The Swatch Group

Swatch Group, based in Switzerland and founded in 1983 by merger of SSIH and ASUAG, is
a diversified multinational company renowned for manufacturing and selling finished
watches, jewellery, watch movements and components. It is the worlds largest watchmaking
company which also supplies nearly all the components required for the watches sold by 18
individual brands under the umbrella of Swatch and also the multi-brand retail companies
Tourbillon and Hour Passion.
The groups production companies also supply movements and components to outside thirdparty watch manufacturers in Switzerland and around the world. The Swatch Group is also a
leading player in manufacturing and sales of electronic systems and devices used in
watchmaking and other related industries. It is also a front player in the field of sports event
timing.
18 Brands under The Swatch Group are: Breguet, Harry Winston, Blancpain, Glashtte
Original, Jaquet Droz, Lon Hatot, Omega, Longines, Rado, Union Glashtte, Tissot,
Balmain, Certina, Mido, Hamilton, Calvin Klein watches & jewellery, Swatch, Flik Flak.
Based on the segments these brands serve they can be classified as per the following segment
pyramid.

Premium/Luxury Range

High Range
Mid Range
Entry Range

The production companies under The Swatch Group are: ETA, Nivarox-FAR, Franois, CHH
Microtechnique, Comadur, Rubattel et Weyermann, MOM Le Prlet, Universo, Manufacture
Ruedin, Simon Et Membrez, Lascor, Novi, Swatch Group Assembly, DYB, EM
Microelectronic, Renata, Micro Crystal and Swiss Timing.
The Swatch group employs over 36,000 employees in more than 50 countries.

Swiss Watchmaking Industry

Watchmaking began in Switzerland in the later 16 th century after the Huguenot refugees
brought the manufacture of portable timepieces to Geneva. In those times the display of
wealth and wearing of jewelleries in Geneva was banned. As such the citys goldsmiths found
new scopes for their creative talents and they discovered watchmaking. Watches started being
worn as a necessary belonging and an alternative to jewellery.
In the beginning, design of watches and its production were mainly concentrated in Geneva.
However, this soon spread over to other regions. The Swiss watch industry continued to
flourish during the 19th century with exports to America forming a large part of revenue. By
the middle of the century the Swiss watch industry had overtaken the English to become the
worlds most important watch manufacturers. But this success for Swiss watch industry was
not long lived. During the later 19th century the American watch manufacturing industry
started to produce watch components which were quite accurate and useful for a variety of
other models. In a decade, the export of Swiss watches to the U.S. dropped by 75%. This
was a hard blow for Swiss watchmakers, who responded to the changes in the market with
the manufacture of industrial, precision mechanical components.

Pic: Watchmaking assembly line at ETA, Switzerland (early 19th century)

In the early 20th century Swiss watchmakers started innovating by adding additional new
features to their watches such as calendars and stop watch with an objective to restore their
competitiveness in watchmaking. In the 1920s, Swiss watchmakers like Rolex came up with
waterproof and automatic watches. These break through innovations in the mechanics and
production gave a boost to Switzerlands domestic watch industry. The Swiss watchmakers
were back and for the next few decades occupied the top spot in the world watch market.

However, opportunities generated from the 20th centurys greatest revolution in the watch
industry which was the quartz watch was missed by the Swiss players. Although the first
quartz watch was developed at CEH Centre for Electronic Watches in Neuchtel in 1967,
the Swiss companies missed this opportunity to make money out of this innovation. The
innovative developments were taken up by the Japanese and Americans while the Swiss
limited their focuc to the development and improvement of mechanical watches. The
development of quartz watches led to a drop in demand for traditional watches and, by the
mid 1970s, the Swiss watchmaking industry was again taking a deep hit famously known as
the quartz crisis
Swatch and the Recovery
Swatch played the pivotal role in recovery of the Swiss watch industry making it return as the
leader in the global watch market. Swatch made this possible by an innovative approach of
positioning watches as a fashion accessory. The Swatch came up with the analogue quartz
watch, a fusion of high quality and low price. It was first launched in 1983 and since then it
has been replicated by all other big players. 30 years after the crisis watchmaking industry is
once again one of the most prosperous economic sectors in the Switzerland.

Economy of Switzerland
Switzerland is considered to be one of the most stable in the current global economies. The
reasons lie behind its policy of long-term monetary security and political stability. These
factors have made Switzerland an undoubtable choice for investors, thereby creating an
economy heavily dependent on foreign investment.
Switzerland though small in size boasts of a highly specialized labour. This makes industry
and trade as the key drivers of Switzerland's economic livelihood. Switzerland has very low
unemployment rates and one of the highest per capita incomes in the world. The service
sector has also received a boom in the recent past thereby contributing significantly to the
economy. Switzerland ranked first in the world in the 2015 Global Innovation Index.
The industrial sector in Switzerland picked up its pace in the mid-19th century. However,
Switzerland emerged as one of the most prosperous nations in Europe during the world wars.
The emergence is sometimes termed the "Swiss miracle"
During World War I, Switzerland suffered an economic crisis and an energy crisis. As imports
were difficult, attempts were made to strengthen the Swiss economy. In the 1940s,
particularly during World War II, the economy profited from the increased exports and
delivery of weapons to the Germany, France, Great Britain, and other neighbouring countries.
In the 1950s, annual GDP growth averaged 5%. This decade was also notable as the Swiss
economy made a transition from an industrial economy to a service based economy. Since
then the service sector in Switzerland has been growing faster than the agrarian and industrial
sectors

Switzerland maintained a decent growth rate from 1950s to 1980s. However in 1990s,
Switzerland's economy was marred by slow growth due to a 3-year-recession from 1991 to
1993.

By 2000s Switzerland was doing trade with almost all the big nations. Economic activities of
one geography was linked closely to how other nations were doing. As such, Switzerland was
not able to escape the slowdown felt in countries like US and other European nations. In 2001
the 9/11 terrorist attacks in US had a bad impact on Swiss economy and the rate of growth
dropped to 1.2%, to 0.4% in 2002 and in 2003 the real GDP contracted by 0.2%. That
economic meltdown had a noticeable impact on the labour market.
In order to counter such meltdowns and revive the economy, 5 measures considering political
and economic factors were suggested:
1. Promotion of private consumption with decent increase in wage.
2. Switzerland's national bank should revive investments by lowering interest rates.
3. Switzerland's national bank was asked to devalue the Swiss Franc, especially compared to
the Euro.
4. Government spending to increase in the infrastructural and educational sectors. Lowering
taxes would make sense in order to promote private household consumption.
5. Flexible work schedules to avoid low demand dismissals.

Pic: Switzerlands GDP growth from 1960s to 2013

Economic sectors of Switzerland

The Swiss economy follows a typical First World model with respect to the economic sectors.
A small minority of the workers are involved in the primary or agricultural sector while a
larger minority is associated with the secondary or manufacturing sector. The majority of the
working population is involved in the tertiary or services sector of the economy.
Over the last few decades the following sectors have largely determined the Swiss economy
Watches

Switzerland is one of the leaders in exports of high-end watches as well as clocks, Swiss
watch making companies produce most of the world's high-end watches. In 2015, the exports
of Switzerland reached nearly 26.3 billion CHF. The exports of those watches mainly go to
Asia (55%), Europe (29%), Americas (14%), Africa and Oceania (both 1%)
However, China taking advantage of its low labour cost is a hot spot for production of
watches. It exports the most watches followed by Hong Kong and then Switzerland.

Industry
Switzerland has an extensive industrial sector, which is not very well known around the
world, but present with companies in different industrial sectors, such as: food processing
like Nestl, chemical for industrial and construction use like Sika AG, pharmaceutical like
Novartis and Roche and roof coating chemicals Sarnafil. LafargeHolcim is the largest
construction materials group in the world.
Agriculture
Switzerland is extremely protective of its agricultural industry. High tariffs and extensive
domestic subsidisations encourage domestic production, which currently produces about 60%
of the food consumed in the country.

Trade
The CIA World Factbook estimates Switzerland's 2016 exports at $408.3 billion and the 2010
exports at $258.5 billion. Imports are estimated to be $399.6 billion in 2016. According to the
World Factbook numbers, Switzerland is the 20th largest exporter and the 18th largest
importer.
As a first world country with a skilled labor force, the majority of Swiss exports are precision
or 'high tech' finished products. Switzerland's largest specific SITC categories of exports
include; medicaments, glycosides and vaccines, watches, orthopaedic appliances and precious
jewellery. Switzerland's main imports include; medicaments, cars, precious jewellery and
other unclassified transactions. While Switzerland has a long tradition of manufacturing cars,
there are currently no large-scale assembly line automobile manufacturers in the country.
Tourism

The total financial volume associated with tourism, including transportation, is estimated to
CHF 55.5 billion (as of 2015) although some of this comes from fuel tax and sales of
motorway vignettes. The total gross value added from tourism is 14.9 billion. Tourism
provides a total of 144,838 full time equivalent jobs in the entire country. The total financial
volume of tourist lodging is 5.19 billion CHF and eating at the lodging provides an additional
5.19 billion. The total gross value added of 24.9 billion is about 3.9% of Switzerland's 2015
nominal GDP.
Banking
Swiss neutrality and national sovereignty, long recognized by foreign nations, have fostered a
stable environment in which the banking sector was able to develop and thrive. Switzerland
has maintained neutrality through both World Wars, is not a member of the European Union,
and was not even a member of the United Nations until 2002.
Currently an estimated 28 percent of all funds held outside the country of origin (sometimes
called "offshore" funds) are kept in Switzerland.

Economy of India
India is the seventh-largest economy in the world measured by nominal GDP and the thirdlargest by purchasing power parity (PPP). The country is often classified as a newly
industrialised country, one of the G-20 major economies, a member of BRICS and a
developing economy with an average growth rate of approximately 7% over the last two
decades.
India's economy became the world's fastest growing major economy in the last quarter of
2014, replacing the People's Republic of China. The long-term growth prospective of the
Indian economy is positive due to its young population, corresponding low dependency ratio,
healthy savings and investment rates, and increasing integration into the global economy.
The Indian economy has the potential to become the world's 3rd-largest economy by the next
decade, and one of the largest economies by mid-century. And the outlook for short-term
growth is also good as according to the IMF, the Indian economy is the "bright spot" in the
global landscape. India also topped the World Banks growth outlook for 2015-16 for the first
time with the economy having grown 7.6% in 2015-16 and expected to grow 8.0%+ in 201617.
India has the one of fastest growing service sectors in the world with annual growth rate of
above 9% since 2001, which contributes to about 65% of GDP. India has become a major
exporter of IT services, BPO services, and software services with $267.0 billion worth of
service exports. It is also the fastest-growing part of the economy. The IT industry continues
to be the largest private sector employer in India. India is also the fourth largest start-up hub
in the world with over 3,100 technology start-ups in 2014-15.
The agricultural sector is the largest employer in India's economy but contributes to a
declining share of its GDP (17%). India ranks second worldwide in farm output.
The Industry sector has held a constant share of its economic contribution (26% of GDP in
2013-14).

The Indian auto mobile industry is one of the largest in the world with an annual production
of 21.48 million vehicles (mostly two and three wheelers) in FY 2013-14.
India has $600 billion worth of retail market in 2015 and one of world's fastest growing ECommerce markets.

References:
http://www.nghayekwatchmakingschool.org/The-Education/Future-Employers.aspx
http://www.myswitzerland.com/en-in/watchmaking-on-the-cutting-edge-of-time.html
http://www.fhs.ch/eng/fhhistory.html
http://www.swatchgroup.com/