Case Chapter 7, Schindler India

Case Chapter 7, Schindler India - Case 7-3: Silvio Napoli...

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Case 7-3: Silvio Napoli at Schindler India (A) Since eight month (1998) the new organization of the elevator manufacturer Schindler Holdings Ltd. is running in New Delhi. The plan was to sell core, standardized products, with no allowance for customization. To keep costs down and avoid India’s high import tariffs, the plan also proposed that all manufacturing and logistic activities be outsourced to local supplier. Napoli, vice chairman, was confronted with three challenges: First, for the second time on two month, his Indian managers had submitted an order for a no standardized product. At the same time his business plan has come under intense cost pressure, first from a large increase in customs duties on imported elevator components, than from an unanticipated rise in transfer prices for the “low-costs” product lines imported from Schindler’s European factories. Finally, as Napoli began accelerating his strategy of developing local sources for elevator components, he found that his request for parts lists, design specification, and engineering support were not forthcoming from Schindler’s European plants. Schindler’s India Explorations In 1990 the company decided to take a bold step and enter the Indian market through its own wholly owned subsidiary. The Growing Commitment: Alfred Schindler was the leader of the company in 1987 and he sought to transform the company’s culture from that of an engineering-based manufacturing company to on of a customer-oriented service company. Their elevators were widely perceived as the technological leader. In 1995 Alfred Schindler saw huge potential in the Indian market. Before the company entered collaboration with the Mumbai-based Bharat Bijlee Ltd. (BBL) to manufacture, market, and sell its elevators. In 1996 the collaboration ended and Schindler began considering options to establish its own operations in India. Silvio Napoli’s Role As head of the corporate planning, he was responsible for the annual strategic review process and undertaking external benchmarking and competitor analysis. But his most visible role was as staff to the corporate executive committee, the Verwaltungsrat Ausschuss (VRA). The Swatch Project In 1995 Napoli took on the Swatch Project, a major assignment that grew out of the concern by VRA members that margins on new product sales were eroding as each competitor strove to expand its installed base on elevators. The projects goal was to develop a standardized elevator at a dramatically lower cost than the existing broad line of more customized products. “We redesigned the entire supply chain and halved the industry’s standard 20- to 30-week cycle time.” The Indian Entry Project As negotiation with BBL broke down they were searching for alternative local partners but could not find one. But know they could start up a 100% wholly owned company in India. Napoli spend nine month developing a detailed analysis of the market size, legal environment,
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This note was uploaded on 11/11/2011 for the course ECON 202 taught by Professor Sneijder during the Fall '10 term at Erusmus University Rotterdam .

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Case Chapter 7, Schindler India - Case 7-3: Silvio Napoli...

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