1. What is the summary of the case (e.g what is it about? What is the issue being faced?)

2.What is the recommendation for the issue faced by the company? Take into consideration the following key points:

• Performing a market structure analysis, which identifies a firm's major competitors
• Performing a competitor analysis
• Alternative sources of information for analyzing competitors
• Using game theory in the development of competitive strategy

I just need to know what are the recommendations needed to solve the company's issue.

Victorinox: Cultural Heritage and Brand Innovation

Abstract

Thecaseexplains howVictorinox,themanufactureroftheSwissArmyKnife,survived the2001crisis, which reduced its sales of knives in airports and planes to zero. The company continueda policy of diversification begun in 1989 after cheap knock-off designs of the Swiss Army Knifeflooded the market. Carl Elsner must now decide if the company should continue to diversify itsportfolioofproductsorfocus onitscorecompetency.

Many residents of Switzerland may not necessarily remember the name of their current president, but youcould hardly find one who does not have a Swiss Army Knife in the pocket. The brand Victorinoxis closelyassociated with the legendary Swiss Army Knifeoriginating in the "Swiss Officer's and Sport Knife" creat-ed by Karl Elsener in the year 1897. Today, Victorinox is a global company with operations in Europe, Northand South America, and the Asia-Pacific region. It remains a family business run by Carl Elsener, the great-grandson of the founder. The head office is located in the village of Ibach, Canton Schwyz in the centre ofSwitzerland. Over the course of the past 130 years, its products have been extended from the original SwissArmy Knives and cutlery to timepieces, travel gear, apparel and fragrances. Victorinox has been striving forall of its product lines to resemble the traditional brand of the Swiss Army Knives, which implies matchlessquality,innovativefunctionality,superiorreliabilityandiconicdesign-allatanaffordableprice.Nevertheless,suchanextentofdiversificationhaspresentedacriticalquestion fromabrandmanagementperspective:isitreasonable to stretch the Swiss Army Knife brand, which is almost a national one, by repositioning the market from outdoor adventure to urban lifestyle? Would the stretching of the Swiss Army Knife brand dilute thecompany's core competences? From a cultural heritage perspective, would this move towards more trendyconsumer goods, which are partly manufactured outside of the country, be a departure from Victorinox's tradition?

The HistoryoftheSwissArmyKnife

Today, Switzerland is one of the richest countries in the world, and one can hardly believe that in the 19thcentury the Swiss were still among the poorest people in Europe. Unemployment was high, and many youngSwisshadtomigrate tootherregions forjobs.

In 1884, 24-year-old Karl Elsener, a Swiss farmer's son finished his apprenticeship in France and Germanyand decided to return to his hometown Ibach in the German-speaking part of Switzerland. There he foundedhis own cutlery workshop with the clear aim of creating jobs for local people. In 1891, the first delivery ofknives for Swiss army soldiers was completed. The soldier's knives were very robust and relatively heavy. Elsener then invented the multi-functional concept, and based on this concept, he developed a lighter andmore elegant knife with six practical tools for officers. He named this new pocket knife model "Officer's andSportsKnife".In1897,thename"SwissOfficer'sandSportsKnife"waspatented. Thismodellaterbecameknownaroundtheworldasthe"OriginalSwissArmyKnife".Sincethenthecompanyhasbecometheofficialsupplier ofknivestothe SwissArmy.

In 1909 Karl Elsener started to use the Swiss symbol of the cross-embossed on a shield-shaped emblem toclearly differentiate his products from those of his competitors. A brand was born. To this day, all Victorinoxproducts bearthesameidentifiableemblem.

Officers in the Swiss army started buying this versatile pocket tool in stores, and very soon this innovativeproduct became popular. Demand then came from abroad, especially after World War II, as the "OriginalSwiss Army Knife" was sold in the US Army garrisons in Europe, including the US Army, Navy, and Air ForcePX stores. Many US officers and soldiers bought it for their daily use, and it was also a favorite souvenir forthemtotakehomefromEurope.

Over the years, Swiss Army Knives have been evolving. The multifunctional pocket knife has been furtherdeveloped with additional functions and features to meet the needs of our ever-changing daily environment. Today, the "Original Swiss Army Knife" is available in 360 models with more than 100 variations and combinations. For instance, there is the Swiss Champ with 33 functions, the SwissFlash USB pocket knife withup to 32GB storage capacity, a pocket knife with the smallest laser pointer in the world, or with an altimeter. Indeed, there is always a matching tool from the Swiss Army Knife categories for nearly all kindsof professional work or free-time activities e.g., office work, hunting, camping, fishing, biking, rescue and security services, and recently even golfing.3A further application of the company's high-precision processingofsteelisVictorinoxcutlery, whichcoversabroadrangeofhouseholdandprofessionalcutlery forrestaurantkitchen chefsandbutchers,aswellashouseholdcooks.

Victorinox is the largest knife manufacturer in Europe. About 28,000 Swiss Army Knives and approximately32,000 other multi-tools leave the company daily. In addition, 60,000 household and professional knives arealso produced. Victorinox exports 90% of its total production through subsidiaries and distributors in morethan 100 countries on all five continents. All knives and cutlery are manufactured in Switzerland. With about900 employees working in Ibach, of whom around 500 are involved directly in production, Victorinox is thesecond largest employer in Canton Schwyz after the regional administrators engaged by the Canton government.How has a family company from a small village known for soldiers' knives managed to surprise themarketeveryyearwithinnovationsandthusstayamarket leaderfor fourgenerations?

CarlElsener,current CEOofVictorinoxandgreat-grandsonofthefounder KarlElsenerresponded:

We remain true to the approach and principles set forth by the founding father: motivation of ouremployees, satisfaction of the customers, quality of the products, and a powerful brand. In fact, in-novation is not only reflected in our products, but also in the organization. When the founder KarlElsener received a large batch of orders from the Swiss Army for soldiers' knives, the production faced abottleneck for delivering. On my great-grandfather's initiative, the Swiss Master Cutlers' Associationwas founded. Members of this association support each other, share tasks experiences, and growtogether.

CulturalHeritage

WithitsrootsintheheartofSwitzerland,Victorinoxhasbeencommitted toqualityandprofessionalism,whichare deeply embedded in the company's product philosophy and praised around the world. Since its foundingin 1884, the company has kept on innovating and growing organically. Victorinox now has 2000 employeesworldwide, but it retains the culture of a family enterprise. Throughout the company's history, no employeehas been dismissed for economic reasons. "To create jobs and maintain employment have always been theultimate objectives of Victorinox. In order to retain this norm, we built reserves in good years as an anti-cyclical measure for challenging period." pointed out Carl Elsener, after working together with his father formorethan30yearsinthecompany, succeededhimastheCEO of Victorinoxin2007.

Victorinox has experienced several severe challenges in its business history. The most recent critical periodwastheaftermath of9/11whenheightenedsecurity rulesmadeitillegaltocarryknivesonboard.Theseregulationshadanimmediate effectonthecompany'sturnover, assalesofpocketknivesatairports andon-board

airplanes dropped to zero. Moreover, sales through corporate market channels also declined drastically, becausepocketknives werenolonger favoredascorporategifts.

Since lay-offs were not an option for Victorinox, the company undertook several measures to deal with theovercapacityproblems,suchasstopping newhiring,encouragingemployeestotakeadvancevacations,andlending skilled workers to other local companies temporarily. This way the company was able to keep all theemployeesonitsownpayroll.CarlElseneracknowledgedthat"masteringthiscrisishasreinforcedourbeliefsandasanemployer,weareabletodeepenthe trustrelationshipwithouremployees."

Toensurethatthecompany traditionandculture arewellpreserved,CarlElsenersenior triedtoinvolve hisfamilymembers inthebusiness as earlyaspossible.

Weareabigfamily, eightoftheelevenchildren inmygenerationareworking forVictorinox,andfamily values are essential for us. In fact, the Victorinox company has been part of our lives sincewe were born. The company offices, the warehouses, and the departments were our playgrounds.During our childhood, we were usually free from school on Wednesday afternoons and Saturdays.We used those timeslots to earn our first pocket money in the factory by packaging knives in busyseasons.Atanearlyage,myfatherpaidcloserattention tocultivatingoursenseofbelongingtothe family business. He always tried to introduce us to our customers from around the world. Wewere asked to attend their meetings. Though we could not catch all the points on what they werediscussing, we realized these customers were important for the company and we should show respect to them. With time we understood why my father had always put employees, products, andcustomers at the center of his thought because he was convinced [that] if a company concentratedonthese threefactorsthebusinesscan not domuchwronginthelong-term.-explainedCarlElsen-erwithdeepconviction.

NotonlytheElsenersbutalsotheemployeesareaccountedasextendedfamily members,andtherefore theyallshallsharethemissionofVictorinox.AsCarlElsenerrecalled:

Every new employee will receive a booklet in which the company's history, values, and philosophyarestated. Myfatherkeptremindingusthatweastheowner-familyshould notlookattheassets thatthe company has accumulated over the years, such as the machines, the buildings, and the brandasourprivate property,butratherasaresponsibilityentrusted tous.

In the spirit of this philosophy, in 2000, the Elsener family established the Victorinox Foundation, which owns90% of the share capital. The main purpose of this act is to preserve the company's traditions and incorporate culture intact through generations, and safeguard financial independence. The remaining 10% of theshares are put into a charitable foundation created in memory of Carl Elsener Junior's grandparents. Evenbefore establishing the foundation, the family had never drawn a dividend from the company. The Elsenerswho work in the company earn the same salary as their fellow employees, and all follow the company rulethatthetopincomeshall notbemorethanfivetimes theaveragewageofemployees.

BrandExtension

Due to the increasing popularity of the Swiss Army Knife brand, Victorinox products have often been copiedandpirated.Inthe1980s, cheapimitationsofVictorinoxpocketknivesfloodedthemarket.CarlElsenerinterpretedthereactionofthecompany asfollows:

My father and I discussed how we could stay competitive while keeping production of the SwissArmyKnifeinSwitzerland.Werealizedthatoneeffective waywouldbetoincrease ourbrandawarenessbyinvestinginVictorinoxbrandvisibility.Forallthefunctionalitiesandconvenienceofthe

SwissArmyKnife, ourproducthasonedisadvantageinthatitiscarried inthepocketandthusrarelyseen. Peoplearewilling topayabitmoreforabrandif it isperceivedtohavevisible recognition.

Watches were the company's first move towards visible products. In 1989, under the brand name VictorinoxSwissArmyTimepieces,thecompanybrought morethan180modelsofVictorinoxwatches ontothemarket.The timepieces are divided into three segments: "Active" for dynamic people; "Classic" for a sporting, luxury-oriented target group; and "Professional" for those who demand the utmost in performance and functionality.Theprecisionwatches fromVictorinoxaremanufacturedinthecompany'sassemblyfacilitiesinthecenteroftheSwisswatchmakingregion inCantonJura.SalesandmarketingarelocatedinBiel/Bienne.

Afurtherextension oftheBrandwastheintroductionofVictorinoxTravelGear.Thisproductgroupincludesaseries of luggage, business cases, lifestyle bags, backpacks, travel accessories, and personal leather goods.Eachpieceisdesigned tomeetthedemandsofintensivetravel. Thefunctionalityanddurabilityofthetravel gear are made with advanced technology. Victorinox Travel Gear is manufactured by the TRG Group, withheadquarters in St. Louis, Missouri USA. The material used in the manufacturing of Victorinox Travel Gearoriginates,toalarge extent,inAsia.

In 2001 the Victorinox Fashion collection was launched. The main selling market was North America. The high-quality fabric developed for the fashion outdoor clothes was based on cooperation between renownedmanufacturersfromaroundtheworld.Thefinishingoftheclothing itemswasproduced bytheworld'sleadingtextile manufacturersunderthe supervisionoftheVictorinoxQualityTeams.

Two years later in 2003 Victorinox made another innovative product by entering the fragrance business.Again, it proved to be a successful venture. The Swiss Army fragrance line consists of five collections: twoforwomenandthreeformen.Aswithalltheproducts Victorinoxhandled,payinggreatattention todetailsin design and manufacture, and pursuing improvement wherever possible has always been the main pro-duction philosophy of Victorinox. No wonder that in 2010, Victorinox was awarded for making a technologicalbreakthrough in the perfume industry. Among the numerous prizes, Victorinox won, one of the most recent istheSwissPackagingAward2015forthecompany's fragranceVictorinoxElla.

DoestheDiversificationWork?

Victorinox not only survived the 2001 crisis but also consolidated the loyalty of its workforce and diversifiedinto various new product lines, which continue to carry the top-quality image of the Victorinox brand and represent60%ofthecompanyturnover.TodayVictorinoxmakesaturnover ofaroundCHF500million. As head of Victorinox, Carl Elsener is proud of leading an independent enterprise and producing anddistributingarangeofpractical productsinthenameoftradition, quality,andinnovation.

In the wake of the revolutionary development of the online markets, the already fierce competition in consumergoods has become more intense and borderless. For Victorinox, the question arises: how to take advantageof internet technology while capitalizing on its established brand? This new challenge has occupied CarlElsener for some time. For him, it is not just about good marketing savvy in today's digital world, it is by andlarge about how to achieve the right balance between selling - being truly creative from a product-focusedperspective, and branding - nurturing the image of the company. According to Carl Elsener, "brands aresomething people identify with", and as Victorinox so greatly embodies the Elseners, it is widely perceivedthatVictorinoxisElsenersandtheElsenersareVictorinox.

Whilerevisiting theproductportfolio andthegrowthchartofVictorinox, CarlElsenerstarted toaskhimself:shouldVictorinoxfurtherinvestinexpandingitsbusinessscopeorshould thecompanyfocuson itscorecompetence?CarlElsenerclearlyknowshisresponsibilityofsettingthecourseforfuturemarkets intimeandintherightway.