According to the case Silvio Napoli at Schindler India (A) by Fagan, Yoshino, Bartlett (2006), the world elevator leader Schindler was searching for ways to enter the India market in the year of 1998. Silvio Napoli, who was a young Harvard educated Italian and had been working with Schindler since 1994, was appointed by the Verwaltungsrat Ausschuss (VRA) to establish the India operations as a Vice President. In Schindler, Napoli was well known for his ‘Swatch Project’ which was “to develop a standardized elevator at a dramatically lower cost than the existing broad line of more customized products” (Fagan et al., 2006, p. 3). With the ‘Swatch Project’, Schindler was able to increase its profitability by reducing production cycle time. However, regarding the India operation, Napoli encountered a number of issues that may stop the growth plan in India if not handled correctly. The issues will be further addressed in this report. On the other hand, since Napoli developed the business plan for India operations, he was under the pressures of leading the India operations and meeting the critical planned break-even objectives as a vice president. This report discusses how well Napoli was conducting the basic tasks of management in an international setting and examines the position of the company in terms of how it defines its international management strategy. Further, this report evaluates how well the company matched its chosen strategy and how well Napoli performed as a general manager.
The India Elevator Market
The India elevator market evolved from the economic liberalization in the early 1990s which had increased the demand for elevators in India. According figure.1, we can see that roughly 50% of demand was for low-tech manual elevators while low, mid, and high rise segments accounted for another half market demand with 35%, 50%, and 14% respectively. Fagan et al. (2006) had also pointed out that “the middle segment of low- and mid-rise buildings was promising due to India’s rapid urbanization which had led to a shortage of space n Mumbai and fast-growing cities such as Babgalore, Pune, and Madras” (p. 7). As for the top end of the India elevator market, there was small but growing demand from multinational companies (Fagan et al., 2006, p. 7). Due to the high importing government tariff in India, the India elevator industry appeared to be a complex global industry, more towards the degree of multi- domestic industry. Factors are discussed below. Figure.1 Indian Elevator Market, Structure, and Product Segmentation
The Government Ban
In the early 1990s, a ban on collapsible gate elevator had been approved by the Indian government and this implied that the 50% of the local demand segment for low-tech manual elevator was open to international companies. As a result, Napoli’s business plan was to place Schindler’s S001 standardized elevator in this category. With economies of scale, market share was expected to gain quickly from the competitive price of S001. The Expanding Tourism
Tourism was another key criterion in building the top end India elevator market. In 1990s, the Indian government liberation had also led to the increase of Tourism, aiding the domestic hotel industry (Fagan et al., 2006, p. 7). As a result, hotel industry was a major buyer of top-line elevators and Schindler’s S300P mid-range elevator was expected to fit in this segment. In addition, Fagan et al. (2006) had also noted that “the average value per top end elevator was five to six times that o low end installations” (p. 7). Competitors
Before Schindler entered the India Elevator Market, Napoli’s business plan had also documented the four major competitors that accounted for more than three-quarters of the market: Otis (50%), BBL (8.6%), Finland’s Kone (8.8%), and ECE (8.4%). Based on figure.2, we can notice that there were actually many players in the market with Otis dominating. Figure.2 Elevator Brands in...