Seiko Management
The company was founded in 1881 by Kintaro Hattori in Tokyo to sell and repair foreign watches. Seiko is a family run empire of five companies with overlapping products. The Seiko companies are run by Hattori's two grandsons. Reijiro Hattori, 63, runs the two oldest companies, Hattori Seiko and Seikosha, and Ichiro Hattori, 52, runs Seiko Instruments and Electronics, Suwa Seikosha, and Epson Corp. Seiko gained market share by positioning themselves in the mid range of the world watch market. Seiko left the luxury watches to the Swiss and the cheap watches to the Americans. When other Asians flooded the market with cheap watches, Seiko introduced other cheaper watches under the names of Pulsar and Lorus to protect the Seiko brand name. Seiko entered the luxury watch market with the purchase of Jean Lassale. Hattori Seiko owns the "Seiko" brand name and markets the group's watches. Seikosha is a maker of clocks, camera shutters, and printers. Reijiro Hattori recognizes the need to diversify Seiko beyond watches, but believes that watches should still be the main focus. Reijiro's older brother Kentaro Hattori, 65, Chairman of 4 of Seiko's 5 companies agrees; "our business is watches". The youngest member of Seiko's leadership is Ichiro Hattori. Ichiro Hattori is the cousin of Reijiro and Kentaro and runs Seiko's three newer companies which are twice as profitable as those run by Reijiro Hattori. In 1989, Epson Corp. had revenues of $3B and $154M in profits while Hattori Seiko had $22M in losses on $2.8B sales and $65M in losses in 1988. Seiko Instruments and Electronics makes robots, measuring instruments, and lady's watches. Suwa Seikosha manufactures optical lenses, semiconductors, and men's watches. Epson Corp. makes computer printers. Ichiro Hattori wants to diversify into computers and other high technology areas rather than watches.
Seiko has been a major force in the quartz market place since the 1970s. Seiko ended the Swiss dominance of the mid range watch market in the mid 1970s. Technological superiority originally gave Seiko an early edge, but now that it is at the end of the S-curve and quartz movements are a commodity and profits have suffered. Competition with its arch rival Citizen caused Seiko to glut the market with watches further hurting its profits.
Organizational structure problems are hurting Seiko's competitiveness. Ichiro Hattori wants a centralized management structure, but his youth and desire for more power is not winning him friends or support in a culture that respects its elders and honors the team approach. Seiko's divisions compete with each other to make watches for Hattori Seiko. Originally this dual competition was successful at spurring innovation and technological developments. Quinn suggests such a method of pursuing multiple approaches as part of an overall strategy to effectively manage innovation. But, as Hattori Seiko lost market share the confederation approach makes it more difficult to organize development, manufacturing, and marketing strategies. Seiko tried to enter the luxury market without success and they also entered the lower end with Lorus, also with little success. Seiko has diversified into computers and semiconductors using the watch profits.
Seiko made the first alarm clock, successfully introduced the quartz watch, and was an innovator with printer technology, but poor organizational structure and family squabbles make it unable to make quick decisions to respond to changing market conditions. This inflexibility has led to a decrease in watch production and a loss of market share and world sales leadership to its Japanese rival Citizen.