Strategic Management

Case Study - Bracken Darrell’s

turnaround and growth strategy
at Logitech

Done By –
Kanchan Lakhwani – MBA 2001007
Neelav Dhar Choudhury – MBA 2001008
Mohammed Shahrukh Khan – MBA 2001011
 Logitech How it began

• Started in 1981, in a town called Apples, Switzerland.

• Started with selling mouse for computers.
• PC centered peripherals – keyboards, speakers, microphones and
webcams.
• Growth of the PC market
• Only co. which posted 39 consecutive quarters of double digit growth in
profit and revenue
• Declining sales of PC and increase in sales of smartphones, tablets and
wearables.
Increase in sales of smartphones, tablets
and wearables- Just the tip of the iceberg
• Four Screen Portfolio strategy – Failure
• Revue Boxon the google TV platform was a big mistake
– Software was incomplete.
• SEC Investigation – $ 7.5 mio – write-off's totaling $ 339
mio
• In July 2011 CEO Gerald Quindlen quits.
 Barcken Darrell- A new hope from outside
• Joined in April 2012, became CEO in Jan 2013.
• MBA at Harvard University
• Worked previously at Pepsi Co., Accenture, P&G, GE, Whirlpool and Braun
• Loved Switzerland and its work ethics. Prioritized humility, small size and agility,
quality, innovation and strong capabilities.
• Restructuring the brand
- Cost Savings of $16-18mio for fiscal year 2014 in addition to $80 mio
savings in operating cost
- 450 job cuts in 2012, 370 in 2013
- Replacement of 1/3rd of the senior management
- Onboarding Alastair Curtis – Internal Design Team
- Onboarding CFO Vincent Pilette – Building Financial and Operation
Strength
 The Worst Was Yet to Come …..
Darrell’s 1st year at Logitech led to a record net loss of
$228mio after taxes.
Due to the following
- Restructuring cost
- Decreasing Margins
- Goodwill impairment
- Share Price bottomed out at $6.24 in Arpil 2013, closing
with market capitalization of less than $1 billion which
was 47% of FY 2017 revenue
 Darrell’s Strategy- Make It Lean and Slim

• Turned “Life Size” into a EBITDA profitable company.

• PC Gaming
• Ultimately Darrell decided to spin off Life Size in 2016, he exited OEM.
• In 2017 the growth strategy was clear – To Transform Logitech from PC
Peripherals to Cloud Peripherals.

How Gaming Could Change Logitech?

- Acquired Astro Gaming Brand (headphones)

- Introduction of high end mice, keyboards, controllers and
flight and farming simulators.
- Ensure potential emotional attachment of gamers to their
hardware.
 Gaming and its contribution to
Logitech’s Revenue
• Revenue increased from $145 mio in (FY 2013) to $646
mio (FY 2014) - 23% CAGR
• Expected Revenue upto $8 - 6 billion by 2021.
M&A as a growth enabler
- Acquired Saitek for $13 mio in 2016
- Acquired Jaybird for $54 mio in 2016
- Acquired ASTRO gaming for $85 mio in 2017
- Acquired Blue microphone for $117 mio in 2018
Design as a guiding principle
1. He ensured to work with designers as partners
2. First Generation  Second Generation  Third
Generation
3. Better Design could drive financial performance in the
long run, giving better product experience
 China and Logitech’s 35th Anniversary
• Manufacturing facility in China however the revenue contribution was
less than 25%.
• Ways to grow in China – Focused on ecommerce and modernizing the
go to market channel.
• Logitech was back on the growth track - Stabilizing profit trends
(FY2016 Net Profit $120mio, Gaming- $245mio in sales)
• Received awards for transitioning into a design led company
• 2016, Darrell hires Kirsty Russell to head people and culture division.
• Performance bonus system + stock options + flexible vacation time.
Explaining Logitech via the components
model
As per as Ansoff’s Matrix
External and Internal Environment

External Factors Internal Factors

Rapid technological advances Matrix structure of the management

Marketing and distribution capability Transparency and visibility

Frequent introduction of new Solid partnership among

products departments

Service and Support Lean and slim management team

 What’s Next ?
• Under Darrel, Logitech achieved 6 years of constant growth

• 2 Key partners decided to call it quits, however the company was able to
maintain its stature.
• Trade Tariffs and challenging consumer sentiments.
• Flattening gaming sales after a strong run in 2018, 3 quarters in 2019
slowed down.
• Guerrino de Luca stepped down while Darrell’s main goal was to ensure
perfect product portfolio for next generation of Logitech.