Silvio Napoli At Schindler India V2
Silvio Napoli
Silvio Napoli, a Harvard Business School graduate joined Schindler in 1994 as Head of corporate planning, reporting directly to CEO. Silvio had a chance to prove his worth to the company in 1995 with The Swatch Project. He was successfully able to develop a standardized elevator at considerably lower cost. He did this by sourcing many parts from outside suppliers and redesigning the supply chain which enabled them to cut industry’s standard cycle time in half.
India Plan
Some of the reasoning given by the board why Napoli was the right choice was, he developed the business plan which was approved by the board in addition he also had contacts with market experts and local consultants however most importantly the Board had trust in him. Napoli’s India plan was simple, he wanted to sell 50 elevators in first year and break even after four years and generate double digit margins, to achieve this plan he wanted to focus on low rise segment as primary target and may pick up midrise segment as and when opportunity arises. Low rise market was 35 % of elevator market and midrise was 14 %. He wanted to achieve this by selling only core standardized product (S001) with no possibility of customization for low rise and S300P for midrise segment. On the cost side, he wanted to keep cost down by outsourcing all manufacturing and logistics activities to local suppliers. Eight months into the operations he was facing major challenges as he had not sold even a single elevator and he was also facing challenges on cost escalations. Let’s examine each challenge and give recommendation for improving them;
Cost escalations: There were 2 main cost escalations Silvio was facing, first one was increased customs duty by Indian customs from 22% to 56 % and Internal transfer pricing which was way above his initial cost estimations. Recommendation: Although Silvio can do nothing about the import duty, he already has a right plan to fast track the outsourcing activities.
Silvio Napoli, a Harvard Business School graduate joined Schindler in 1994 as Head of corporate planning, reporting directly to CEO. Silvio had a chance to prove his worth to the company in 1995 with The Swatch Project. He was successfully able to develop a standardized elevator at considerably lower cost. He did this by sourcing many parts from outside suppliers and redesigning the supply chain which enabled them to cut industry’s standard cycle time in half.
India Plan
Some of the reasoning given by the board why Napoli was the right choice was, he developed the business plan which was approved by the board in addition he also had contacts with market experts and local consultants however most importantly the Board had trust in him. Napoli’s India plan was simple, he wanted to sell 50 elevators in first year and break even after four years and generate double digit margins, to achieve this plan he wanted to focus on low rise segment as primary target and may pick up midrise segment as and when opportunity arises. Low rise market was 35 % of elevator market and midrise was 14 %. He wanted to achieve this by selling only core standardized product (S001) with no possibility of customization for low rise and S300P for midrise segment. On the cost side, he wanted to keep cost down by outsourcing all manufacturing and logistics activities to local suppliers. Eight months into the operations he was facing major challenges as he had not sold even a single elevator and he was also facing challenges on cost escalations. Let’s examine each challenge and give recommendation for improving them;
Cost escalations: There were 2 main cost escalations Silvio was facing, first one was increased customs duty by Indian customs from 22% to 56 % and Internal transfer pricing which was way above his initial cost estimations. Recommendation: Although Silvio can do nothing about the import duty, he already has a right plan to fast track the outsourcing activities.