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Competing Case: Silvio Napoli at Schindler India
TEAM D Alexandra Breitner Annick Verhoeven Catarina Figueiredo Denise Embregts Sophia Oshchebska Wirtschaftsuniversität Wien © 2011 CEMS - MIM Global Strategic Management
After having ended the collaboration with Indian BBL. An unexpected 30% rise in transfer prices from Europe and an increase of the import duties further set back break-even objectives. created Schindler’s business plan to expand to India and was appointed to lead the top management team of the new subsidiary. his team described him as authoritative. Nevertheless. 2. impulsive and impatient. 2. customized orders were not to be taken. this environment requires more patience and flexibility than Napoli expected. c.2 Problem Analysis a. The first orders. b. Napoli’s personality Schindler’s top management was convinced Napoli was the right candidate for this job as he was young and risk-taking. Silvio Napoli. This explains why Napoli’s team behaved inconsistently with the strategy. The low uncertainty avoidance ranking (Hofstede. He was persistent in making his developed business plan work. The outsourcing strategy was expected to reduce costs by avoiding tariffs and excessive overhead expenditures. people are more perseverant in their views and reluctant to rapid changes. In general. Only one type of fully standardized elevator (S001) was to be marketed in India. according to Hofstede (2009). Indian environment Indian culture.Competing Case: Silvio Napoli at Schindler India India 1. Head of Corporate Planning at Schindler Switzerland. This strategy aimed at reducing complexity of operations and a quick penetration of the market. which could make a cost-effective standardized product attractive and an 1 . Napoli had difficulties adapting to culture and local complexities both at a company and personal level. INTRODUCTION 1. taken in Napoli’s absence. its feasibility was challenged. Business strategy The strategy was aggressive and somewhat overoptimistic. The Business plan relied on two main pillars: standardization and outsourcing. Schindler enters this high growth potential market independently in 1987. is long-term oriented and traditional.1 Challenges in the current situation Despite the carefully prepared business plan. were not consistent with standardization and required considerably higher costs. and unwilling to adapt. PROBLEM STATEMENT 2.1 Schindler in India Schindler is the technology leader in elevators with a strong customer focus. The Indian market is price sensitive. 2009) explains the Indian reluctance to rules and regulations (see: Appendix a).
ALTERNATIVES 3. Maintain the business plan The original strategy of standardization and outsourcing stays in place. to achieve stable sales of S001. However. however. e. The consumer has to be educated about the new cost-effective product.2. He has contacts in the hotel industry. transfer prices have to be negotiated. he lacks knowledge about this sector and the different products available. Napoli has to engage in a more two-way oriented communication and his team needs to be educated about the business plan to prevent them from taking customized orders. long-term approach. 3. d. Additionally. Schindler should offer high-end elevators focusing on leading technology and 2 . Also.1. Additionally. elevators are customized to serve demand without changing customer habits. 3. Singh should be given increased control over operations. Further. the future growth potential of the strategy must be ensured. First.3 Goal For Napoli. 3. and the Indian consumers are not educated about the cost-efficient and standardized product S001. but the current problems have to be solved.3. Specific standardized components can be outsourced. which is important to Indian consumers (see: Appendix b).Competing Case: Silvio Napoli at Schindler India India interesting opportunity for Schindler. Napoli needs a cross-cultural training in order to tackle his adaptation problems. Schindler must provide Napoli with a thorough cultural training and offer personal support during the difficult start-up phase. Schindler Corporation Schindler Europe is inactive and does not provide Napoli with necessary training or support. the parent company shows lack of attention towards the subsidiary. there is no one in charge of marketing and sales. as he has knowledge about the culture and experience in providing customer service. the main goal is to set up profitable operations as soon as possible. Singh has no experience in the elevator business. whereas clients for standardized elevators are found in other industries. This could be perceived as a lack in service. Revise the business plan In this alternative. attention has to be paid to marketing. By increasing transfer prices without warning. customized elevators have to be assembled inhouse. 2. The management team The management team consists of different personalities. New entry strategy Another possibility is to enter the Indian market with a completely different. Moreover. Also.
allowing for low-priced standardized elevators. Schindler could profit from the trend towards higher technology demand.2. it is suggested to implement alternative 1 in order set up profitable operations and to ensure future growth potential. In alternative 2. See Appendix c for industry analysis. 4. characterized by local players lacking funds and technological know-how. Transfer prices are not an issue as safety parts are produced locally.manual elevators . 4. 3 . will become more attractive to international players. Schindler targets a broader market including the middle-priced segment. Market & growth potential The in alternative 1 targeted low-end and price-sensitive segment is highly attractive. overheads are increased to assure retention of technological know-how. The radical change in alternative 3 will potentially cause the most difficulties as Schindler has to start from scratch. which means that it would face high competition. In alternative 3. the costs will be on a medium level as the customized elevators incur higher production costs. driven by urbanization. Restructuring issues Although Napoli is likely to accept alternative 1. a new manager with specific knowledge about the new plan should replace Napoli. as Schindler has to invest heavily into developing production plants. Also. 4. which is expected to grow by double-digit numbers in subsequent years. Schindler would not target any specific niche. capital requirements are very high.3. the high-end segment is very competitive as Otis and other MNCs are already well established. tourism is also expected to grow which will boost the high-end segment. Singh and the team. 5. 4. Schindler could be the first international mover. Schindler needs to set up own local production sites in order to protect know-how. the low-end segment. Alternative 2 will cause tension between Napoli. In alternative 3.1. In alternative 3. Competitive situation Due to current developments. Regarding alternative 2. Capital requirements In alternative 1 the capital requirements are rather low although marketing expenditure has to be increased. With strategy 2. as it is an important decision criterion for customers. Schindler is enabled to take advantage of the first mover position in the low-rise elevator market.Competing Case: Silvio Napoli at Schindler India India service. as 50% of market .4. it may cause tension between Schindler India and Schindler Europe. Also. CONCLUSION According to the analysis and the scoring model (see Appendix d). ISSUES 4.must be rebuilt because of legal changes. Elevators are expected to become a commodity.
Geert Hostede’s Cultural Dimensions PDI – Power distance index IDV – Individualism MAS – Masculinity UAI .geert-hofstede. 2009 b. the price-sensitive Indian consumers can be optimally served. Greater marketing and sales efforts are needed to turn S001 into a high-growth product (see Appendix e).com (12/11/11): Itim International.Uncertainty avoidance LTO Long-term orientation Source: http://www. SWOT ANALYIS: Napoli’s business plan 4 . 6.Competing Case: Silvio Napoli at Schindler India India By offering a standardized product. APPENDIX a. Geert Hofstede Cultural Dimensions.
6 2 0.2 0.8 A3 1 0. PORTER’S FIVE FORCES: elevator industry in India d.6 2.6 3 0.3 0.4 1.6 3 0.4 2 0. SCORING MODEL Market growth & Competitive Capital Organizational TOTAL potential situation requirements issues weights 0.2 A2 3 0.2 1 0.1 1 score weighted score weighted score weighted score weighted A1 2 0.4 2 0.Competing Case: Silvio Napoli at Schindler India India c.6 Issues e.4 3 0.4 0.2 1 0 1 0.2 0. PORTFOLIO ANALYSIS 5 .
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