THE WATCH

INDUSTRIES IN
SWITZERLAND
JAPAN AND THE
UNITED STATES
GROUP 2
• A N K U S H K U M A R PAT R A
• ARJUN SHEKHA
• A P O O RVA PAWA R
• P I Y U S H PAT N A I K
• PRONIT DIHINGIA
• RAHUL KUMAR
• YA S H A G A RWA L
Introduction
Swiss Industry before 1970s

•Holds almost 42% of Worldwide watch output

•3% of Swiss GNP

•Employed 8% Swiss labour

•97% of total production is exported outside.

•610 M USD value

•12% of total Swiss exports

•Mainly produced pin-level and jeweled-lever

watches.
What 1970 Watch Industry looked like
Leading Watchmaking Nations - 1970
80

70

60

50

40

30

20

10

0
Switzerland Japan USSR United France West East United Italy Others
States Germany Germany Kingdom

Production Exports
 Pin vs. Jewelled Lever Watch
Pin lever watch has two major parts
• Movement block (Ebauche) like the chassis and engine

• Regulating components like the transmission

• Simple in design and less reliable.

Jewelled lever
• Positioned as jewellery

• Design complexity

• Not much correlation found with cost or performance

Pin Level Watch Model

 Fragmentation: Around 1000 different
Struggles of enterprises was far more fragmented then
Swiss Watch that in other leading watch making nation.
Industry
Research and Development was not highly
invested and it was 0.8 percent of the sales.

Economies of scale was low as the labour

cost was high compared to Japan where
the labour cost were low and Capital
invested was high
What Swiss It concentrated its market to form 8
did against the big companies which resolved the
struggles it issue of fragmentation
faced
Government placed ban on outside
companies.

It also fixed a standard which need

to be satisfied by all the watches,
ensuring high quality watches.
 Industry Competition- Premium
segment (LOW), Budget segment
5 Porter (HIGH)
• Numerous or equally balanced competitors
Analysis • Industry growth rate
Threat of new entrant– Premium
segment (LOW), Budget segment
(HIGH)
• Economies of Scale – US and Japan were at
advantage while Swiss at disadvantage
• Product Differentiation – Swiss were at advantage
• Budget Segment – Japanese were at advantage
• Distribution channel – Swiss were at advantage
 Threat of Buyer Power- Premium segment
(LOW), Budget segment (moderate)
5 Porter • Concentration of buyers and high volumes
Analysis • Bargaining Power of buyers was low
• Purchases are standard or undifferentiated (low)

Bargaining power of Suppliers: Premium

segment (High), Budget segment (moderate)
• Lot of small family-owned businesses manufacturing
premium components
Threat of substitute: Premium segment
(moderate), Budget segment
(Moderate/High)
Japan Industry
By the end of 1960s, Japan started to export
watches.
The exports contribute almost 14% of world
share i.e 24 Millions.
There is no doubt that the Japanese have had a
significant edge over other producers’ in
respect of labour cost.
the Government encouraged the highly
concentrated industry structure
US Industry
Watches were mostly imported
Main players Timex and Bulova
Bulova sold to all segments
Bulova patented the Tuning fork watch
Accutron , Partnered with Citizen Watch
Company
Timex simplified the pin lever movement for
mass production
Invested heavily in advertisement
 Introduction of LCD display and
Changes due Quartz crystal disrupted the
to technology market of Swiss watches.
advancement • US market started moving towards the
use of Electronic and digital watches as
they are more accurate at the same price
and sometimes even cheaper.
• Cheaper labour and implementation of
the assembly line at Japan also allowed
them to export watches at cheaper price
mainly to US.
• Due to this Swiss started losing its
market share in US.
QnA
1. Why did the Swiss dominate the global mechanical watch industry? What were the barriers to entry?

2. How did the Swiss lose this domination (in mechanical watches)? What were the changes in
industry structure that negated Swiss competitive advantage?

3. Will the Japanese be able to maintain their domination of the mechanical watch industry (1971)?

4. How will the advent of electric/electronic watch change the industry structure? Who could dominate
and with what advantage?
Your best quote that reflects your
approach… “It’s one small step for
man, one giant leap for mankind.”

- NEIL ARMSTRONG

THANK YOU