Strategic Planning for Global Competition

[Timex] developed with a single product line. In two decades, from 1950 to 1970, Timex expanded to a dominant position in the worldwide wristwatch industry with an inexpensive pin-lever watch engineered for mass production and assemble.

Blocked from selling its watches through jewelry stores – the traditional distribution channel – Timex introduced its product in a variety of retail outlets that included drugstores, hardware stores, and large mass merchants. It backed its product with a generous one-year warranty tied to a lifetime low-cost service policy. Heavy advertising trumpeted high value in service, durability and reliability.

To support sales, Timex built a worldwide network of more than fifteen manufacturing and assembly plants. These facilities were designed to fabricate piece parts at lowest costs. They used the latest automated equipment for small parts assembly and testing. Operations took place under strict quality control. The lightweight watch movements, case, and straps (with many interchangeable parts) were shipped by air freight for subassembly and final assembly at locations that optimized advantages of import duties and tariff regulations.

Joachim Lehmkuhl, [one of] the company’s founder[s], formulated and directed Timex’s integrated business strategy from the top. Key strategy elements were low-cost manufacturing, efficient mass distribution, high product reliability and creative customer service.

In recent years, however, digital electronic watches have threatened Timex. Because it was late exploiting this technology, which calls for totally different manufacturing techniques, the corporation suffered erosion in its worldwide market share. Its current recovery strategy appears to have two thrusts: rejuvenation and consolidation in competitive positioning by introducing its own electronic watches, and diversifying the product line. Both thrusts utilize the existing, well-established Timex retail distribution system, but success in diversification may be the crucial strategic determinant.

Within a two-year period, Timex introduced the Nimslo 3-D camera, the Timex/Sinclair home computer (which was for a time the price leader in its market segment at under $100), and a variety of home-use health care products including digital scales, thermometers, and blood pressure and pulse rate monitors. All build upon Timex’s precision, high-volume production.

Although Timex’s central planning system should be effective for manufacturing and distributing these new products, it must deal with markets where the company is not the initial or even one of the principal competitors. The adaptability of the planning system is being tested to much the same extent as new technology has tested traditional manufacturing methods.