"The Birth of Swatch" Case Analysis

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"The Birth of Swatch" Case Analysis

By | November 2012
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Today we will present you the analysis of the case «The birth of swatch». First we willl give you the information about the background of the problem, then we will define the problem of the case and finally we will present you our recommendations. So, let’s start with the background.

In the 1940s the Swiss dominated the watch industry in large part because of their centuries-long history of jewelry-making expertise. Watchmaking was a source of national pride, and the “Made in Switzerland” label was a global seal of quality, status, and prestige. Around the world, the general public consensus was that the only “good” watches were Swiss watches. , the Swiss accounted for 80% of the world’s total watch production and 99% of all U.S. imports. In 1950s several Japanese companies—including Hattori-Seiko and Citizen—had taken over the Japanese market. Then these Japanese watch manufacturers pushed into Europe and North America as well. The result was that, even as worldwide demand for watches grew, the Swiss share of the global market declined, from 80% in 1946 to just 42% in 1970 In 1970, the introduction of quartz technology changed the nature of competition in the watch industry once again. The rise of quartz technology hastened the decline of the Swiss watch industry. Swiss watchmakers had refused to embrace quartz based on the belief that electronic watches were unreliable, unsophisticated, and beneath Swiss quality standards.By 1984, more than three-fourths of the watches sold around the world were based on quartz technology (most were manufactured in Hong Kong), and by 1986, Citizen had become the overall global leader in both movement and finished watch production volumes. Now, as Japanese watchmakers saturated the global market with quartz watches at rock-bottom prices, Switzerland found itself unable to compete. By 1983, both of these companies were losing millions of dollars, and Switzerland’s unit share of the world watch market had fallen to...

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