Accounting Paper

1. What advice would you offer Silvio regarding his decision on the non-standard glass wall elevator that has been ordered? (Options/Pros & Cons)

Although Schindler India could take a loss by accepting the expensive order and installing the non-standard glass wall elevator would be difficult, Silvio Napoli should nonetheless take on the challenge and accept it. Schindler India was at the stage of making the foothold in India and trying of grabbing market shares. This order could just be the niche to penetrate into the Indian market. As the case illustrated, Indian market is dominated by the four major players (Otis, BBL, Kone and ECE), which in total represented market share of approximately 75%. The highly concentrated market situation only gave Schindler India and the rest a quarter market share to play. The “big four” competitors already held strong customer relations and presumably long term contracts to build and maintain elevators to their existing customers. However, these companies also tended to keep the status quo by not readily tap into a new market segment, i.e., non-standard glass wall elevators.

If Schindler India provided a superb service and exceeded the customers’ satisfaction, the market would reflect well and possibly gave the company its much-needed strong foothold in a highly competitive Indian market. The market acceptance would be the key to Schindler India’s success because of the nature of the Indian market as being price sensitive and customer relation centric.

Although Silvio Napoli’s point was valid that Schindler India should focus on its long-term business plan and product strategy, it was important for the company to take the tactic move by adjust its strategy to grab the market opportunity. Two additional points should also be noted. The one was that the government was the buyers of these elevators, which provided Schindler India with an opportunity to establish potential long-term relationship with a...