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1
INDIAN INSTITUTE OF MANAGEMENT CALCUTTA
STRATEGIC MANAGEMENT
THE WATCH INDUSTRIES IN SWITZERLAND
JAPAN AND THE UNITED STATES
I: An Overview of the World Watch Industry in 1970
As best as can be estimated, worldwide watch and watch movement production in 1970 reached the level of 175 million units. At manufacturers' selling prices this production had a value of about $ 1.3 billion. Pin-lever watches constituted slightly more than half of the total output; jeweled-lever watches made up the rest with the exception of 1% - 2% of the total which belonged to a variety of electric and electronic models. 1

Since the early 1950s, when worldwide watch production was at an annual rate of about 45 million units, the output of the industry had increased fourfold. In the 10 years leading up to 1970, worldwide output increased at annual rates that ranged between 7% and 11%. Talk about market saturation persisted among some watchmakers, yet as of 1970 the overall growth of the industry and not shown any noticeable sign of slowing down.(Table-1 shows the origins of the 1970 output

2
.)
These figures in Table-1 illustrate several important points. The first is a well-known one : Switzerland is far and away the dominant watchmaking nation. In 1970 its production amounted to 42% of Worldwide output. Table -1

Leading Watchmaking Nations - 1970
(millions of watches and watch movement)
Country Production Exports Exports as % of production
Switzerland 73.7 71.4 97%
Japan 23.8 13.7 58%
USSR 21.5* 1.8 8%
United States 20.0 0.2* 1%
France 11.0 4.1 37%
West Germany 8.2 4.1 50%
Mainland China 5.0* - -
East Germany 5.3 1.8 51%
United Kingdom 1.2 1.0 31%
Italy 2.6* 0.6 23%
Others 2.0* - -
________ _______ ______
174.5 98.7
* Estimated.
The second point is less well-known: there is considerable production in countries currently outside the mainstream of Western commerce. In 1970 output in the USSR, East Germany and mainland China represented about 17% of the World total. For the time being, at least the bulk of this output stays within the Eastern block. Accordingly, the communist countries, and in particular the Soviet Union, will be excluded from this note's analysis of the struggle for the world watch market.

With the Eastern block out of the picture, the Swiss domination of watchmaking becomes all the more striking. In 1970 every other watchmaker in the non-communist world came from a Swiss plant. The third point had to do with how the watchmaking in Switzerland, Japan and the United States are 1

For a brief guide to watch technology, see Appendix `A'
2
Data provided in Tables 1 through 5 are provided by the
Federation of Swiss Watchmakers.2
linked to world markets. In 1970 Swiss watchmakers exported virtually all of their output, Japanese firms exported slightly more than half of their output, and American companies exported almost none of their output. In the case of the United States, the largest watch market in the world, domestic production accounted for slightly less than half of its needs. Imports, some from foreign firms and some from United States - controlled plants sited overseas, filled the void.

While data on the production of watches by country are readily available, figures on market size by country are hard to come by. Still, rough estimates by major geographical areas are possible. In 1970, Europe in total represented a market about equal to that of the United States : watch purchases in both markets ran at an annual rate of around 45 million units. In the same year, Japan's home market was about a third of the size of those in Europe or the United States. And as for the rest of the world (excluding or the communist countries), its market roughly matched that of Europe or the United States.

The reminder of this note examines the three watchmaking industries, as of the early 1970s, were the most active contenders for dominance in these markets. Sections II, III...
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