Schindler 1

Schindler Case Study Silvio Napoli at Schindler India

Schindler 2 Schindler Case Study Analysis

The Harvard Business School case study Silvio at Schindler India summarizes the concerns and issues related to the Schindler Holdings Ltd. entrance into a new global market. The company is a manufacturer of elevators and escalators based in Switzerland, trying to establish a market in India. Significant members of the executive board thought that there was substantial growth potential in the business of elevators. The purpose of the venture was to create elevators at a cheaper cost than the existing market value. The lead on this was Silvio Napoli, head of corporate planning at Schindler. Silvio and company had many challenges to cope with; including but not limited to (1) international and local staffing policies; (2) marketing, sourcing and logistics strategies; (3) organizational structure; and (4) the strategic approach and mode of entry.

Schindler had to decide the best global, tactical method appropriate for the targeted market; government guidelines; development of products including targeting and positioning; supply chain management including logistics efficiency; and possible human resources management issues including cultural navigation and other differences. The following critical issues will be discussed in this analysis; (1) identify and discuss two major issues and management problems that challenge Schindlers cultural adaption for its operations in India; (2) was Silvio the right choice for general manager of the India operation; (3) the overall evaluation of Silvios first eight months as general manager of the Indian company.

Schindler 3 Two major issues and management problems challenging Schindlers cultural adaption for its operations in India.

Strategy as a new market entrant Napolis method to entering the Indian market concentrated on standardization. He decided to center he focus on basic and narrow products lines for rapid market entry based on market research; in-depth consultations with market experts, and studies by local consultants (Silvio Napoli at Schindler India, p. 3). This business approach made no allowances for customization. Napoli presented his idea in a persuasive business plan and was offered the task of making this a successful venture. Though research was conducted, he soon learned that standardization was not the preference of the customer. According to Daniels, Radebaugh, and Sullivan (2011), an international firm doing business in another country must determine which of that nations business practices differ from its own and then decide which adjustments, if any, are necessary if it is to operate efficiently (p. 50). Lacking the local knowledge necessary, it prevented Napoli from recognizing this as a possible barrier. In the short term, standardization could produce fast-tracking sales and promotion but cannot survive in the long-run as acquiring new business will be a challenge because standardization reduces possible opportunities for the company to do business with customers that may require customization or slight changes to the standard product. This approach levies limitations almost immediately that create a disadvantage for a new market entrant, leaving potential revenue on the market.

Schindler 4 Marketing, sourcing strategies and logistics are other major issues and challenges.

Not reinventing the wheel was not a method Napoli wanted to take. He felt that Schindler could not compete just "matching what others did. It had to find its own unique source of advantage. (Silvio Napoli at Schindler India, p. 8). He theorized, the most effective way to enter the new market would be to focus on a narrow product line of simple and standardized elevators. (p. 8). He briefed this marketing plan to the management team he assembled in India. The team established an innovative approach to sell the standard line. (p. 9). DRS (2011), talks about global integration as the process of combining differentiated parts into a standardized whole so as to achieve/improve efficiency and synergy (p. 417). If the business plan was built off this principle, there would be no problems and Schindler would have success in India.

Nonetheless, high transfer expenses prohibited the company from transporting needed materials from the European factories. Most foreign elevator companies manufactured locally due to the high import tariffs. His mistake was deciding to outsource most of the logistics and manufacturing functions to decrease costs without taking in to account the importing fees. The issue with outsourcing is the lack of monitoring and quality control. Despite the findings, Napoli decided against logistics infrastructure, in-house manufacturing, and no centralize assembly. From an advertising viewpoint, there are unintentional significances that could hurt Schindlers reputation. To name a few include: low quality products; shoddy work; questionable working conditions and unreliable delivery. Schindlers tactic was reckless and ill advised. Entering into joint venture partnerships in an unknown market seems to be a more rational method to reduce

Schindler 5 manufacture costs. Having a partner will guarantee Schindlers interest with quality control, better monitoring and guard of the company reputation and brand.

Was Silvio the right choice for general manager?

After looking at this, Silvio was the right choice for general manager. In saying that, I think an evaluation of Silvios strengths and weaknesses is needed along with the outcome of the project before determining if he was the wrong choice. He brings numerous strengths to the company and venture: he was involved from the beginning to the end and was the draftsman of the business plan; he had the assurance of the Chairman and executive committee, he was connected to a network of individuals; and had meaningful participation in the successful Swatch project. His weaknesses are that he is so demanding, hasty and impatient. This style of management was in stark contrast to his executive committee and subordinates hired that resulted in communication difficulties and other issues. These conflicts arisen due to the culture of India being informal and relaxed.

It is easy to say Napoli lacked understanding, knowledge, and limited experience of the market and culture of India. This is why the executive committee was hired. The rule of thumb is always hiring people smarter than you. He did everything right in that aspect. Even though, his stress level was high in dealing with the demands of the start-up and pressure of relocating his family, he had everything needed to succeed. The stress may have contributed to him not being able to adjust when it was realized that the culture was different from what was anticipated. It can be challenging trying to keep up with work while facing a crisis in ones personal life.

Schindler 6 Even though Napoli spent nine months studying the business atmosphere, consulting with specialists about survey data and arranging the business plan he did not have the experience of truly living and working in the culture. That was a mistake on the companys part, as he should have been enriched in the culture before being assigned the job. It is unclear whether or not nepotism or an act of a crony gesture is what played a role in selecting Napoli for the position. Personally, I would have accepted this project because I would be determined to succeed but with a more sound business plan. I would have experienced the culture for myself before accepting responsibility of leading a project without proper acclimation. I also would have looked to have a partnership with a local company to share and cut expenses, all of which Silvio can achieve and tweak by going back to the drawing board and making a few adjustments. Imagine you are Mr. Luc Bonnard. How would you evaluate Silvios first 8 months as general manager? Silvios difficulties in understanding the culture overshadowed his strengths mainly because the attributes he possessed did not get used properly. DRS (2011) maintained knowledge is key to a sustainable competitive advantage (p. 559). Overall, strategy and implementation of work are the key elements that result in demonstrated ability and success to successfully complete projects with little disruptions. That said, if I were Mr. Bonnard, I would evaluate his performance as exceeds expectations for effort while needing improvement in implementation and execution.

Silvio has all the things needed to succeed in India. While problems arose, Silvio did not have a back up plan to deal with any issues that came about; his calculations were

Schindler 7 outdated so it gave the company incorrect information; his overconfidence in his abilities; ineffective communication and staffing problems; too prideful about asking for help and getting the situation under control; and lack of cultural awareness. Problems that is fixable. Mr. Bonnard should not remove Silvio from the project but should sit down and determine what went wrong to fix it while looking at a partner in India. The executives believe in Silvio and should take the effort to help him succeed if they believe he can turn this around and worth the risk.

Conclusion and Reflection

The Schindler case is a powerful reminder that entering a foreign market requires a lot of planning and understanding of the culture. There are many factors a company should take into consideration to include political, legal, economical, environment and social. It is necessary to recognize how these elements and others influence the business plan development, business rules and strategy to enter the new market. Also, the reminder of assumptions and poor planning are costly. It is essential for firms to do their homework, contract expert consultants who have a proven track record and strong reputation offering direction on how to conduct business in foreign countries.

Additionally, it is vital to learn how to adapt in situations that are not apart of the script, this approach will aide in having a successful venture. There are many lessons that can be taken from the Schindler case. Cultural differentiations are sometimes more challenging than anticipated. Realize that values between cultures can conflict and necessitates a plan of action to address situations when they occur. It is critical to understand the role and impact of political, legal, economical, environment and social

Schindler 8 factors.

For our Team project, I think British Airways could learn from the mistakes made by Schindler and Napoli by staying in contact with headquarters as things will get rough and keeping them informed with what is going on good or bad. Knowing the culture and gathering proper research with valid, up to date information that will assist and knowing the wants and needs of the customers. DRS (2011) states that building a requisite organization calls for managers to integrate the efforts of people, teams units and divisions into a functioning whole (p.558). This was a failure on Napolis part to create a successful environment in India. We will be sure to not make that same mistake going forward.

Schindler 9 References Daniels, J.D., Radebaugh, L.H. & Sullivan, D.P. (2011). International Business (13th ed.). Pearson Custom Publishing Learning Solutions. Faganm P., Yoshino, M., Bartlett, C., Silvio Napoli at Schinlder India (A). 2006. Harvard Business School. 9-303-086.