As the products that are manufactured and sold in the luxury watch industry are much in demand with high level values assigned to them, the threat of substitutes is much high for such products. The main threat that is faced by them in the industry is in the form of counterfeit products which copy and sell the unique pieces at a fraction of the original price to consumers in the market. This is a significant issue for the luxury watch makers in the industry.
The luxury watch makers in the industry have attained their symbolic status and position in the industry due to their established history in the Industry. As a result the threat of new entrants in the industry is quite low due to the high barriers to entry. The classic premium watch manufacturers are unrivalled by any new entrants in the industry as they have strong everlasting demand and can drive the new entrants out in a short time.
The rivalry in the luxury watch industry is considerably high. The COSC in 2006 provided that the leading luxury watch makers in the industry were headed by Rolex which was followed by Omega, Breitling, Panerai, Chopard, Ulysse Nardin, Heuer, Chanel, Bulgari and Montblanc. A handful of 12-15 main luxury watch makers operate in the industry however as the market for the products manufactured by them is significantly small due to the elite nature of the market, each of these watch makers vies for the largest share of the market leading to high level of rivalry.