Professional Documents
Culture Documents
CONTENTS
History of Schindler Characters in the case study Profile : Silvio Napoli Indian operations Schindler India strategy: The swatch project The Indian entry project Indian Organisation Man mgmt: Developing the Relationship The India business plan The Indian Elevator Market Segmentation Competition Product strategy Outsourcing strategy Business challenges What went Wrong? Conclusion Current scenario
History of Schindler
Robert Schindle established the company in 1874 in Switzerland Company began manufacturing elevators in 1889 Did not have a local market base in India until 1950s by appointing a local distributor Alfred N Schindler took over the company in 1987; becoming the 4th generation in line 1998 : Schindler increased revenue worth $ 6.6 billion around the world Company has over 38,000 employees in 97 subsidiaries
Date of Birth : August 23, 1965 Education : 1992-1994 :: MBA, Harvard University , Graduate School of Business Administration Bostan, Massachusetts 1984 1989 :: Graduate degree in Materials Science Engg. Swiss Federal Institute Tech, Switzerland; Lausanne University; rugby captain (1987) 1983 1984 :: Ranked amongst top 20% foreign students admitted to EPFL, One Yr compulsory selection program, Swiss Federal Institute of Tech. (EPFL)
T.A.K. Mathews Field Operation New Installation Account Management Support Trainees Hade of Existing Installations
J. Jena Finance
Hade of Logistics
Different management styles of the top executives also led to problems Silvio Napoli was regarded as a tough and aggressive manager by the staff members The scenario greatly differed from where Mr. Napoli came from and India The internal environment of the organization was informal according to the employees
The business had many opportunities coming up in India after the liberalization of Economy in 1990s Construction industry was reviving Rapid urbanization A ban on collapsible gate elevators was enforced by the Indian Standards Institute (ISI)
Stop
2-8 2-15 16-25 >25
Speed MPS
0.5-0.7 0.6-1.5 1.5 >1.5
Schindler Products
NIL S001 S300P S300P
Competition
Schindler India faced the competition from four major companies; they were: 1. 2. 3. 4. Otis ( market leader, with 50% market share) Kone ( market challenger, 8.8% market share) BBL (Market Follower, 8.6% market share) ECE( market follower, 8.4% market share)
Otis was a threat for Schindler India because it already had a good customer base, 61.5% of which were under maintenance contracts
Business Challenges
Sales force was bringing in orders, but not for the standard products The transfer cost of S001 has increased The import duties on elevators has also increased There was lack of motivation in the organization about the sales strategy Things were not going well
Outsourcing Strategy
Silvio Napoli's business plan was to outsource the production of 90% of the components of S001 from local suppliers the safety equipment would be imported from Schindler plant in south-east Asia The basic on-site assembly work would also be outsourced Eventually they would install their own dedicated plant to manufacture the parts
STP
Segmentation
Strategy was to make the Swatch project products as their core competence ( S001) To cater mid-rise segment they were planning to introduce S300P
Schindler
Positioning
To establish Schindler in mid-rise segment with Customized product
Targeting
Target was to first hit low-rise segment as scope was highest (Govt. banned the manual elevators) Break-even was predicted at four years, with the sales reaching a double digit growth figure eventually
Porters 5- Forces
Competition was very strong & there was a push from regional players (25) as well
Substitutes
Mitsubishi & Hyundai
New Entrants
Schindler
Customer
Customers were asking for customized products
Supplier
Non-cooperation from the Schindler s European plants
PESTEL : Strategy
Increase in import Duty Increase in transfer rates New Budget of Indian Govt led to increase in import duties Govt. banned low-tech manual elevators This step was well accepted by other states & enforced to follow
Political
Legal
Economical
Indian economy was growing at a faster rate Tourism & Hotel industry was expanding
With growing economies, the Indian Governmental was emphasising on environmental protection
Schindler
Environment al Technologic al Social
Technological advancement in elevators was taking place Customers were looking for better services & facilities Small but growing demand for top-quality, high rise office facilities
Rapid urbanization was taking place Cities were taking shape of metro Traditional building were becoming more sophisticated & professionalized
Correct Strategy
My Suggestion: As the company was new in India & was having limited resources they must have focused on Bypass attack.. Bypass attack : As per the data available urbanization in India was taking place & cities were converting into metros, Tourism & Hotel industry was increasing at a faster rate so company must have focused in Two-speed higher Technology elevators. For this category they had to focus on limited towns with key customer base. As soon as the co. grows they must have increased their customer base. There was less competition in this segment & this was the emerging category so highest scope was there to get established. As Co. was already selling with help of ECE then with BBL there might be a huge existing customer base who would be looking for good after sales services & customer might be dissatisfied with Co. s products. OTIS might be servicing those Schindler s customers & generating revenue. Schindler must have focused on maintenance contracts, as it was a profitable business and was the key attribute for a customer to make a decision. They might able to get new business from those maintenance contracts as well.
Napoli Strategy: Napoli adopted Frontal attack strategy with competition considering; Napoli s primary target was low rise segment with S001 model then for mid-rise with S300P the chosen segment was highly competitive (70% residential) 23% of the segment was price sensitive Competition (Otis) was very strong with 50% MS & was having highest brand pull The low rise segment was highly scattered & Co. was not having big market coverage Last but not the least this was third time entry of Schindler in Indian market, so there might be some negative word of mouth of the company
Conclusion
The business plan was partially successful Lack of contingency measures, however their lack of enthusiasm to follow them Value congruence was not achieved in the organization Lack of goodwill had an impact on the sales Communication problems with the European superiors increased pressure Non-cooperation from the European plants Commitments to the booked orders Need of the customers were judged wrongly Lack of vision
Current Information
Silvio Napoli CEO at Jardine Schindler Location Hong Kong