Global Elevators Industry Essay Example
Global Elevators Industry Essay Example

Global Elevators Industry Essay Example

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  • Pages: 7 (1884 words)
  • Published: September 23, 2017
  • Type: Case Study
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Otis in the Global Elevator Industry

Despite being a well-known brand in the elevator industry, Otis may not be familiar to the general public. This case study, "Otis in the global elevator industry," aims to comprehensively analyze Otis' recent status and how other elevator companies operate their businesses. It also examines the elevator market and industry conditions.

2.0 Analyzing the External Environment

2.1 The General Environment


Demographic:

The increasing population has resulted in a growing demand for elevators. Due to limited land availability, buildings are now constructed as high as possible, making elevators an essential facility. Better quality elevators allow for taller skyscrapers to be built.

The increasing aging population emphasizes the growing need for elevators in everyday life. This demonstrates the high demand for lifts among peopl

...

e in developing countries.

Political:

Governments of China and India actively promote business development in their respective countries. They offer lower taxes and no import/export restrictions to attract investors.

Economic: China and India, two developing countries, have promising economies. In 2011, India witnessed a GDP growth of around 7.9% compared to the previous year, while China experienced a 9.5% increase in its GDP.

Socio-cultural: The prevalence of skyscrapers in modern society has led to an increased reliance on elevators. When given the choice between using stairs or an elevator at the same place, people tend to opt for the convenience of elevators instead of walking.

Furthermore, there is a growing concern within the community regarding vulnerable groups, and efforts are being made to meet their needs. This involves the installation of accessibility facilities for individuals with disabilities, includin

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elevators for their convenience. When new establishments are built, they incorporate fully functional elevators in their design. Additionally, existing buildings are being considered for retrofitting to accommodate those with disabilities by adding elevators. It is important to note that elevators consume significant amounts of energy; therefore, endeavors are underway to develop environmentally friendly alternatives that prioritize safety and efficiency.

The average electricity consumption in buildings accounts for 5% of the total. The industry's main focus in the future is on developing 'Green' lifts, which includes changes in drive methods, noise reduction, and energy conservation. One global concern is the pollution generated during the construction of escalators or elevators, which impacts the environment through sewage, air pollution, and waste discharge. Strategies should be implemented to prevent or minimize these negative effects. In conclusion, taking into account these external factors, the future outlook for elevators is promising, particularly in China and India.

2.2 Industry Analysis

The elevator industry remains promising as it requires continuous maintenance services. Additionally, the positive outlook is enhanced by the emergence of potential markets such as China and India. To evaluate the current condition of the worldwide elevator industry in light of evolving international markets, we employ the Porter Five Forces model. The industry encounters significant barriers to entry, and despite an increasing demand for elevators, the four major elevator companies can fully meet this demand. Consequently, establishing new firms in the global market proves challenging.

The availability of substitutes for elevators is limited. While stairs can be considered a substitute for elevators, in the modern society, people tend to prefer using elevators in their daily lives if they have the choice. Therefore, stairs do not

pose a significant threat. The bargaining power between suppliers and buyers is generally balanced. Since the elevator business primarily involves business-to-business transactions, both parties will reach a fair agreement through negotiation.

The competition among elevator manufacturers is moderate as the industry has reached maturity and is dominated by four major global players. This stable competition may change in the future due to market shifts, potentially becoming more intense.

2. 3 Competitor Analysis

The elevator industry is not extensive in the global market. However, it is mainly represented by four leading companies that operate internationally. These companies are Otis from the United States, Gone from Finland, Schneider from Switzerland, and Togetherness from Germany.

Developing countries such as China and India have witnessed a rise in elevator demand, leading to changes in the elevator market. Consequently, new markets with potential have emerged, attracting both existing and new companies. Alongside the four main companies, other competitors like Mediumistic Electric have entered the market, making the industry outlook highly competitive and complex. Despite being a prominent player in the elevator industry, Otis must address these competitor challenges to adapt to the evolving market.

3. 0 Analyzing the Internal Environment

3. 1 Toot's Tangible resources


Financial resources

: Otis displays a strong capacity to generate internal funds. An example of this is its operating profits. In 2012, Toot's operating profits reached a remarkable amount of $12056 million dollars, surpassing its competitors.


Organizational resources

: The formal planning, controlling, and coordinating aspects of Toot's operations are effective because they are adapted to the company's large scale. As a result, the

company has established a strong position in the market.

Physical resources:

The majority of Toot's manufacturing facilities are located in America, Europe, and Asia.

Technological resources:

Otis introduced innovative elevator technology, although the patent has expired.

3. 2 Intangible resources


Human resources:

Otis employs a total of 60000 individuals, with 53000 of them working outside of the United States.

Otis possesses strong managerial capabilities, enabling it to effectively handle a large workforce. Additionally, the company has also trained numerous highly skilled technicians. As for innovation resources, Otis demonstrates excellent scientific capabilities in developing elevators that embody superior quality, durability, and reliability. Moreover, they excel in elevator maintenance.

As for reputation resources,

Otis is globally recognized as the leading brand in the industry, with its operations spanning across approximately 200 countries. Furthermore, the general public perceives Otis as a brand synonymous with exceptional quality, durability, and reliability.

Experience resources: Otis has been operating its elevator business since 1852, accumulating 161 years of experience that instills great confidence in the general public.

3.3 Value Chain

Primary activities: land for setting up company installed staff products elevators and escalators transportation manufacture facilities controls and security
Support activities: training engineering and test centers product design servicing procedures /maintenance recruitment insurance of the products
Although maintaining service is only part of the value chain, if any accidents occur, Otis' reputation will be destroyed. Therefore, extra effort should be put into any parts related to elevator security to ensure the smooth functioning of elevators and stabilize the

contribution to the value chain.

4.0 Toot's Capabilities

Otis boasts an excellent set of capabilities, many of which operate at the level of core competencies. Some notable capabilities include:

  1. Continual innovation and international presence, securing a significant portion of the global elevator market.
  2. Possessing excellent maintenance technology in the global elevator industry.
  3. Owning two of the tallest elevator test towers located in Shipyard, Japan and Bristol, CT, United States.
  4. Having 12 Engineering facilities Centers worldwide.
  1. Ability to handle a demanding government.
  2. Have manufacturing facilities in global market.
  3. Outstanding marketing knowledge and skills that allow fast elevator industry success in global.

4.1 Core Competencies

A range of capacities set illustrated above, the main strengths of the brand Otis elevator industry, in particular, are number 1, 2, 4, 6 and 7 which all are valuable, costly to imitate and non-substitutable products. Otis is always able to lead the change of industry and this is because of these core competencies. And customers valued it significantly which are expensive and difficult to establish.

Innovate (Number 1): Otis produced the 'automatic elevator' that did not need an operator.

Toot's maintenance technology (Number 2): Firstly, the company has implemented remote access systems that allow for the maintenance of elevators at a distance. This enables the company to receive early indications of problems and reduce downtime significantly. Secondly, in the event of a mains power failure, the elevators seamlessly switch to battery power.

Ability (Number 5): Toot's maintenance technology can handle the different policies set by various government authorities worldwide. Through collaboration with governments globally, the company ensures compliance with safety regulations and obtains permits for elevator installations.

Marketing capacity (number 7): An essential aspect of

Toot's core competency is its marketing capacity. The company's corporate brand and reputation are highly regarded, with products being used in over 200 countries and regions worldwide. Examples of famous buildings that utilize Otis products include the Eiffel Tower and Glasgow Harbor Tunnel.

4.2 Weaknesses

Otis dominates the elevator industry but faces indirect competition. However, a notable weakness is the imbalance between the installed base and service base, with a ratio of 1:0.72. This means that for every 1 installed elevator, there is only 0.72 available for service.

72 service is provided for the elevator.

5. 0 Strategy of Otis

5. 1 Current Strategies

The business level of Otis is differentiation.

The text highlights that Otis is involved in two primary areas: business-to-business (BIB) markets, which cater to architects and property developers, and elevator maintenance. Otis maintains strong global relationships with its business partners to ensure future benefits. Additionally, Otis places a strong emphasis on hiring the most talented individuals worldwide to maintain high-quality services and products. As a result, Otis possesses extensive leadership experience on a global level.

To prioritize environmental protection, Otis serves as a leader in energy-saving elevators, creating a positive image and reducing costs for buyers. It also places emphasis on product quality to minimize accidents through technological innovation and regular maintenance. For example, when main power fails, Otis elevators switch to battery power, increasing user confidence. These merits make Otis

more appealing and distinctive.

Moving forward, Otis should continue using the differentiation strategy and attracting as many target customers as possible to maintain competitiveness. As the elevator market continuously evolves, Otis must regularly review and modify its strategies to adapt to these changes. There are a few future strategies for Otis to consider. Firstly, with the rapid development of space exploration, more countries are able to send people into space for extended periods of time. This presents a great potential market for investment, making it crucial for Otis to focus on becoming the market leader in space elevator business. Secondly, Otis should strengthen its service base.

The current ratio of installed base to service base is around 1:0.72, indicating that for every one elevator installed, only 0.2 services are offered for it. Therefore, there is an opportunity for Otis to improve their services since maintenance and other services can also generate revenue. Moreover, Otis must address the issue of anti-discrimination as discrimination concerns are growing in today's society.

In order to address the new trend, Otis should focus on developing elevators that are barrier-free, as this will help create a positive image for the general public. It is also important for Otis to prioritize enhancing its power-saving technology, as energy conservation has become increasingly vital in today's society due to global warming and excessive energy use. By producing elevators that are highly efficient in terms of power-saving, Otis can establish a strong reputation for itself. In conclusion, the elevator industry is currently flourishing and is expected to continue growing with emerging markets like China and India. However, this growth also presents challenges by attracting new competitors. Nonetheless,

despite these challenges, Otis remains a market leader but must adapt to changing market conditions. Given Otis' capabilities, it is well-equipped to effectively navigate both new opportunities and threats.

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