Sil vi o Napoli

Sil vi o Napoli, a Harvar d Busi ness School graduat e j oi ned Schi ndl er i n 1994 as Head of cor porat e pl anni ng,
reporti ng di rectl y to CEO. Sil vi o had a chance to pr ove hi s wort h to the company i n 1995 wit h The S watch
Pr oj ect. He was successf ully abl e to devel op a standardi zed el evat or at consi derabl y l ower cost. He di d thi s by
sourci ng many parts fromoutsi de suppli ers and redesi gni ng the suppl y chai n whi ch enabl ed the mt o cut
i ndustry s standar d cycl e time i n half.
I ndi a Pl an
So me of the reasoni ng gi ven by the boar d why Napoli was the ri ght choi ce was, he devel oped the busi ness pl an
whi ch was appr oved by the boar d i n addi ti on he al so had cont acts with market experts and l ocal consul tants
however most i mportantl y the Boar d had trust i n hi m. Napolis I ndi a pl an was si mpl e, he want ed to sell 50
el evat ors i n first year and break even after f our years and generat e doubl e di git mar gi ns, to achi eve thi s pl an he
want ed to f ocus on l ow ri se seg ment as pri mary target and may pi ck up mi dri se seg ment as and when
opport uni ty ari ses. Low ri se market was 35 % of el evator market and mi dri se was 14 %. He want ed to achi eve
thi s by selli ng onl y core standar di zed pr oduct (S001) wi t h no possi bility of cust omi zati on f or l ow ri se and S300P
f or mi dri se seg ment. On the cost si de, he want ed to keep cost down by outsourci ng all manuf act uri ng and
l ogi sti cs acti viti es to l ocal suppli ers. Ei ght mont hs i nt o the operati ons he was facing maj or chall enges as he had
not sol d even a si ngl e el evator and he was al so faci ng chall enges on cost escal ations. Lets exa mi ne each
chall enge and gi ve reco mmendati on f or i mpr ovi ng them;
Cost escal ati ons: Ther e were 2 mai n cost escal ati ons Sil vi o was faci ng, first one was i ncreased cust oms duty by
I ndi an cust oms from 22% to 56 % and I nter nal transf er pri ci ng whi ch was way above hi s i niti al cost esti mations.
Reco mmendati on: Al though Sil vi o can do not hi ng about the i mport duty, he al ready has a ri ght pl an to fast
track the outsourci ng acti viti es. For l atter issue, he can i nfl uence as he knows exactl y what the costs of
manuf act uri ng i n pl ants worl dwi de are. He shoul d di scuss thi s with VRA and ask f or thei r support, it is
i mper ati ve that he gets the parts from ot her pl ants at costs or at mi ni mu m at cost pl us pri ce.
Del ay i n getti ng support: He was not getti ng support from hi s Eur opean count er parts i n pr ovi di ng hi m desi gn
specifi cati ons and engi neeri ng support. Reco mmendati on: Once agai n, thi s shoul d be di scussed with
manage ment and there shoul d be cl ear di recti on from manage ment i n pr ovi di ng hi mall support. As the I ndi a
pr oj ect had a l ot of Strategi c I mportance f or Schi ndl er i n devel opi ng econo mi es thi s pr oj ect shoul d have a Top
Pri ority.
Outsourci ng Strategy: Napolis outsourci ng strategy i s not worki ng as pl anned due to del ay i n support from
Eur opean organi zati on and no ot her el evat or company f oll owi ng thi s strategy, whi ch means that ther e are no
manuf act urers and suppli er market at thi s ti me. Recommendati on: Sil vi o shoul d try to part ner up with
co mpeti tors li ke Oti s, they ar e manuf act uri ng uni ts and maybe i nterested i n pr ovi di ng the parts to Schi ndl er.
Addi ti onall y, Schi ndl er had a good part nershi p with BBL i n past; he shoul d appr oach the mt o source some parts
as they are well awar e of Schi ndl er pr oducts
Br and I mage: It is cl ear that Oti s has excell ent brand image, whi ch i s by far exceedi ng any present el evat or
br ands i n I ndi a. Reco mme ndati on: Napoli shoul d f ocus on creati ng brand awar eness thr ough vari ous marketi ng
i niti ati ves. Schi ndl er hol ds excell ent stat us worl dwi de as technol ogy l eader; he shoul d use thi s to hi s advant age.
Mar keti ng eff orts can be achi eved by Tech Br ochur es, target ed Se mi nars f or the cust o mer seg ment whi ch
Schi ndl er knows i s the key to thei r success ( buil ders 60 %) and as he has li mited exposur e to the I ndi an Business
Cul ture he shoul d i nvol ve a l ocal PR fir mtail or made to the Cor e cust omer Gr oup. I n these events it coul d also
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be benefi ci al to i nvi te exi sting cust omers of Schi ndl er from EU & AP Markets to highli ght the achi eve ments of
Schi ndl er
Servi ce Centre: Servi ce i s one of the mai n co mponents of pr ofit. At present Napoli has not pl anned a servi ce
cent er. Hi s agree ment and pl an with hi s tea mi s to have si ngl e poi nt of cont act and pr ovi de excell ent servi ce.
Servi ce i s al so most hi ghl y rat ed fact or f or reason f or buil ders to buy certai n el evators. Reco mmendati on:
Napoli and hi s tea mshoul d i mmedi atel y start worki ng on a ser vi ce cent er concept, they shoul d have servi ce
co mponent ready as soon as they i nstall first El evat or.
Manage ment styl e: Napoli is a di rect and har d dri vi ng manager wi th strong Eur opean val ues i s very di recti ve
and wants everyt hi ng to be compl et ed by short deadlines. Reco mmendati on: Napoli shoul d understand the
cul tural difference bet ween Eur opean way of worki ng and I ndi an way of worki ng, He must change hi s
manage ment styl e to mor e supporti ve, and he shoul d al so consi der cross cul tural trai ni ng f or hi msel f.
Tea m: Al though Napoli has sel ected a tea m of thr ough pr of essi onal s they are too di verse, Hi s MD has a
backgr ound of Hot el I ndustry, whi ch i s onl y 4 % and it is al so hi ghl y cust omi zed i ndustry. Al so he has no
knowl edge about El evat or industry. Reco mmendati on: Napoli shoul d ask the MD to l ear n mor e about El evator
i ndustry, maybe send hi mfor vi sits to Eur opean pl ants, whi ch will enabl e hi mt o understand thi ngs better.
Napoli shoul d al so i nvest i n sal es tea m; thi s will hel p i n getti ng addi ti onal cust omers.
Standar d Pr oduct: Napoli wants to i mpl e ment Swatch model i n I ndi a, he wants to sell onl y standar di zed
pr oduct with no possi bility of cust omi zati on. Reco mmendati on: Napoli has to realize that I ndi an market i n
di ff erent from Eur opean market, there i s a cul tural difference. He shoul d thi nk i n di ff erenti ati ng types of
cust omi zati on. One I dea coul d be that He keeps stri ct contr ol over engi neeri ng/manuf act uri ng standar di zati on
however all ows some degree of cos meti c cust omi zation e. g. addi ng a gl ass wall. He shoul d al so make sure that
if cust omer wants to add cos meti c cust omi zati on then ther e shoul d be addi ti onal charge f or that.
Cul tural Difference: As sai d bef ore thi s is the bi ggest chall enge f or Napoli, One, he has a Eur opean way of
wor ki ng, whi ch i s qui te differ ent than I ndi an styl e of wor ki ng. Rat her than gi vi ng chance to experts fromthe
mar ket to come up wit h a pl an he present ed the m a ready pl an and asked the m to i mpl e ment. I n addi ti on, he
doesnt understand that I ndi an cul ture has different styl e of f uncti oni ng wher e empl oyees sel do m chall enge
thei r bosses Reco mmendati on: Cr oss cul tural trai ni ng and gi ve experts a chance to come up wit h a pl an.
Ali gn wit h HQ: We have seen i n the case that HQ has hi gh expectati on fromI ndi a Oper ati ons; they want to use
I ndi a as a devel op ment l ab f or all ot her markets. Thi s cl earl y means that ther e are hi gh i nterests from
manage ment i n success of thi s start up. Reco mmendati on: Napoli shoul d di scuss thi s with Manage ment and
cl arify the support he expects i n or der to be successf ul.
Mar ket: At present Napoli is f ocusi ng on a 50 % on the total market onl y. Rest 50 % i s pri ce sensiti ve manual
el evat or market, however la ws i n I ndi a are changi ng and he shoul d keep a cl ose eye on thi s seg ment of market.
Wor k Life Bal ance: Napoli is shuttli ng bet ween Mu mbai and Del hi every week; this is putti ng a strai n on hi s
fa mil y and i s addi ng stress to hi mas well. Reco mmendati on: Napoli shoul d consider movi ng HQ t o Del hi, this
wi ll reduce hi s travel and he can have better fa mil y life whi ch can gi ve hi m much needed respi te