Swatch

In: Business and Management

Submitted By skhudari
Words 6369
Pages 26
Harvard Business School

9-400-087
June 12, 2000

Rebirth of the Swiss Watch Industry, 1980–1992 (A)
“Time is fast running out for the ailing Swiss watch industry.”1
—The Globe and Mail
By the end of 1983, Hayek Engineering, a Swiss consulting firm founded by chairman and
CEO Nicolas Hayek, was becoming increasingly involved in solving the mounting problems facing the Swiss watch industry, which was on the brink of disaster. Hayek Engineering had initially been recruited by the creditors of the two largest Swiss watchmakers, ASUAG (Allgemeine Schweizerische
Uhrenindustrie AG) and SSIH (Societe Suisse pour L’Industrie Horlogere), to formulate a strategy to deal with changing market conditions in 1981. Since then the firm’s involvement with the industry had grown steadily. The firm’s influence had also been increasing since earlier that year, when the banks had agreed with its recommendation that SSIH and ASUAG merge. Although Hayek
Engineering was acting as a consultant, Nicolas Hayek, its CEO, would come to have a significant role in supervising the merger and in helping to lead the newly-formed company forward.
With the formalities of the merger completed, in December 1983, the new company and its consultants were confronted with a number of new issues. The company faced restructuring challenges and management shifts. But more importantly, it still faced the foreign competition that had decimated the Swiss presence in the inexpensive and middle-range watch segments—the Swiss no longer accounted for any of the inexpensive segment and continued to lose what remained of their share in the mid-range—now less than 10% of the world market.
The consultants’ comeback strategy hinged on two things: first, on a revitalization of flagship brands like Omega, which were being used to prop up the Swiss position in the middle-range market segment. Second,…...

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