This case study outlines the introduction of Schindler in India. Schindler India introduced a new Harvard MBA Silvio Napoli to its operations in India making him the vice president of South Asia. Silvio Napoli made radical changes but faced with challenges too. The objective of this case study analysis is to find out how Schindler India could have been more popular, also what were their strengths and weakness.
Silvio Napoli was given a major responsibility as a head of corporate planning he had to make Schindler in India more competitive, with competition coming from Otis and Kone, he had to design a strategy which would greatly help him shrug off competition. Obviously Schindler was a Swiss company with a rich history of 120 years, this was an advantage as people in India did think that a foreign company was likely to provide with better quality products. Moreover Schindler India had a 12 % stake in BBL which meant that they would provide elevators to BBL so they could sell it to customers. BBL was quite popular and had a respected brand image. Schindler also had the backbone of experienced employees such as M.K. Singh and T.A.K. Matthews.
M.K. Singh was an experienced employee who had experience working in the building industry. Silvio Napoli himself had a strong personality, who was committed in dealings and organized worked very well. Schindler’s introduction of standardized elevators was a hit, as Indian industries were growing and because of rapid growth the elevator market was witnessing a rise in demand. 40000 units were installed in 1997 which was 17% more on last year, a significant rise. With sales revenue of 125 million, the future was looking bright. Schindlers introduction of S001 was a hit, these low cost standard elevators were facing a
Steady demand. Schindler faced competition from Otis. Otis had a huge market share, there components were mostly made in India. Schindler introduced outsourcing too with major components coming from local suppliers. India was considered the 2nd largest growing market, this was a great opportunity for Schindler India (Ahluwalia, 1991).
SCHINDLER INDIA’S PROBLEM
All was not green for Napoli as the challenges and hurdles were yet to come. The swatch project was a hit in the beginning but it was not all satisfying for the customers as things progressed, as other companies were customizing the elevators too. Napoli felt customizing will increase cost, it did increase cost but customers were not wholly satisfied with standard elevators. Elevator industry was getting competitive. Schindlers first failure was that it mostly imported its component from Schindlers head office, which increased cost greatly as import prices were getting high.
High exchange rate fluctuations and also sudden import duty introduction caused great hike in prices and recalculation of cost and how feasible was it to sell were making life tougher, this increased price from 22 % to 56 % (Columbus, 2005). This made Silvio concentrate on keeping prices low so that his company could sell more, that’s when they introduced outsourcing. This was a bold step as outsourced companies could not meet the standards of high end components from Schindlers foreign office.
The outsourcing effort also involved a new team and this took longer to assemble and execute its plan, sales were lost during this. The decisions made by the management team weren’t up to the mark and had also accepted deals from low quality suppliers, just to reduce cost. It was also getting hard for Napoli to work with other managers in India, as the case study states that he founded that his managers have accepted an order for a customized elevator with an expensive glass wall on it. This infuriated Napoli but it was too late, this is why he had to tell the employees again that their strategy was to provide low cost standard elevators.
This may have raised a question over Napoli’s strategy as clearly the standard elevators without any customization were not so popular. Napoli’s decision to expand the business and open offices in Mumbai and Delhi also back fired as the setup cost was high, moreover they failed to win any new business (Columbus, 2005). Napoli was also not backed by his European head quarters as they introduced new transfer pricing when Napoli already had a plan established. It was also very difficult to impalement Swiss strategies in India as it was a totally different market.
He was over burdened with establishing the company in India and also to keep regular contact top officials in Europe to put forth his demands, and also to create a balance between ambitions of Schindler’s top officials and the resources and circumstances he faced in India (Columbus, 2005). Clearly Napoli had a very difficult time dealing with a country totally different from where he came from.
Napoli was frustrated when deadlines weren’t met because he was used to work where deadlines are respected, Napoli was energetic but also became very impatient, Napoli also had a problem of dealing with his family, as they found it hard to settle in a new country, they had to adapt to the lifestyle, and this was obviously Napoli’s job to create a best fit between work and family. Schindler’s highly formal office procedures were not competitive in the industry, it took time, this why decisions were not made fast. Once Schindler failed with its previous objective they failed to overcome from it.
Schindler could have been more popular if their main focus was on customized elevators through out. A sudden change into standard elevators was that appealing for the customers. Obviously the competitors gave customers what Schindler didn’t. Napoli was very rigid in his dealings, he did not want to change according to the environment, moreover Napoli did not respect what the customers wanted, and rather he stuck to his own plan. Napoli was impatient and also too demanding, this didn’t help much as the working habits were totally different. India’s market was competitive and liked innovation. Napoli’s idea of sticking to standard elevators lost sales.
He needed to adapt to the new market. Schindler’s other problem was that they did not give Napoli full control, this created problems for Napoli as he did not have control of all the affairs. Napoli also did not have a say in the hiring, he could not chose the people he thought were suitable for the work.
This responsibility of hiring should have been given to Napoli, as he was close to the action, he knew what type people he would like to work with. Schindler’s headquarters making most of the decision for Indian market didn’t pay off, it also made decision making slow, as the case study stated that Napoli didn’t know about the new transfer pricing. Schindler India should have kept a quality check on their suppliers, to ensure the components were of superior quality.
Schindler India were ambitious, they had a great manager in Silvio Napoli. If Schindler had given more control to Napoli, things would have been different. India was a new market and it should have been treated differently. Its growing potential should have been utilized. Schindler did come to realize this and this is why it is now one of the leading companies in India. It is known for its high tactical planning and superior quality.
Ahluwalia, I.J., 1991. Productivity and Growth in Indian Manufacturing. New Delhi. Oxford University Press.
Columbus, L., 2005, Selling into India: lessons from Silvio Napoli. Macnewsworld. Available at http://www.macnewsworld.com/story/42512.html?wlc=1280076151 [ Accessed at 25 July 2010]
David, F.R.,2006, Strategic Management: Concepts and cases.