Otis Elevator Case Study

Otis Elevator has drastically changed the focus of their company’s strategy. They were once solely focused on the design, manufacture and installation of elevators, escalators, and moving walkways. Now, while they continue their manufacturing and installation business, they have moved more of their focus towards excellent customer service. They must learn to use every resource possible to become not only an exceptional maker of elevators, but also the top service company of its kind.

The Company

Otis Elevator is one of the world’s most well-known names in the business of “moving people”. By 2004, they had 1.5 million elevators and 100,000 escalators operating throughout the world. They sold their products in more than 200 countries and housed their engineering headquarters in Farmington, Connecticut; they also had international facilities in Japan, France, Germany, Spain, Korea, and China. By the end of 2003, their revenues had surpassed $8 billion, with 80% of that coming from outside the United States.

Competition, Marketplace, and Otis’s Strategy

The elevator market was filled with manufacturers, designers, installers, and servicers. Often the elevator company was selected by a building owner, on the basis of its ability to satisfy elevator performance specifications and architectural requirements, as wells as price and reputation. An elevator service company was selected on the basis of responsiveness, quality, and price. There were low barriers to entry into the service market, thus competition was high and it attracted many entrants. It was easy for buyers to switch service companies once the elevator/walkway/escalator had been installed – because of a low/no switching cost for a service provider. There existed thousands of companies to meet service needs of buildings; Otis Elevator must use their knowledge and reputation to rise to the top of this market sector. While maintaining the business of designing, manufacturing, and installing...