It seems to me that some parts of Silvio Napoli’s strategy were reasonable but some were questionable. Discussing the advantageous plans that Napoli carried out in India, firstly, I believe that his strategy to penetrate the low-rise market segment by introducing S001, and then pick up sales in the mid-rise segment with the S300P was wise. It was a sensible decision because Otis already covered 85% of the high-end market and the promising future of the rapid residential and commercial segment. Another clever step that Napoli took was efficiently cherry-picking five experienced Indian top managers to complement the management team of Schindler India. Additionally, to boost their sales performance, the concept of organizing an account manager was clever. This method integrated all the different specialists in the company, and facilitated customer service with a hassle-free contract. Accompanied with this approach, I also recommend that Napoli utilizes M.K. Singh’s experiences on the customer side and works on strengthening Schindler’s customer service, such as routine maintenance, short break-down service response time, since service, repair, modernization, and replacement account for 80% of profits. By bolstering customer service, I am confident that Schindler India would not only keep Schindler’s value of being a customer-oriented service company but also become a much more competitive company in India.
With Napoli’s clear business plan and the all-star team, the Schindler’s Indian subsidiary had considerable potential. Then, Napoli proposed the ambitious business plan that the team would achieve 50 units in the first year, win 20% share of the target segments in five years, and break even within four years. However, instead of attaining the goal of selling 50 units in the first year, the team had not installed a single elevator in the first eight months. There are three main problems and concerns that we need to further discuss in order to figure out why the business plan did not work well.
The first problem was that Napoli merely hinged on merchandizing standardized products with no allowance for customization. As far as I am concerned, Napoli should accept the non-standard glass wall order. The question whether accepting customization or not would repeat again over again, because customers have different needs and building structures are not identical. Therefore, I suggest that Napoli changes his business plan. Schindler India should provide customers with limited customization, for example, the look and interior design of elevators, so that it can still take slightly modified elevator orders.
The second problem was the cost issue. The Indian government policy raised import duties on elevators, whose rates increased from 22% to 56%. That is to say, the import cost alone was double than Napoli had estimated. The impact of increasing costs was even worse as the soaring transfer prices on the basic S001 elevators were at 30% above the costs, which Napoli had used for the original plan six months ago. As a result, it was not profitable to import the low-cost components from European factories anymore. In my opinion, Napoli should deal with the cost problem by adopting short-term and long-term solutions. To tackle the cost issue as soon as possible, Schindler India could purchase components from other qualified Indian suppliers. Then, he could plan to acquire those qualified companies or begin to build the in-house manufacturing and logistics department in India. In this way, Schindler India will not be controlled by either local or international service providers and be capable of operating independently in India.
Finally, communication problems between the India subsidiary and headquarters impeded the speed of alleviating the cost problem. When Napoli tried to reduce the rising costs by outsourcing the S001 to Indian suppliers and asked for support from Schindler’s European plants, he did not receive reply from them. At that critical moment, I think Napoli ought to have asked headquarters to dispatch some temporary technicians to India soon, and plus hired Indian-based elevator designers, engineers and quality analysts. By doing so, the urgent problem could have been solved and Schindler India would have been able to cultivate the local talents for operating sustainably as well. All in all, to carry out an international business plan requires comprehensively considered strategy, the mother company’s support, and the subsidiaries collaboration. Napoli and managers in Switzerland should sit down and deliberate the strategies carefully before they implement the business plan.