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The Comeback of the Swiss Watch Industry on the World Market: A Business History of the Swatch Group (1983-2010)

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  • Pierre-Yves DONZ�

    ()
    (Osaka University, Graduate School of Economics, Post-doctoral Research Fellow of the Japanese Society for the Promotion of Science (JSPS))

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    Abstract

    The objective of this paper is to contribute to a better understanding of the comeback of the Swiss watch industry on the world market since the end of the 1980s. It focuses on the Swatch Group (SG), currently the worldfs biggest watch company. In 1983, the merger of the largest watch group (SSIH) and of the trust controlling the production of parts and movements of watches (ASUAG) into SG was the main measure taken to overcome the Japanese competition. Managed since 1986 by Nicolas G. Hayek (1928-2010), SG experienced a high growth and recovered its competitiveness on the world market, becoming a driving force for the entire Swiss watch industry. This success is traditionally explained by the firm itself and by scholars as the result of the launch of a new product (Swatch, a cheap plastic quartz watch first marketed in 1983) and the persistence of an old technical culture in Switzerland which enabled this rebirth. This paper, based on SG annual reports, focuses on the strategy adopted by SG since 1983. It shows that, rather than product innovation (Swatch), it was the rationalization and globalization of the production system (concentration of strategic partsf production in Switzerland; transfer of production facilities in Asia), together with a new marketing strategy (brand segmentation, distribution and retailing facilities, communication, etc.) which were the two main sources of the comeback of the Swiss watch industry on the world market. While Japanese still attach great attention to product innovation, SG largely established its competitiveness on non-technological innovation.

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    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/1114.pdf
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    Bibliographic Info

    Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 11-14.

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    Length: 36 pages
    Date of creation: Apr 2011
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    Handle: RePEc:osk:wpaper:1114

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    Web page: http://www.econ.osaka-u.ac.jp/
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    Keywords: Watch Industry; Switzerland; Swatch Group; Luxury Goods; Marketing Strategy;

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    1. Hugues Jeannerat & Olivier Crevoisier, 2011. "Non-technological innovation and multi-local territorial knowledge dynamics in the Swiss watch industry," GRET Publications and Working Papers 01-11, GRET Group of Research in Territorial Economy, University of Neuchâtel.
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