Otis

Introduction: “ A company can outperform its rivals only if it can establish a difference that it

can preserve” is attributed to Michael E Porter in article,” What is Strategy” Harvard Business Review

November-December 1996.The above statement summarizes the reasoning behind Otis’s strategy of

embarking on a series of information technology changes that would positively impact the company’s

strategic position in the elevator manufacturing and servicing industry. Otis’s goal has been to use

cutting edge technology to reduce waste, enhance productivity and boost customer service thereby gaining

a distinct competitive advantage over rivals.

External Environment: Otis as the global industry leader in the manufacture, installation and servicing of

elevators, escalators and moving walkways historically operated in an industry focused on manufacturing

as a main source of revenue. Competitors include Schindler, KONE, Hitachi and many others.

Porter’s Five Forces Models of competition are in active play in the industry in the following ways:

1) Competitive pressure from other industry players to win buyers: Due to high profitability and

demand, there are lots of alternative participants that a customer can choose from if dissatisfied with Otis’s

products/services. As it is the norm is to cut prices to gain businesses, this is a high competitive threat.

2) Competitive pressures from buyer’s bargaining power: Buyers have a large pool of Otis’s

competitors to choose from and coupled with low barriers or costs of switching, there is a real threat

which is moderated by small companies having less bargaining power than the bigger companies.

3) Competitive pressure from supplier’s bargaining power: This is not high as raw materials are

readily available from a wide pool of suppliers.

4) Competitive pressure from substitute products: This is a low threat as currently the only

alternative to elevators/escalators are stairs...