Schindler is a Switzerland based elevator manufacturing company founded by Robert Schindler in 1874. Since its inception, the company has generated billion dollar revenues and is regarded as the technology leader in elevator manufacturing. Alfred N. Schindler, who is the 4th generation of the family to lead the company, has seen growth potential for the company in India and is attracted by the growing demands for elevators in that particular part of the world.
After negotiations for a joint venture with a local Indian firm BBL has failed, Schindler decides to establish its wholly owned subsidiary in India. To lead the implementation of this plan Schindler has appointed Silvio Napoli, a Harvard MBA graduate as the head of the Indian subsidiary project. With the appointment of Silvio Napoli as the Head, several issues come up as the reality of starting up a new subsidiary in a country that is culturally different proves to be more challenging than what was initially anticipated.
From having to deal with the newly formed management team taking orders for customized elevators, which is not part of the business plan written out by Napoli emphasizing the sale of standardized elevators only, to not getting full support from the European plants in regards to the request for parts and design specifications for the elevators, implementation of Napoli’s business plan is proving to be more perplexing than initially planned.
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Such issues raise the questions of whether appointing Silvio Napoli as the Head of the project is the right decision and how Luc Bonnard, who is the vice chairman of Schindler, would evaluate Napoli’s performance on the project thus far. Was Silvio Napoli the right choice for general manager of Schindler’s India operations? Assessing whether Silvio Napoli was the right choice for general manager position will require looking at his strengths and weaknesses, accomplishments, as well as his compatibility with the new management team and the host country.
In terms of professional qualifications, Napoli is no doubt the right choice. A Harvard MBA graduate with various accomplishments up his sleeve, Napoli has the necessary knowledge and experience to lead a new subsidiary. He reports directly to the CEO of Schindler and is the only “non-member to attend VRA meetings” (Fagan, Yoshino, Bartlett, 2006, p. 3), which are reserved exclusively for the corporate executive committee consisting of Alfred Schindler, Luc Bonnard, and Alfred Spoerri.
In addition to this, Napoli has a proven success record with regards to the Swatch Project, which is the first major assignment that he took, in which he redesigned Schindler’s entire supply chain to bring costs down and increase profits as mentioned by Fagan et al. (2006, p. 3).
In addition to this, since Napoli is the person who came up with this business plan, it may be best that he is the one who leads the realization of such plan.
Moreover, although Napoli’s strict and demanding leadership style is often seen criticized for not being adaptive to the culturally different management styles of his newly formed team, it is effective in helping Napoli achieve the task at hand. As Fagan et al. (2006, p. 6) describes “Napoli expected things to be done yesterday, but in India things do not get done yesterday”. From this, Napoli’s bureaucratic leadership style is evident. According to Grayson (n. d.
, Bureaucratic Leadership Style section) bureaucratic leadership style is most effective when you want things to be done precisely the way it is planned in an organized and timely manner. This means that such style of leadership is best suited for the task in hand at that time, as such tight control style of leadership has the ability to ensure efficiency in getting things done which in this case is to cut costs and increase productivity in the manufacturing of the elevators.
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PROJECT MANAGEMENT > EFFECT OF LEADERSHIP STYLES… effect of leadership styles in project management Charismatic authority, Construction, Fiedler contingency model By gerryo Oct 4, 2013 10347 Words 63 Views PAGE1 OF 50 CHAPTER ONE 1.0 INTRODUCTION 1.1 OVERVIEW OF PROJECT MANAGEMENT What is project management? Project Management Institute (2008) defines it as the application of knowledge, ...
Considering the partisan perspectives however, it also becomes clear that Napoli’s cultural and organizational background do not quite fit in with that of India’s which soon ends up leading to various cultural management issues within the newly formed subsidiary. To begin with, his Swiss-Italian background differs greatly from India from a cultural perspective. It goes without saying that the country of Switzerland, which is where the headquarter of Schindler company is located, lies on the opposite spectrum of cultural dimensions as identified by the GLOBE (Global Leadership and Organizational Effectiveness) Study when compared to India.
This study was conducted with the intent of finding out the relationship between culture and leadership. And according to a review of this study by Hoppe (2007), the major premise is that “leader effectiveness is contextual, that is, it is embedded in the societal and organizational norms, values, and beliefs of the people being led. ” This means for Napoli, whose leadership and cultural background being different from that of the management team he is assigned to lead, creates conflicts and undermines Napoli’s potential ability to lead effectively. This factor
is reinforced when we look at the country clusters resulting from the findings of the GLOBE study (refer to Appendix A).
It can be clearly seen that India belongs to the ‘Southern Asia’ cluster whereas Switzerland belongs to the ‘Latin Europe’ cluster. And these two clusters are on polar opposite ends of the ‘Humane Orientation’ dimension (Appendix A).
What this means is that for someone like Napoli, who comes from an individualist society where individual achievements are regarded as high priority, it may be hard to realize the power and importance of interpersonal relationships.
But for a manager in India, the role of human interactions is regarded as very important, and hence the high value on humane orientation and in-group collectivism for India. This mismatch in cultural management can hurt the team’s potential to achieve their intended objectives. This discrepancy in management style can be seen when Fagan et al. (2006, p. 6) mentions that “Napoli’s Indian staff and colleagues described him as driving very hard, impulsive, impatient, and at times over-communicative”, which contrasted sharply for his colleague and co-leader M. K.
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Singh, whom “one manager saw as friendly and easygoing. ” In addition to this mismatch in cultural management, there is also incongruity in the kind of organizational environment that Napoli has to work in within the Indian subsidiary. As stated in the case by Fagan et al. (2006, p. 7), the employees describe the new Indian subsidiary’s company culture as “informal, open, responsive, and proactive”. And for Napoli this is not something that he is used to as back in the Swiss headquarters, the company hierarchy “was clear, politeness important, and first names rarely used” (Fagan et al.
, 2006, p. 3).
Lastly, the strategy to reuse the Swatch Project formula of having standardized products does not seem feasible given that the Indian market is completely different and customers demand different needs. With the intentions of segmenting the market into low-rise and mid-rise elevators and targeting to hit low-rise segment with the standardized products (refer to Appendix B for detailed Segmentation, Targeting and Positioning strategy for Indian subsidiary) Napoli has taken the approach to apply the existing values and strategies of the company into a predetermined business plan.
This does not work as for the culturally different Indian managers as they prefer to incorporate the needs and demands of the general customers with focus on relationships before applying any practices All things considered, it can be said that Silvio Napoli was the right person for the job. But what the Schindler headquarters back in Switzerland should have done is before deploying Napoli to India to implement the start-up plan, he should have received some kind of cultural management training or support from the European parent company.
Initial research into the workings of Indian culture should have been carried out in addition to the research on the Indian elevator market. Such training and research could have prepared him better and teach him to prioritize relationship orientation over task-orientation in a culture such that of India’s. How should Silvio Napoli have approached the nonstandard glass wall elevator situation? One of the major challenges that Napoli faces during the implementation of his business plan is the management team accepting an order for a customized nonstandard glass wall elevator.
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As stated by Fagan et al. (2006, p. 10) Napoli “was at first just surprised, and then pretty angry” about the situation. To Napoli, this is a violation of what is written in the business plan which all of them have agreed to commit. However, Napoli should not have reacted the way he did. The business model that he has built upon is based on the previous success and learnings of the Swatch project. The plan is to ensure short-term success for Schindler in India so that this can motivate continued operations further down the line.
What Napoli fails to realize is that this approach does not fit in well with the Indian counterparts who hold more of a long-term orientation. To them meeting the needs of the domestic customers is regarded as higher than ensuring short-term success through the standardized product strategy. Therefore, instead of stubbornly continuing the standardized product approach Napoli should adopt the customization strategy as this will align with Indian culture’s orientation towards relationships which involve listening to the demands of the general public.
Napoli should take note of what the customers want rather than strictly following his business plan, as the focus on standardized products does not give any flexibility, and it has been made evident through the first four orders that customers would not accept the products without customization (Fagan et al. , 2006, p. 10).
It is not like Napoli does not know the need to adapt and adjust to the demands of the domestic market. He himself mentions that “to survive in India you have to be half monk and half warrior” (Fagan et al. , 2006, p. 6).
The Business plan on Silvio Napoli at Schindler India Case Analysis
... establishing contracts with customers for customized versions of Schindler elevators, in contrast to Silvio’s business plan. Silvio’s plan to keep costs ... India, a wholly owned subsidiary of the Swiss based company. His plan was to differentiate by selling “core, standardized products,” ... Silvio Napoli was a young an eager executive that had a bold and aggressive business plan for entering the Indian ...
What he means by that is one should learn how to embrace the monk part and learn to accept things that cannot be changed (Silvio Napoli Interview Video shown in class).
Now if he embraces what he has said, and accepts the customization strategy there may be potential for increase in sales and positive turnaround past this particular obstacle. How would Luc Bonnard evaluate Silvio Napoli’s first seven month as the general manager of the India operations? What advice/feedback should he offer? Silvio Napoli’s first seven months have seen ups and downs.
And in order for Luc Bonnard to evaluate and advise on the progress that Napoli has made several factors will need to be considered. Bonnard will need to assess the progress as per the business plan, the challenges that Napoli is facing and how he has planned to deal with them, as well as the performance and effectiveness of the new management team that Napoli has put in place. To begin with, Napoli has done a good job of putting together a cohesive and experienced pool of individuals for his management team.
It is wise of Napoli to pick a group of experienced individuals who have the local knowledge and the know-how in their respective fields. On top of that, all of the 4 recruits for the management team are under the age of 55 (Fagan et al. , 2006, Exhibit 3), which is one of the favorable factors mentioned by Bonnard in his explanation for choosing Napoli to be the head of the India project. As mentioned by Bonnard, he needs individuals who are “young and flexible” (Fagan et al. , 2006, p.
4), and because the entire management team including Napoli is under 55 years old it is easier for them to be cohesive and work together on the same page. Hence Napoli has done a job well done on selection of his key managers for the India subsidiary as they are all compatible to one another. Furthermore, the fact that Napoli organizes meetings between his management team members help him run the company better as such meetings strengthen the communication within the team and make the new managers feel inclusive.
However, these positive achievements are not without the accompanying negatives. For instance, as far as the progress as per the business plan is concerned, Napoli has not been able to achieve his targeted sales nor meet the initially targeted level of cost allocations. Now although some of the contributing factors are out of his hands, such as the price of elevator parts going up, Napoli could have had some kind of contingency plan set up in the business plan. His original business plan is
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also seen flawed as he fails to prioritize the need to meet the demands of the domestic market, and instead models his plan to aggressively pursue success through the low cost strategy. Rather than relying on engineering-based manufacturing Napoli should adopt a more customer oriented approach in dealing with the obstacle of customers wanting to have customized elevators as opposed to the standardized units that Napoli has proposed in his business plan. Moreover, it hasn’t been wise for Napoli to have to deal with both family and business matters.
Napoli should have taken the initiative to establish the company first in India before bringing his family to relocate in Mumbai. The decision to bring the family during the early stages of company development is not an ideal one and is a mistake on Napoli’s part. In terms of advice, it should be suggested that Napoli review his original business plan and make necessary amendments to better fit the needs of the local market. He should stop relying on the practices adopted in the Swatch Project and instead do a thorough background research into India’s culture and amend his business plan.
His new business plan should try to meet more realistic goals and adopt a customization strategy as this will satisfy the demands for customized products and have more flexibility on sales (refer to Appendix C for how Customers influence Schindler through Porter’s 5 forces analysis).
According to a research paper on “A competitive model of customization with lead-time effects” by Xia N and Rajogopalan S custom firms are more likely to survive and succeed in markets with large potential, such as India.
It is stated that “profit margin and price of the custom product are likely to be higher than that of standard products in equilibrium under certain conditions” (Xia, N. & Rajogopalan, S. , 2009).
Hence by learning how to adjust his behavior according to the customization needs instead of continuing his aggressive pursuit of success through low-cost strategy, Napoli will be able to generate more sales and establish a more relationship oriented supply of products. It is prominent that Napoli aims to meet customer expectations as this is the key to success.
Instead of relying solely on standardized products to achieve break-even at the committed time, maybe Napoli should consider other methods to cut costs such as reducing the day to day operation costs. Last but not least it should also be advised that Napoli communicate the inefficiency in support from the European plants to the headquarters back in Switzerland as it is one of the influential factors (suppliers) affecting the success of Schindler’s operations in India (refer to Appendix C for 5 Forces analysis).
As described by Fagan et al. (2006, p.
10) in the case Napoli feels the burden of being the middle manager as he faces the multiple demands form the Switzerland headquarters as well as from the newly formed Indian subsidiary. It is essential that Napoli gets the necessary support and cooperation he needs from his European counterparts to be able to effectively lead and run the India subsidiary. Conclusion In conclusion, although Silvio Napoli is the right person for this job certain cultural preparations should have taken place prior to his deployment in India by Schindler to avoid unnecessary difficulties.
In addition to this, although the initially proposed business plan is partly successful Napoli will need to amend his plan including changes in the approach towards dealing with the customer demands, inclusion of contingency plans for unforeseen circumstances that are out of his control and flexibility in the sales approach. If these measures are to be taken it is no doubt that Silvio Napoli will be able to overcome any challenges, cultural or organizational, and institute a successful subsidiary for Schindler in India.
