competitors
 Supply Chain Network flexibility
 Marketing expertise related to Logitech products

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Explanation of the VRIO for Logitech

In the VRIO framework above, we can see that the pricing strategies of Logitech are a
resource that is considered valuable for the company. But, the resource consideration is
not rare since various strategies related to price can be deployed. The strategy of price
is prone to regular imitation by rivals in the industry however is efficiently organized
as Logitech has its price analytics engine. Thus, optimum utilization of the mentioned
resource can lead Logitech to a competitive advantage in the short run.

Similarly, we have marketing expertise related to products as the fourth resource that is
valuable for the company. However, the resource cannot be considered rare since
competitors in the industry can also have decent marketing know-how. It is subject to
imitation and with in-house expertise this resource is efficiently organized by Logitech.
Analysis of this resource and its better use can help build a temporary competitive
advantage for Logitech.

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Application of the framework

Concerning the application part, we have identified a new set of resources analyzing the
success story of Logitech. The VRIO analysis of these newly identified unique
capabilities can help in the process of a unique product development.

Unique product development

Let us understand how these capabilities can help in unique product development with
the help of the table presented below.

Capability/Resource 1: Strategic combinations

We realized that Logitech has a unique internal capability of strategic combination. It

focuses on core business development alongside strategic acquisitions. Analyzing the
capability/resource, it can be termed as valuable, rare, costly to imitate and efficiently
organized. Logitech can design and develop uniquely innovative and marketable
solutions by utilizing a resource that is valuable, rare, difficult to duplicate and expertly
organized.

Capability/Resource 2: Inner and outer efficiency

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For Logitech, an organizational restructuring that focuses on interaction for innovation
enhances internal efficiency and a step into the wireless world, advanced gaming and
web software indicates thrive on outer efficiency. Utilization of this capability which is
valuable, rare, difficult to imitate, and efficiently organized, it again supports for the
unique product development building a sustained competitive advantage.

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 Question no: 2

Discuss about various competitive advantages gained by Logitech through innovation.

Competitive advantages gained by Logitech

First mover advantage

Logitech’s competitive advantage has been the first-mover advantage, allowing them to
build a rapport with buyers and enabling them to have larger market segments. At the
heart of technological development, Logitech started with mice development. This is
seen with their pioneering of the computer mouse and keyboard and has been at the
forefront of video conferencing. Logitech instead of following trends have always
created them with their innovative products. This is an indicator of their first-mover
competitive advantage. It was termed the first company to develop an infrared tracking
mouse. The company’s goal is to be the number one provider of all peripheral products
in the world and strives to be the first to introduce any new and exciting peripheral
technologies.

Unique products:

Logitech is extremely proactive when it comes to innovation. Along with the

incremental improvement of its core technologies and products, Logitech is
continuously, radically innovating new technologies in the peripherals industry.
Logitech is quick to recognize new market opportunities and grasp them which provides
them with a way to design and create innovative peripheral products. When the gaming
industry began to experience recognition and rapid growth, Logitech designed and
introduced its first gaming console controller. Logitech's one of the most significant
innovations was the Logitech i.e. Personal Pen which merges the use of a traditional
pad or paper with the digital world.

Pricing strategy

Logitech has a difference in its cost of production and the value that consumers perceive
in its products. The generic competitive strategy being employed by Logitech provides
the company with a competitive edge and is the best cost provider strategy. This strategy
helped the company in providing a competitive offering by blending affordable prices
15
with highly differentiating products. By efficiently utilizing the strategy the company
was able to establish its name in the market. Logitech is known for providing innovative
products at a reasonable rate while maintaining the quality of its product. Logitech
offers affordable prices as well as the higher price segment. Products like keyboards
and mice are segmented at a low price whereas products like digital music and home-
entertainment control are segmented at mid/high price.

Elaboration of Issue

While Logitech is an undeniable leader in the area, the peripherals category is crowded
with many competitors. Logitech enjoys market share leadership in the product
categories it participates in and has successfully established itself as a quality brand in
the minds of its consumers. Logitech is constantly innovating new products and has
always been able to be a first-mover in the market. However, product replication has
been a major issue.

Problem identification

The competitive advantages acquired by Logitech in relation to being first movers,

having unique products and competitive pricing comes along with some drawbacks.
Identification of problem that appeared despite competitive advantages and innovation
is explained below;

Product Replication

One of the major consequences of today’s modern manufacturing technology is

enabling the production of knockoffs that are closer to the originals than ever before.
With Logitech’s major source of business being innovative products, the company is
more prone to this issue. Logitech was a first-mover company to develop any peripheral
products. This problem is not new to the company as a popular gaming company, Razer
introduced their Basilisk V3 which was very much similar to the Logitech Mx Master
mouse. However, the razer company was not able to provide a better product by
replicating Logitech. Though replication can help develop innovation and creativity, it
creates a major issue for the company creating high competition and increased
substitution of products in the market. The replication of products can also divide the

16
market into segments in terms of quality and affordability which can further contribute
to the disadvantage of the initial innovator company. Hence, to protect this issue, the
solutions are discussed further.

General Solutions

Every problem comes with a solution. Logitech shall implement various solutions to
the problem of replication of their problem.

Acquiring Intellectual Property Rights

Logitech has always been a first mover in developing peripheral products from
developing mouse, keyboards, and many more. Hence, product replication has always
been a major issue as described in the problem above. Logitech shall prevent this
problem by incorporating patents and intellectual property rights to their product so that
any other company shall not have the authority to replicate products. This may also
provide the company with a secondary source of income as any company that wishes
to replicate the Logitech technology would have to pay royalties as well. As most of the
products of Logitech are manufactured in China which is known for developing similar
products at reasonable prices. So the possibility of product replication is high.
Patent rights and IP shall protect products from being replicated.

Critical Analysis

A critical analysis is done with the general solutions described below:

Acquiring IP

By acquiring IP, Logitech may have following merits and demerits.

S.N Merits Demerits

1. Security of products Additional Cost

2. Ability to have a competitive edge over Difficult to acquire

other similar businesses

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Theory/Model/Framework

In order to gain an idea of what kind of competitive forces the industry will face, the
framework is based on Porter's five forces model.

Logitech Porter's five forces reflect the competitive environment of an industry.

Logitech holds its vision closely as Logitech is always in the process of developing new
innovative products. Within the industry, the business's profitability is dependent upon
the following forces.

 Competitive rivalry
 Threat of new entrants
 Threats of substitute
 Bargaining power of suppliers
 Bargaining power of customers

The threat of new entrants

The threat of new entrants for Logitech is low. Logitech being an established company,
the manufacturing required to be in the most recent modern technology, as well as
therefore brand-new players, would not be able to compete with dominant Logitech
OEMs.

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Threat of substitutes

The threat of alternatives on the market is high, offering the reality that Logitech
competes for market share with global gamers like Toshiba, Samsung, and Hitachi. This
indicates that marketplace has a high degree of rivalry where makers that have layout
and also development abilities together with making proficiency might have the ability
to have negotiating power over the market.

Bargaining power of supplier

The vendor in the Logitech sector has low negotiating power despite the fact that the
market has supremacy of three gamers consisting of Power chip, Nanya, and Promos.
Logitech producer are mere initial tools suppliers in strategic partnerships with foreign
gamers for modern technology. The second reason for a low bargaining power is the
reality that there is an excess supply of Logitech devices due to the large range
manufacturing of these leading sector gamers which has actually decreased the rate each
well and raised the bargaining power of buyers.

Bargaining power of buyers

Bargaining power of buyers is high because there is high competition among OEM
companies. Due to this, the options available for buyers are also high.

Competitive rivalry

Competitive rivalry in computer peripheral industry and any other technological

industry is high since there are already established companies like Creative
technologies, Microsoft, Apple, Windows etc. that specialized in their core capabilities
but offer similar products as developed by Logitech.

Application of the framework

Application of these five forces can help Logitech to determine industry attractiveness
and understand its competitive positioning in the market. The analysis can be used to
make some strategically wise decisions that could improve the performance of Logitech
and ensure long-term survival. According to Michael Porter- “If a strategy is to have
real meaning then it should reflect directly into company’s financial performance”.

19
If Logitech Product has a real competitive advantage, it means that compared to its
rivals Logitech Product is- operating at a lower cost, commanding a premium price, or
doing both. Competitive advantage is about superior performance and it is a relative
term. When all rivals in the Logitech products industry try to compete in the same
direction, no one firm gains a competitive advantage. This model allows organizations
to make wise strategic decisions. Logitech can determine industry attractiveness.

20
 Question number 3:

Analyse whether innovation can sustain growth for Logitech

Elaboration of the issue

Logitech has a long history of innovation, with over 65 industry firsts to its credit. In
the year 2006, it introduced almost 130 new goods. However, it is up against fierce
competition from industry rivals, raising concerns about its long-term growth prospects,
where product innovation alone may not be sufficient. The days of incremental core
business innovation driving business growth are long gone. To merely stay in the game,
core business innovation is now required. The whole New and Improved notion is
expected, and it's what it takes to just survive in business. The issue with Logitech can
be described with the help of an innovation life cycle diagram. An innovation initially
begins with ideation. It grows with the passage of time and finally stagnates at a certain
point in time. After it stagnates, it will require a huge amount of investment in R&D to
continue this process forward but it may not be worth it because innovations are risky
and they are subject to failure. So, a company that over relies on innovation may not
experience guaranteed growth in the future.

Fig: Innovation life cycle

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Problem Identification

Overdependence on innovation

The main issue with Logitech in this context seems to be its overdependence on
innovation. It is a highly innovative tech company that is massively investing in R&D
to bring out new and improved OEM products, especially mice and keyboards. With
the technology industry experiencing an exponential rate of change, incremental
innovation can help Logitech to stay in the game but it won't help Logitech to beat its
competition and grow in any meaningful way. Simply put, incremental innovation helps
you survive, not thrive. The economic power of innovation to Logitech can come from
its adoption, not solely from the creation of innovative products. Therefore a new
approach is needed for Logitech that combines the power of innovation with other
strategies necessary for it to beat the competition.

Generated solutions

Delaying the Innovation

Not every company or department needs to constantly focus on innovation. At some

point, the company might need to slow down experimentation to an unfathomable
degree and try to capitalize on the initial results. Being too innovative and futuristic can
backfire, which seems to be the case with Logitech that became too innovative. One
prime example of Logitech being too innovative is through its Revue set top box for
Google TV, A TV platform product by Google. Logitech discontinued the product in
the early 2010s for its Revue set-top box for Google TV, saying that the device cost it
$100 million in operating profits and that Google TV just isn't ready for prime time.

The company stated that Google TV simply wasn't ready to launch when it did and that
Logitech mistakenly thought the search giant's product was revolutionary but it actually
wasn’t. The main problem with Logitech’s Revue box is that it was set up like a gaming
controller, too many buttons, a track pad and unfamiliar interface. This resulted in the
customers not liking the whole revue setup for Google TV. After all, who would want
a TV controller with outrageous features and buttons when you just want to relax while
watching TV? Given the state of constant disruption in the technological industry,

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Logitech needs to find the right blend of innovation and its relevance in the current
timeframe. So that everyone in the target segment would be willing to accept it.

Collective Disruption

According to Michael Docherty, Collective disruption is about applying many of the

concepts of collaboration to the strategy of new business creation. One of the major
questions regarding Logitech’s success is whether it will successfully create disruptive
new businesses in this changing technological landscape or not.

The computer peripherals industry is showing signs of stagnant growth as the devices
come inbuilt with better mice, keyboards, camera, speakers, etc. Therefore, there seems
to be no growth in the peripherals industry. Since Logitech is the market leader in terms
of gaming accessories, there seems to be an underlying opportunity to succeed through
collaboration with uprising gaming startups like Epic Games (Fortnite), Twin suns,
Multiverse, and Merge games, etc. to come up with specialized gaming peripherals. The
collaboration of these highly-motivated, fast-moving, risk-taking startups, supported by
well-financed, talent-laden, and influential corporations like Logitech will be able to
leverage a great innovation in the specialized gaming peripherals and might also create
a new segment of computer peripherals.

Critical analysis

Delaying the innovation

Delaying or postponing the extravagantly futuristic innovation opportunities comes

with a fair share of both merits and demerits. Therefore, both the advantages and
disadvantages that this postponement brings should be carefully evaluated in order to
reach rational decision-making. The merits and demerits of delaying the innovation are
as follows.

S.N Merits Demerits

1 Increment in acceptability of products Possibility of missing out on

resulting from the release of market innovative opportunities by shifting
relevant innovations the futuristic innovations forward

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 2 Reduction in Research and development Fear of getting swallowed up in the
cost resulting from less investment in competition as a competitor seizes
R&D of too futuristic ideas. the innovation opportunity and
capitalizes on it.

3 Improved efficiency resulting from an Holding on to innovations to

increased acceptability (higher sales) release them in the future can invite
and a lower research and development mishaps of the innovative ideas
cost. being obsolete and being leaked
before their release.

Collective disruption

Collective disruption, another proposed solution for Logitech can bring a number of
merits to the company. However, it also brings its fair share of demerits. The advantages
and disadvantages of collective disruption to Logitech are weighed below.

S.N Merits Demerits

1 Synergistic effect from the adjoining Collaborations often lead to a loss

startup in the same industry will lead to of sole control over organizational
the new product development that will decisions.
help to disrupt the market

2 Increase customer base resulting from Collective disruption may lead to

the addition of adjoining start-up’s own potential conflict over authority,
customer base to that of Logitech. power struggle and decision
making

3 Coming together of two established Possibility of damage to the

brands will help them to co-brand and goodwill if the adjoining start-up
promote each other does something scandalous or
unethical.

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Theory/Model/Framework

Fig: Diffusion theory of Innovation

E.M. Rogers, a communication theorist at the University of New Mexico, established

the idea of the Diffusion theory of innovation in 1962. It describes the transmission of
an idea through stages of adoption by diverse actors by integrating earlier sociological
theories of behavioural change. There are 5 key figures in the diffusion of innovations
theory. People who are willing to take chances and are the first to test new ideas are
known as innovators. People who are interested in trying out new technologies and
determining their utility in society are known as early adopters. Early majority refers to
the members of the general population who pave the way for the adoption of an
invention in mainstream culture. Late majority refers to a subset of the overall
population that follows the early majority in embracing the invention as part of their
daily lives. Laggards refers to people who adopt innovative items and fresh ideas later
than the overall community. This is primarily due to their risk aversion and rigidity in
their methods. The spread of an innovation through mainstream society eventually
makes it impossible for them to live (and work) without it.

Application of the framework

Diffusion theory of innovation can be perfectly used in the case scenario of Logitech.
If we talk about Logitech, its products are made to compliment the lifestyle of the
millennial and adapt to their flexible working environments. Therefore, tech savvy
millennial are their primary target segment. These millennial individuals in a social
system do not all accept innovations from Logitech at the same time. Instead, they tend

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to adopt in chronological order and can be divided into adopter types based on how long
it takes them to implement a new concept. The diffusion theory of innovation can be
applied in the following aspects of Logitech’s functionalities.

New innovation launch

Practically speaking, knowing which group particular individuals fall into is extremely
important for Logitech. Therefore, while designing the products or a new innovation to
be released in the market, Logitech should always focus on the early majority and early
adopters section on the graph given above because this is the section that adopts the
released innovation earlier than any other category. The individuals under this category
are the ones who accept the innovation in the first place while paving the way for others
to adopt those innovations.

Marketing and promotion

Human connection through interpersonal networks cause the adoption of a new idea. If
an early adopter of an innovation discusses it with two members of a social system,
these two become adopters who pass the innovation on to two more peers. While
marketing the innovative Logitech products, this diffusion of innovations theory can be
applied to help understand and promote the adoption of new products. This application
of the theory usually focuses on identifying and recruiting influential early adopters to
help accelerate consumer acceptance. Therefore, Logitech can design successful
marketing campaigns by incorporating the characteristics of individuals in early
adopters and early majority and cater the advertisements toward them.

Conclusions and recommendations

To conclude, Logitech began as a software development and hardware architecture

company and thrived in the OEM market but faced high costs due to intense
competition. It chose innovation and acquisition since innovation only lets you survive
and not thrive; the only solution was to strategically acquire companies along with well-
timed innovative ideas in order to increase the acceptability and to survive and grow
while diversifying. Innovative strategies led to high competition for Logitech. As an
alternative, the company could expand itself in the software industry. Also, a specific
focus on customer experience, diversification strategies, and developing partnerships
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are suggested and somewhat implemented in due course by Logitech to stay ahead of
the competition.

Lessons Learnt

Here we present some of the lessons to be learnt from the success story of an industry
leader, Logitech.

 Companies should not rely on one source of revenue and should diversify their
business after they have gained experience and a foothold in the market.

 Meaningful, strong, and timely acquisitions can take the company to greater heights.

 Being a market leader and innovator, one would have to overcome a number of
challenges which would not be possible without the trust and determination of the
people working in the team.

 Competition can challenge companies further and be a catalyst for the growth of
innovative products.

Boundaries and Limitations

In the course of research and writing of this report, we came across a number of
limitations enumerated in the bullets below:

 Logitech’s manufacturing units were dispersed all over the world pushing the cost
higher and making production inefficient.

 Logitech was involved only in one line of business whereas its competitors had
diversified portfolios making the trade relatively riskier for the company.

 Some innovations can be too futuristic and do not address the needs of the current
market.

Assumptions

Our writing of this report is subject to certain assumptions which relates to time frame,
normal economic conditions and some others.
 Initially, the peripheral market was non-existent.

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 Logitech wanted to reduce dependency and risk associated with OEM sales.

 The analysis performed on Logitech is mostly based on the 1980s to early 2010s.

 The suggestions, solutions, and recommendations only hold true in the case of
normal economic scenarios and not in case of economic downturn, recession, stock
market crash, etc.

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