Strategic analysis of Rolex SA from a Global Supply Chain and International Marketing

Perspectives

Total Words 3038

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Executive Summary/Abstract
This assignment provides a comprehensive analysis of Rolex, the iconic Swiss luxury watchmaker,
exploring its global supply chain management, SOCR model, sustainable competitive advantage, and
strategic management perspectives. Examining Rolex's resource-based, market-based, and
organization-based views, the assignment underscores the brand's commitment to quality,
innovation, and meticulous organization. The sustainable competitive advantage lies in its rare and
valuable resources, strategic organization, and adept navigation of challenges. The brand's expansion
plans and distribution model balance exclusivity with meeting market demands. The recommendation
suggests a Market-Based View strategy, leveraging limited edition releases and strategic
collaborations, to enhance Rolex's market presence while maintaining its iconic status. In conclusion,
Rolex's enduring success is attributed to its harmonious blend of tradition, innovation, and
unwavering commitment to excellence in the luxury watch industry.

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Table of Content

1 Introduction .....................................................................................................................................4
2 Global Supply Chain Analysis of Rolex SA .........................................................................................4
3 Sustainable competitive advantage analysis of Rolex SA .................................................................6
4 Schools of strategic management of Rolex SA .................................................................................9
5 Conclusion ......................................................................................................................................11
6 Reference List.................................................................................................................................12

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1 Introduction

Rolex, founded in 1905, is a Swiss luxury watchmaker renowned for its timeless and prestigious
timepieces. The brand is synonymous with precision, craftsmanship, and exclusivity. Rolex has
consistently set industry standards, producing iconic models like the Submariner and the Datejust.
With a commitment to innovation and quality, Rolex remains a symbol of status and sophistication. Its
watches are prized for their impeccable design, robust functionality, and association with success,
making Rolex a global leader in the luxury watch market.

Global supply chain management is crucial for Rolex to ensure the timely and efficient sourcing of
high-quality materials for their luxury watches worldwide. It enables streamlined production, reduces
costs, and maintains the brand's reputation for precision and excellence. International marketing is
equally vital, facilitating Rolex's global brand presence through targeted advertising, cultural
adaptation, and strategic positioning. This approach not only expands market reach but also caters to
diverse consumer preferences, sustaining Rolex's status as a prestigious and sought-after luxury brand
on a global scale. Overall, effective supply chain management and international marketing are integral
to Rolex's success in the competitive luxury watch market.

2 Global Supply Chain Analysis of Rolex SA

Raw materials used by Rolex are steel, gold, diamond tungsten, tin, tantalum, titanium, and sapphire
crystals. Many years ago, Rolex introduced various processes that helped them in tracking their supply
chain, which can assure them about the traceability of their supply chain. Rolex has implemented
their own ISAE 3000 Type 1 certified traceability program, and recognizes the following international
certifications and regulations:

• London Bullion Market Association (LBMA)

• London Platinum and Palladium Market (LPPM)

• Responsible Minerals Assurance Process (RMAP)

• Responsible Minerals Initiative (RMI)

• The Conflict Minerals Reporting Template (CMRT)/Responsible Minerals Assurance Process (RMAP)

• Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES)

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• The Kimberley Process (KP)

• Registration, Evaluation and Authorisation of Chemicals (REACH)

The entire research, design and production of Rolex products is done exclusively in Switzerland.
Rolex's operational landscape spans among 4 Swiss locations, showcasing its commitment to
excellence. From the development and assembly at its Geneva headquarters, movement
manufacturing in Bienne, and production of cases and bracelets in Plan-les-Ouates, to the crafting of
dials, Cerachrom bezels, and gem-setting expertise in Chêne-Bourg, Rolex utilizes sophisticated high-
tech equipment. The integration of production across these sites reflects a strategic choice,
empowering Rolex to independently uphold its creative and innovative standards. This unique
approach ensures that each Rolex watch meets superlative production criteria, with meticulous
attention to even the minutest details, setting the brand apart in the world of luxury watches. A fifth
site under construction in Bulle further signifies Rolex's ongoing commitment to its visionary
production strategy.

New and genuine rolex products are sold only by rolex or official rolex retailers. Rolex is available in
nearly 100 countries with about 30 affiliates like johnson jewelers, goldmiths, Pragnell, Etcetera.
Currently Rolex has nearly 900 authorized service centres across the world to provide high quality
maintenance and service experience to their customers.

SOCR Model

Rolex anticipates a significant production boost by 2029 with the introduction of a new factory in
Bulle and three temporary facilities expected by 2025. These strategic expansions aim to enhance
production capacity, sustain growth, and address rising demand, although the increase in output is
projected at around 25%. Despite Rolex's higher list prices compared to competitors in similar
markets, the brand's integrated manufacturing process, relying on in-house resources, underlines its
commitment to quality control and precision. This approach ensures that Rolex maintains its distinct
position in the luxury watch industry while strategically managing production expansion to balance
exclusivity with market demands.

Rolex maintains a high level of control over its production processes, crafting gold and platinum in-
house for anti-corrosive and lustrous finishes in precious metal models. The proprietary Oystersteel
and virtually indestructible Cerachrom bezels showcase Rolex's commitment to quality. While
sapphire crystals and hands are rumored to be outsourced, almost every component, including
movements since 2003, is produced in-house. Rolex's historical ties with Aegler SA, a third-party
movement supplier, ended in 2003 when Rolex formally absorbed the company. This blend of
secrecy, precision, and selective outsourcing underscores Rolex's dedication to crafting exceptional
and enduring timepieces.

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Rolex employs a predominantly automated process for parts manufacturing, with skilled watchmakers
undertaking meticulous assembly, creating a "hand-made industrial" approach. The company's
emphasis on absolute quality in the industry is substantiated by virtually flawless movements, cases,
and bracelets, setting a benchmark that competitors strive to reach. Despite this, a few instances of
defective Rolex dials, termed "error dials," reaching consumers suggest potential challenges in
maintaining quality control. While these incidents are limited, they prompt considerations about the
strain on Rolex's quality control measures and the delicate balance between automation and
precision craftsmanship in their renowned timepieces.

Rolex's distribution system comprises traditional multi-brand stores, Rolex Authorized Dealers (ADs),
and newer mono-brand stores, Rolex Boutiques, typically owned by independent entrepreneurs or
jewelry chains. Historically, Rolex only owned one boutique in Geneva until their 2023 acquisition of
Bucherer/Tourneau, representing 4% of global AD locations. While Rolex still heavily relies on its AD
network, this acquisition marks their involvement in retail. The distribution model is stringent, with
Rolex delivering watches in batches, and dealers lack control over the selection or quantity of in-
demand models. The ADs receive models shortly before shipments, making acquiring sought-after
pieces uncertain. However, Rolex has started allowing proper ordering for some models, excluding
sports models, offering customers more customization options, albeit without guaranteed delivery
timelines. This blend of strict distribution and limited customization underscores Rolex's unique
market approach.

Rolex implements rigorous certifications and tests to ensure the rarity of defects in their watches
entering the market. Any rare instances of defects are covered by the 5-year international warranty
provided by Rolex, reflecting the brand's commitment to quality assurance. Occasionally, "error dials,"
featuring distinctive visual mistakes, may enhance the value of Rolex watches rather than diminish it.
Notably, some Oyster Perpetual 41 models have been observed with double-batons at the incorrect
hour, showcasing the meticulous scrutiny that enthusiasts apply to these luxury timepieces.

3 Sustainable competitive advantage analysis of Rolex SA

Global Supply Chain Advantages

Rolex employs a stringent distribution model, delivering watches in batches with dealers having
limited control over the available models. Dealers lack visibility into their shipments, making it
challenging to secure in-demand models. However, Rolex has introduced more structured ordering
for certain models, excluding sports models, albeit without a guaranteed timeframe. While the supply
chain restricts immediate access to popular sports models, it demonstrates Rolex's deliberate control,
maintaining an air of exclusivity and scarcity in their offerings, fostering desirability among customers.

International Marketing Advantages

Rolex's century-long legacy as a luxury watch brand is bolstered by a sophisticated marketing strategy
that combines traditional and digital techniques:

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1. Printed Advertisement: Rolex employs classic black-and-white print ads in high-profile magazines,
such as Vogue and GQ, featuring watches alongside messages emphasizing luxury and success. This
reinforces the brand as an iconic symbol of achievement.

2. Sponsorships: The brand's participation in prestigious events like golf tournaments, sailing regattas,
and Formula 1 races, associates Rolex with excellence. This global outreach and alignment with top-
tier athletes enhance brand awareness.

3. Commercials: Television commercials during major sporting events showcase celebrities wearing
Rolex watches in luxurious settings, solidifying the brand's image of opulence and success.

4. Social Media Marketing: With over eight million followers on Instagram, Rolex shares stunning
visuals and sponsors events, actively engaging with users on Twitter and Facebook. This builds
relationships with customers and enhances brand recognition.

5. Influencer Marketing: Collaborating with celebrities in entertainment, sports, and music, Rolex
leverages influencer marketing on platforms like Instagram and YouTube to tap into large fan bases,
boosting product familiarity and potential sales.

6. Online Advertising: Employing SEO and pay-per-click campaigns, Rolex ensures visibility in online
searches related to luxury watches. This broadens their reach and connects with a larger audience
interested in high-end accessories.

7. Limited Editions: Rolex creates hype and exclusivity by releasing limited edition watches with
unique designs and materials, appealing to collectors and driving overall sales.

8. Celebrity Endorsements: Associating with famous figures in sports and entertainment enhances
brand recognition and reaches diverse global audiences.

9. Strategic Partnerships: Collaborating with organizations like Formula 1 racing teams, Rolex
strengthens its industry leadership image, benefiting from additional exposure and aligning with
shared values in precision engineering and performance excellence.

VRIO Analysis

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Valuable

Rolex possesses several valuable resources contributing to its success. Foremost, its substantial
financial reserves empower the company to invest in external opportunities and navigate potential
threats effectively. The workforce stands out as a crucial asset, with highly trained and loyal
employees ensuring heightened productivity and customer value. The possession of patents shields
Rolex from competitive interference, fostering greater revenue and additional income through
licensing agreements. A well-established distribution network enables the brand to reach a wide
customer base, translating promotional efforts into increased sales. Conversely, the cost structure
presents a competitive disadvantage due to higher production costs. Research and development
efforts, while incurring significant expenses, have yielded limited innovation, warranting a need for
improvement and cost reduction. Ultimately, Rolex's century-old brand image remains exceptionally
valuable, symbolizing timeless and durable luxury watches on a global scale.

Rare

Rolex boasts rare and valuable resources that set it apart in the industry. Firstly, its financial strength
is a rarity, a privilege enjoyed by only a select few. The highly skilled and well-compensated workforce
is another rare asset, contributing to Rolex's distinct edge. The possession of exclusive patents further
enhances its competitive advantage, as these are not readily available to rivals. The distribution
network, too, is a rare commodity, requiring substantial investments and time for competitors to
replicate. Lastly, the brand image cultivated over the years is exceptionally rare, with Rolex being
synonymous with luxury, timelessness, and durability, leading to prolonged waitlists despite
manufacturing nearly a million watches annually.

Imitability

Rolex's resources present challenges for competitors seeking to replicate its success. The financial
resources, accumulated through sustained profits, are costly to imitate, requiring prolonged
profitability for new entrants to amass comparable funds. Similarly, the highly skilled workforce is a
challenge to imitate, though other firms can invest in training, the allure of Rolex's compensation
packages and work environment may pose a threat. The patents, safeguarding against imitation,
involve a costly legal process for competitors to navigate. Moreover, Rolex's intricate distribution
network, developed over time, is a formidable barrier, demanding significant investments for rivals
attempting to emulate a similar system. Overall, Rolex's strategic advantages create formidable
hurdles for potential competitors.

Organization

Rolex strategically organizes its financial resources to seize opportunities and mitigate threats,
establishing them as a source of sustained competitive advantage. In contrast, the organization's
patents are underutilized, representing an untapped potential for a sustainable competitive edge. If
Rolex optimally leverages and sells patented products before expiration, it could transform this latent
advantage into a lasting one. Conversely, the distribution network is effectively organized, facilitating
widespread product availability while maintaining the exclusivity of purchasing a new Rolex. Overall,

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the meticulous organization of financial resources and distribution network underscores Rolex's
ability to secure and maintain a competitive edge in the market.

4 Schools of strategic management of Rolex SA

Resource Based view

Rolex, an esteemed and resourceful company, has strategically leveraged its extensive resources to
establish a formidable global presence and cultivate a stellar brand image. Over the years, Rolex has
adeptly harnessed its substantial resources for international marketing and efficient global supply
chain management. The company has seamlessly integrated these resources into its operations,
ensuring a seamless and effective approach to business.

In its pursuit of brand promotion, Rolex has embarked on innovative marketing campaigns, notably
sponsoring prestigious sporting events such as motorsports, yachting, and golf, elevating its status as
a luxury lifestyle brand. Additionally, Rolex has cultivated valuable associations with influential
personalities, further enhancing its brand allure.

A hallmark of Rolex's success lies in its commitment to quality and longevity. The company produces
watches designed to endure for over a century, underpinned by substantial investments in research
and development. Rolex has consistently filed patents in the watchmaking industry, showcasing
advancements in movements and alloys used in manufacturing.

The company's commitment to excellence extends to its workforce, which undergoes rigorous
training, resulting in the production of nearly 1 million hand-assembled watches annually.
Remarkably, Rolex's stringent quality control measures ensure that the release of defective models
into the market is a rare occurrence. In essence, Rolex's strategic resource-based view manifests in a
harmonious orchestration of marketing prowess, technological innovation, and a highly skilled
workforce, solidifying its standing as a paragon of enduring luxury.

Market Based View

Rolex has successfully carved out a distinctive niche in the market, maintaining an aura of exclusivity
and rarity despite producing over a million timepieces annually. The brand's ability to uphold a sense
of luxury is unparalleled, with the mere mention of Rolex instantly conjuring images of opulence.
While major competitors such as Audemars Piguet, Breitling, Jaeger-LeCoultre, and Patek Philippe
also command significant brand value, Rolex's annual production outpaces the combined output of all
these prestigious counterparts.

The key to Rolex's enduring market value lies in its strategic marketing endeavors. The brand
strategically aligns itself with elite sports events, fostering a connection between luxury and
athleticism. Additionally, Rolex distinguishes itself by unveiling limited edition rare watches, creating a
sense of scarcity and desirability among consumers. Collaborations with other high-end brands, such
as Tiffany and Co., further bolster Rolex's image in the luxury market.

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Over its extensive presence in the market, Rolex has fostered strong relationships with renowned
jewelry stores worldwide. These partnerships have granted authorized dealer status to select
establishments, enhancing the brand's accessibility while maintaining a sense of exclusivity. Rolex's
multifaceted approach to marketing and distribution has not only solidified its position as a premier
luxury watchmaker but has also allowed it to transcend the sheer volume of its production, ensuring
that acquiring a new Rolex remains an exceptionally coveted and rare experience for consumers.

Organization Based View

Rolex, an iconic name that transcends the realms of horology, stands as a paragon of luxury and
quality, woven into the fabric of time. Originating from the visionary Hans Wilsdorf in 1905, Rolex has
evolved beyond being a mere watch brand; it has become a phenomenon, an indomitable force
challenging conventional norms. In the past decade, Rolex has undergone a transformative journey,
asserting its dominance with an aura unattainable by others. Beyond the influence of money,
marketing spin, or PR maneuvers, Rolex has carved its own niche, seemingly impervious to
competition.

The brand's evolution is marked by an unwavering commitment to excellence, epitomized by the

relentless pursuit of chronometric precision. Rolex's insistence on crafting movements of the highest
quality catapulted it to unparalleled heights, culminating in the coveted Swiss Certificate of
Chronometric Precision, a testament to its pioneering spirit. The distinction of being the first
wristwatch in the world to receive this prestigious mark from the Official Watch Rating Centre in
Bienne set the stage for Rolex's ascendancy. Subsequent recognition from Great Britain's Kew
Observatory, with the Class A precision certificate, further solidified Rolex's association with precision.

This strategic organizational perspective underscores Rolex's exceptional historical value and its
consistent pursuit of excellence, positioning it as an unrivaled luxury brand with a timeless legacy. The
narrative of Rolex extends beyond timekeeping; it is a saga of precision, innovation, and an enduring
commitment to being a beacon of quality in the ever-evolving world of luxury.

Recommendation

After a comprehensive analysis of Rolex through various perspectives, it is my recommendation that

the company should adopt a Market-Based View strategy, while preserving its existing image of
exclusivity. The rarity associated with owning a Rolex, attributed to high demand and limited supply,
can be strategically leveraged. Introducing new and intricate complications in limited edition releases
would not only meet market demands but also elevate Rolex's stature as a luxury timepiece
manufacturer.

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This approach aligns with competitors like Patek Philippe and Jacob & Co., known for their distinctive
and intricate watch complications. By tapping into the latent potential of withheld innovations, Rolex
can intensify its market presence and allure.

Moreover, strategic collaborations with brands having significant market influence would broaden
Rolex's reach, disseminating its image as a premier luxury watchmaker to a wider audience. This
synergistic approach balances exclusivity with market expansion, ensuring Rolex maintains its iconic
status while exploring new avenues for growth in the ever-evolving luxury watch industry.

5 Conclusion

In conclusion, Rolex, with its century-long legacy, stands as a paragon of enduring luxury and precision
in the competitive world of watchmaking. The company's strategic management is deeply rooted in
its commitment to quality, innovation, and a meticulously organized global supply chain. The
Resource-Based View underscores Rolex's prowess in marketing, technological innovation, and a
highly skilled workforce, while the Market-Based View highlights the brand's ability to maintain an
aura of exclusivity and desirability despite high production volumes.

Rolex's sustainable competitive advantage lies not only in its rare and valuable resources, such as
financial strength, skilled workforce, and exclusive patents but also in its strategic organization of
these resources. The brand has adeptly navigated challenges, ensuring that its iconic image remains
synonymous with success and luxury.

The organization's expansion plans, including the new factory in Bulle and temporary facilities, reflect
Rolex's proactive approach to meet growing demand while maintaining stringent control over
production and distribution. The integration of in-house manufacturing processes, from movements
to cases and bracelets, exemplifies Rolex's dedication to excellence and innovation.

While the brand's distribution model restricts immediate access to popular models, it aligns with
Rolex's deliberate control strategy, enhancing the allure of exclusivity. The implementation of a more
structured ordering system for certain models strikes a balance between maintaining scarcity and
meeting market demands.

Looking ahead, a Market-Based View strategy with a focus on introducing intricate complications in
limited edition releases and strategic collaborations could further elevate Rolex's market presence.
This approach would allow Rolex to tap into new consumer segments while preserving its iconic status
as a luxury timepiece manufacturer.

In essence, Rolex's enduring success is a result of a harmonious blend of tradition and innovation,
precision and exclusivity. The brand's unwavering commitment to excellence and strategic
management positions it as a leader in the luxury watch industry, continuing to capture the
imagination of watch enthusiasts and symbolizing timeless sophistication.

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6 Reference List

• Edwards, Z. (2018). VRIO Analysis of Rolex. [online] Case48. Available at:

https://www.case48.com/vrio-analysis/13802-Rolex [Accessed 14 Dec. 2023].
• Lütgens, M. (2020). Rolex materials and their functions. [online] www.watchmaster.com.
Available at: https://www.watchmaster.com/en/journal/stories-en/rolex-materials-and-
their-functions.
• newsroom.rolex.com. (n.d.). Rolex World Service | Newsroom. [online] Available at:
https://newsroom.rolex.com/about-rolex/rolex-world-service.
• Powerfunk (2023a). A Complete Guide to Every Special Rolex Dial Ever Produced. [online]
Grey Market Magazine. Available at: https://www.luxurybazaar.com/grey-market/a-
complete-guide-to-every-special-rolex-dial-ever-produced/#error-dials [Accessed 14 Dec.
2023].
• Powerfunk (2023b). The Rolex Supply Chain: Does Demand Really Exceed Supply? [online]
Grey Market Magazine. Available at: https://www.luxurybazaar.com/grey-market/rolex-
supply-chain/.
• read, P.P. (2023). The Secret of Rolex's Winning Marketing Strategy. [online] Pete Polgar.
Available at: https://www.petepolgar.com/blog/the-secret-of-rolexs-winning-marketing-
strategy/#:~:text=FAQs%20about%20Rolex%27s%20Marketing%20Strategy.
• Rolex. (n.d.). Official Rolex Website. [online] Available at: https://www.rolex.com.
• Zigu (2011). Rolex PESTLE Analysis | MBA Skool-Study.Learn.Share. [online] MBA Skool-
Study.Learn.Share. Available at: https://www.mbaskool.com/pestle-
analysis/companies/17951-rolex.html.

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