Introduction
Everyone,RolexAre you familiar with this watch manufacturer? It's a Swiss luxury watch manufacturer, and its sales are astonishingly huge.
This article will explain why Rolex continues to be so successful and the ultra-long-term business strategy behind it.
More than just a watch company, Rolex has maintained a consistent style for over 50 years by offering emotional value as a "symbol of success in life." Business professionals can learn about "ultra-long-term perspective" and "the importance of governance" from Rolex's management strategy.
By the time you finish reading this article, you will know the following:
- Why does a strategy that hasn't changed in over 50 years still work?
- What exactly does it mean to "sell emotions"?
- How do you maintain a long-term perspective in foundation management?
- What measures are being taken to address the issue of product shortages?
Let's take a look.
What is the true nature of the "ultra-long-term perspective" that allows strategies unchanged for over 50 years to function effectively?
According to a Nikkei Business article, Rolex's greatest characteristic is that it doesn't "keep changing," but rather "stays the same." For over 50 years, it has continued the same marketing strategy without deviating from its established style.
Why must we "change"?
This may seem irrational at first glance, but in reality, Rolex offers "emotional value." It's not just about the function of a watch; it's selling the story that "only exceptional people wear exceptional Rolex watches."
The following elements support this strategy:
- The fusion of marketing and business strategy
- The development of "accessible luxury"
- Consistent storytelling since the 1960s
Specific facts: Lessons to be learned from 50 years of history
- Inheriting the founder's vision：
After the death of its founder, Hans Wilsdorf, in 1960, the company became a foundation due to the lack of children. This has led to a governance structure that prioritizes "long-term growth." - Conservative innovation in products：
Even after the 1960s, the exterior design remained consistent with its established style, with only limited functional additions such as an annual calendar and regional time display. - Adapting to changes in advertising strategy：
In the 1960s, when the US advertising industry shifted from a "market research-focused" approach to a "creativity-focused" one, we captured that change and developed a storyline where "exceptional people equal exceptional watches."
Four Pillars of Management and Three Major Strategies for Creating Emotional Value: Rolex's Practical Examples Confirmed by Nikkei Analysis
Let's look at the specific measures Rolex employs to ensure its long-term success.
[1: A "purpose-first" governance structure through foundation management]
- No return of profits to shareholders
Instead of using funds for dividends or share buybacks, all funds will be reinvested. - The shares of 100% are owned by the foundation.
The Hans Wilsdorf Foundation owns all of the shares and aims for long-term growth. - Maintaining independence from banks
The accumulated profits (estimated at over 10 billion Swiss francs) will be invested in real estate and financial markets, reducing reliance on banks.
[2: Marketing Strategies for Providing "Emotional Value"]
- Selling stories, not just products.
Position it not as a "time measurement tool," but as an "accessory for success and status." - A brand story that has continued since the 1960s.
They haven't published a company history, and have continued telling the same "story of excellence" for over 50 years. - A leader in the accessible luxury market.
For luxury goods, the positioning is that they are "not unattainable," thus broadening the customer base.
[3: Demand control and maintaining scarcity value]
- Sales policy limited to regular customers
The very fact that it's difficult to purchase at the regular price enhances the brand's value. - Avoiding involvement in the used goods market
The shortage stems from the aspect of "scarcity = luxury," and the continued demand management is a deliberate strategy.
[4: Quality control through supply chain and vertical integration]
- Securing manufacturing bases
We have four manufacturing facilities in Switzerland. - Integration into the retail network
In 2023, the company acquired Swiss watch retailer Büera, aiming for vertical integration of sales. - Large-scale reduction of licensed stores
In the US and UK, the number of licensed stores has been drastically reduced, and the focus has shifted to stores that can properly display products.
[5: Three major measures to address the problem of product shortages]
- Construction of a new factory (scheduled to begin operation in 2029)
The company will expand its manufacturing facilities to four locations in Switzerland, with a budget of over 1 billion Swiss francs and an expected creation of more than 2,000 new jobs. - Launch of Certified Pre-Owned (CPO) program (started in 2022)
Authenticity is verified, and it comes with a two-year extended warranty. Stores around the world are starting to offer CPO (Certified Product Pre-Order) spaces. - Reverse use of the second brand "Q-DAR"
Wilsdorf is using the old brand, which he acquired in 1936, to increase its recognition in the Chinese market, and is now expanding it on a small scale worldwide.
Heading 3: Supplementary Information | "Why Can't Other Companies Copy This?" and "Points That Japanese Companies Can Utilize"
This article summarizes the characteristics of Rolex and how it compares to other luxury brands, as explained in a Nikkei Business article.
[The unique strengths of our "foundation management" that other companies cannot imitate]
- No dividends = priority given to reinvestment
While LVMH and Richemont pay dividends, only Rolex can maintain its growth rate by reinvesting profits into its business. - Uniqueness of the governance structure
Although it is a foundation, it has governance similar to that of a family business, allowing for long-term decisions based on its "purpose." - Strong top-down decision-making
"Having the top management in complete control" allows for a consistent strategy over 50 years.
[Comparison of sales figures with other companies (2025 estimates)]
1. Rolex: Approximately 2.16 trillion yen
2:Cartier(Under the Richemont umbrella): Approximately 683 billion yen
3. Audemars Piguet: Approximately 496.7 billion yen
In comparison to these, it's clear that Rolex's market dominance is overwhelming.
[Price Range Differences: "Accessible" vs. "Exclusive"] The Luxury Market Can Be Divided into Two Categories
- Accessible Luxury
5,000 to 15,000 Swiss francs (approximately 1 million to 3 million yen). Patek Philippe and Audemars Piguet are in a price range above this category. - Exclusive (ultra-luxury)
Over 15,000 Swiss francs. A collection of highly rare products aimed at a select group of wealthy individuals, with a high proportion of handcrafted items.
[Points that can be utilized by Japanese companies]
- Building a governance structure that pursues "long-term value" rather than "short-term profits"
Rolex operates as a foundation, prioritizing growth over shareholder returns. Japanese companies should also adopt a "long-term perspective," such as ESG investing and sustainable management. - The importance of consistently communicating the "brand story"
Rolex has maintained the same marketing strategy for 50 years. It's crucial to clearly define your purpose—"why we exist"—and communicate it consistently within your own business. - Conscious use of creating "scarcity value"
This approach transforms product shortages from a problem into an emotionally valuable experience, like finding something "special." In business, too, we should be mindful of balancing demand management with the value of scarcity.
[Academic perspective: From a conversation with Professor Yuko Yamashita of Hitotsubashi University]
The concept of "demarketing" is being applied not only to the luxury industry but also to the environmental and ethical fields. In other words, it's the recognition that once you've created a sense of scarcity and meaning, it's important to select who to sell to and control demand.
Another point raised is the importance of governance. Controlling things based on values is difficult in bureaucratic organizations, and leaving it to the market is also insufficient. What is needed is governance that is based on ideals and purpose, and that aligns with those ideals.
Summary | Business insights learned from Rolex's unchanging management philosophy over 50 years
This article has explained the strategies employed by Rolex, a company that has achieved such long-term success. Finally, I will summarize, from a broader perspective, what we should learn as business professionals.
There are five key points to "stories of excellence."
- 1. Integration of objectives and strategy
Marketing is not merely a sales activity; it's a business strategy in itself. It's crucial to have a consistent mindset from product development to sales. - 2. Governance structure with a long-term perspective
A system is needed that pursues long-term value even at the expense of short-term profits, such as foundation management. It is wise to prioritize the growth of the business itself, not just the shareholders. - 3. Providing "emotional value"
Focusing solely on functionality will alienate customers. It's crucial to clearly define the emotions and significance behind why they want to buy the product. When a product is marketed not just as a product, but as a "symbol of success," price sensitivity decreases. - 4. Balancing consistency and innovation
In a world where things remain unchanged, we are progressing while maintaining brand value by continuously innovating in the details. It is crucial to clearly distinguish what to change and what to keep. - 5. Thorough control over the supply chain
A vertically integrated approach from manufacturing to retail ensures complete control over quality and customer experience. It's more reliable to have complete internal management rather than relying on other companies or adopting a laissez-faire approach.
Five Key Lessons to Learn from the Rolex Business
- ① What is a "long-term perspective"?
Prioritizing overall business growth over maximizing short-term profits means focusing energy on increasing repeat customers and expanding market share, rather than on shareholder returns. - ② "Brand story" is an asset.
Continuing the same marketing strategy for 50 years builds customer trust and loyalty. This shows that in business, it's crucial to consistently communicate your purpose—the reason why you exist. - ③ "Scarcity value" can be utilized as emotional value.
The perspective shifts from viewing shortages as a problem to transforming them into emotionally valuable items that are "special." In business, too, "waiting times" and "restrictions," when used appropriately, can enhance a customer's sense of exclusivity. - ④ "Governance structure" is a prerequisite for business success.
The non-listed structure of a foundation provides the foundation for achieving long-term growth. Japanese companies, too, need to move beyond the pursuit of short-term profits and adopt a purpose-based governance structure that addresses "why this business exists." - ⑤ Vertical integration protects quality and customer experience
This approach avoids reliance on other companies and maintains complete control over everything from manufacturing to retail. In business, too, the perspective of "not outsourcing too much" and "managing things in-house" is important.
In conclusion, while there are many things in "Stories of Excellence" that cannot be imitated, there are things to be learned from them.
While there are certainly aspects of Rolex's governance structure and foundation management that are impossible to replicate, there are clear lessons to be learned. These are five key points: "long-term perspective," "emotional value," "consistency," "scarcity," and "vertical integration."
In the business world, there's a tendency to demand rapid growth, but Rolex's ultra-long-term success highlights the importance of a "strategy that has remained unchanged for 50 years." Not rushing things, maintaining consistency, and adding innovation to the details—that balance may be the secret to sustainable business success.
