I do not believe Schindler made the right choice in assigning Silvio as the general manager of India. Silvio had little to no "real world" international experience. Silvio had much success in Sweden but there are several factors that limited his success in India. Silvio had high "warrior" and low "monk" attributes. Silvio was a task-oriented individual. This management style is not well received in India. The General Manager needed to be a person that can change their behavior when dealing with different cultures. Before making their selection Schindler should have required Silvio to take a Global Mentality Test. This test would have told Schindler if Silvio was open to accepting other cultures. If the test showed positive attributes, Schindler could have provided Silvio with the training required to prepare him for this new assignment. The problem with this training option is the time required. Given that Schindler was expecting large growth in a short period of time (sell 50 units in the first year and have 20% of the market share within 5 years), they should have hired a General Manager that was more experienced with a business in India and had Silvio report directly to that person.
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1. As Luc. Bonnard, how would you evaluate Silvio's first seven months on the job?
Silvio's performance has both positive and negative attributes. Silvio's method for selecting the management team was extremely positive. His choices of a management team seemed to be very logical and well thought out. It was obvious from the case that Silvio knew he was not in a comfortable environment. The selection of experienced managers with a background in India was extremely needed. Another positive attribute was his desire to get buy-in, from the management team to his business model from the start.
From a negative standpoint, Silvio should have either done more upfront work prior to relocating his family to India or have relocated his family prior to starting to develop the company infrastructure. Silvio spent weeks trying to juggle the relocation of his family and setting up the company infrastructure. As a result of the juggling, neither goal was executed well. Silvio needs to become more accepting of alterations to his business plan. Silvio was determined to follow his business plan even if the market revealed better alternatives. A good example of this was the decision to strictly offer a standard product line with no customization. Customers were pretty clear that the standard product line would not be acceptable for the first two orders that Schindler India received.
I would advise Silvio to sit down with his management team and reevaluate their business plan. After the re-evaluation, Silvio needs to gain the respect of the team. In Sweden, Silvio was given the respect due to his position. In India, Silvio would need to earn the respect of his management team. The "warrior" management style that Silvio was familiar with did more harm than good at earning their respect.
2. What advice would you give Silvio regarding his decision on the nonstandard glass wall elevator that has been ordered?
Even though the company would lose money by accepting this order Silvio should accept it. Unfortunately, you sometimes need to accept a loss to gain acceptance in a market that is dominated by a competitor. If Silvio can pull off the installation, demonstrate reliability, and provide superior customer service the company could make large strides in penetrating the market. Silvio should approach Mr. Schindler about the lack of support he is receiving from the European plants. Outsourcing S001 manufacturing to local suppliers is the critical part of Silvio's business model. With the increased import duty rates Silvio can not afford to let the outsourcing plans be delayed any longer. This duty increase and the short time frame to deliver 50 units require Silvio to take this approach and ensure success.
3. How should he deal with the challenges he is facing over transfer pricing and technical cooperation from the European plants?
The transfer pricing and the lack of technical cooperation from the European plants are crippling the organization. Both of these problems need Silvio's immediate attention. The business plan's main objective was to develop a unique competitive advantage by outsourcing manufacturing to local companies. This would allow Schindler India to avoid excessively high import duties and transfer pricing while keeping overhead costs extremely low. Silvio needs to take the lack of honoring transfer pricing and supplying technical information to Mr. Schindler. Mr. Schindler can use his influence to ensure Silvio can meet the very aggressive time frame that has been established.
4. Should Silvio change the strategy for Schindler India that he developed when he was in the company's headquarters?
I believe that Silvio should sit down with his management team and re-evaluate the business plan. One area of concern is centered on the intended market place. Silvio's business model requires high levels of growth, even within the first year. The business plan also laid out a business model that had never been attempted in the India Elevator market. Lastly, neither the business plan nor Silvio allowed flexibility. Flexibility is generally required in a highly competitive market. Each of these items is obstacles that need to be conquered prior to experiencing growth. Most of these items are in direct conflict with a target of high growth in a short time period.