Silvio Napoli at Schindler India

SilvioNapoli at Schindler India

SilvioNapoli at Schindler India

IssueIdentification

SilvioNapoli’s must decide on whether to change his authoritarianleadership style that does not accommodate the views of others or toadopt a rather democratic leadership where decision-making is acorrective issue. The second issue is that, Schindler must decide onwhether to continue with the earlier business strategy of sellingstandardized elevator components or to include the unstandardizedcomponents line within its business strategy. Thirdly, Schindler mustdecide on whether to continue with the business strategy ofoutsourcing services and components from Europe manufacturers or toestablish a local manufacturing division in order to remaincompetitive. Importing from outside was found to be incurring extracosts due to added transfer costs and increased custom duties forimportation of elevator components.

Analysis

Napoli’suses an authoritarian leadership style. He does not consider theviews of other managers who might be more experienced with the localmarket and sticks to his plan even when the outcomes are notdesirable for the company. With his authoritarian leadership style,Napoli’s strict adherence to the business plan worked against theprospects for growing sales to reach the 50 units first year target.In India, there is higher demand for low priced elevators thus adecision that works for this type of market would enable the companyto reach its yearly targets.

Napoli’sused a differentiation strategy that focused on a narrow product linewith simple but standardized elevators and elevator components. Thisstrategy was different from the strategy of main competitors who sellboth standardized and non-standardized components. This strategy wasfeasible because the cost benefit analysis of standardized elevatorswould be higher as compared to unstandardized elevators whenconsidering the elevator’s life cycle. It was established thatservices, and price are the two major factors that influenceselevator purchase decisions (Exhibit 6). Thus by differentiatingitself in the selling of standardized components, Schindler clientswould perceive their products as long lasting thus involving lowerservice charges and safe. These features can influence customers topurchase Schindler elevator, which are offered at premium price. Thiswould create a competitive advantage for Schindler over competitors.

Theadopted business strategy of focusing on importation of elevatorcomponents for European manufacturers is based purely on the costreduction strategy. Due to the high transfer costs for the importedcomponents and the increased custom duties for elevator components,this strategy is unsuitable for the India market. High cost ofimportation would translate to increased price of the elevator. Athigher than market price, Schindler elevators will attract low sales,as Indian market demanded more of the low priced elevators. Majorcompetitors like Ottis and Kone sells elevators that are manufacturedlocally and have a technical team to assist in fieldwork.

Conclusion

Schindlershould change the business strategy by establishing a manufacturingdivision in India for reducing cost of production. This way, thecompany will avoid the high custom duties for importation of elevatorcomponents, thus the company will be able to adjust the priceswithout affecting profitability. Moreover, manufacturing locallywould enable the company to respond better to customer needsespecially where customization is required. For differentiationpurposes, the company should continue with the strategy of focusingon standardized elevators, as it will increase customers’confidence with the quality of elevators. Thirdly, Napoli shouldengage a more democratic leadership style where views of others areconsidered in the decision making process.

Reference

Jiang,F. (2015). InternationalBusiness Strategy.Dalhousie University.