Case 7-3: Silvio Napoli at Schindler India (A)
- Schindler Holdings Ltd. = Swiss-based manufacturer of elevator and escalators
- Napoli: Italian, 33 years-old, has a pregnant wife and 2 children
- Eight month earlier (1998): Napoli charged of the Start-up of the company’s Indian subsidiary → create from scratch
- 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.
- 3 challenges: 0 elevators installed in 8 months and his plan shows 50 units for the first year
- For the second time on two month, his Indian managers had submitted an order for a no standardized product.
- 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.
- 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
1925: 1st elevator installed by them in India
1950s: local distributor (ECE)
1985: technical collaboration with Mumbai-based Bharat Bijlee Ltd to manufacture, market and sell the product
1990s: enter the Indian market through its own wholly owned subsidiary.
The Growing Commitment: Alfred Schindler = the leader of the company in 1987 → transform the company’s culture from that of an engineering-based manufacturing company to one of a customer-oriented service company. The company employed 38,000 people in 97 subsidiaries & is perceived as the technological leader.
- In 1985: Schindler saw huge potential in the Indian market.
- Collaboration with ECE to distribute then with the Mumbai-based Bharat Bijlee Ltd. (BBL) to manufacture, market, and sell its elevators.
- Schindler wanted to increase its involvement in the Indian market → proposed a separate joint venture to BBL with Schindler taking management control.
- In 1996, the collaboration ended due to difficult negotiations. 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)→ taking minutes and for following up on action items and special projects defined by the 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, and competitive situation in the Indian elevator market. Later, he was offered the job of creating the Indian subsidiary. Bonnard explained the choice of Napoli: “We needed someone who could handle different cultures, who was young and flexible and someone we could trust in. Finally I believe that people who make the business plan should have to realize it.”
- Forming Schindler India
Napoli relocated to India and began the task of building the company that would implement his business plan.
New Culture, New Challenges Weeks were consumed shuttling between Delhi and Mumbai, hunting for office space, filling government registrations, and completing legal paper-work. + getting settled with his family (new home, school, doctors, … ) All things were totally different in India.
Recruiting the Team
- M.K. Singh (managing director who reported to Napoli): 42, He was chosen because he had been on the customer’s side and he would know how to make a difference in service. Singh brought valuable experiences and a different perspective. He was also more sensitive to organizational power and relationships.
- T.A.K. Matthews (field operations head):35, He brought the direct elevator business expertise Napoli needed. He came across as a dynamic and ambitious handy-on manager waiting for the change to exploit his potential.
- Ronnie Dante (general manager for engineering): 39, 24 years of experience at Otis; hard-core elevator engineer and was one of the bests.
- Pankaj Sinha (human resource department), 32 he was needed as a front-line HR manager who can develop a first-class organization. Convinced them to hire him through his commitment to care about the employees.
- Jujudhan Jena (Chief financial officer), 33
→ They were looking for people with the right attitude and energy, not just for elevator people.