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
• Complex in design

• Not much correlation found with cost or performance

• Sold like jewellery

Pin Level Watch Model

Struggles of Swiss Watch Industry
Fragmentation: Around 1000 different enterprises was far more fragmented then that in other leading
watch making nation.

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 did against the
struggles it faced
It concentrated its market to form 8 big companies which resolved the issue of fragmentation

Government placed ban on outside companies.

It also fixed a standard which need to be satisfied by all the watches, ensuring high quality watches.
5 Porter Analysis

Industry Competition- Premium segment (LOW), Budget segment (HIGH)
Numerous or equally balanced competitors
Industry growth rate


Threat of new entrant– Premium segment (LOW), Budget segment (HIGH)
1.Economies of Scale – US and Japan were at advantage while Swiss at disadvantage
2.Product Differentiation – Swiss were at advantage
3.Budget Segment – Japanese were at advantage
4.Distribution channel – Swiss were at advantage

Buyer Power- Premium segment (LOW), Budget segment (moderate)
Concentration of buyers and high volumes
Bargaining Power of buyers was low
Purchases are standard or undifferentiated (low)
Bargaining power of Suppliers- Premium segment (High), Budget segment (moderate)

Threat of substitute Premium segment (moderate), Budget segment (Moderate/High)

Premium segment (LOW), Budget segment (HIGH)

Concentration of suppliers
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approach… “It’s one small step for
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- NEIL ARMSTRONG

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