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MGMT19128 | Strategy and Change in Context of Otis

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The assessment involves the application of strategic management theories, concepts and tools covered in the unit to analyse a case. It is important that the case analysis is limited to case information only. The objective is to analyse the case from the management's point of view, given the information they had at a particular point in time. 

Answer:


Brief Introduction of the Company 

The report aims at providing an overview of strategy and change of Otis, a leading player in worldwide elevator industry (otis.com, 2018). The company is a part of the United Technologies (UTC), an American firm with revenue close to US$ 65 billion. Otis is a known brand whose escalators and elevators sell in over 200 countries across the world. Some of the initial sales of Otis included elevators for Eiffel Tower, Underground Railroad of London, Harbor Tunnel of Glasgow, elevators at Kremlin, Balmoral Castle, Hungarian offices and Palaces and the apartments across Europe.

Critical Analysis of the External Forces Influencing the Company 

According to Luo & Zhao (2013), the external factor that influences the operation of Otis includes the political, economic, social, technological, environmental and legal. In context of the political factors, United States of America (USA) represents second largest democracy of the world. The country not only has stability in the political climate but also have immense influence over political dynamics. Advanced technology and infrastructure along with stability in the political environment makes it an ideal destination for the elevator industry to flourish.

Brock (2013) put forward the economic factors that portrayed USA as the largest economy of the world in terms of the nominal GDP. The country was affected by the 2009 recession that led to the collapse of various companies thereby leading to an alarming increase in the unemployment rates. Situation however improved since the year 2015 when the unemployment fell and the income level started to improve. Czinkota & Ronkainen  (2013) stated that compared to the other countries like China, Mexico and India, labor is expensive in United States that has encouraged various US firms including Otis in outsourcing the business activities across the world. The country is not only a world leader but also an economic superpower and stands third in global ranking in terms of the gross domestic product.

However, Mayo (2014) stated that in terms of the social factors USA represents one of the populous countries with population figures close to 326 million. According to the researcher, the country witnesses the birth of a child in every eight seconds and a death in each eleven seconds. The country also witnesses a huge ageing population who are unable to climb stairs. Therefore, the domestic elevators and escalators acts as welcome addition thereby giving a boost to the elevator industry.

According to Spykman (2017), the United States represents is a global leader in the science and the technology.  The country remained in the forefront for applying and adapting technologies in wider fields. Technologies have changed the means of doing things that has helped the companies in reducing production cost. Besides, the rate of technological change and innovation has changed at a rapid pace with increasing number of multistoried buildings including elevators. Thus, the fast-paced technological revolution gave a boost to the elevator industry where elevators not only possessed the capacity to talk thereby letting the passengers know their floors but also ensured their remote monitoring of their performance.

On the other hand, the environmental factors put forward by Schaltegger & Wagner (2017) shows that the country experiences one of the most difficult weather conditions and has witnessed close to fifteen climate and weather disasters in the year 2017 thereby leading to over $1 losses across United States. Apart from the financial damages brought about in the elevator industry the disasters also leads to the disruption in the day-to-day life of the people.

According to Macaulay (2018), each of the states in United States represents their own legal scheme and government structure. Businesses operate within state regulatory environment and the country ensures equivalent treatment to the foreigners and the nationals. The equal opportunity and the anti-discrimination regulations forces increasing number of multistoried buildings to incorporate elevators by the rule of the law.

Critical Analysis of the Capabilities and Competencies of the Company

According to Finkel (2015), Otis enabled the skyscraper revolution through the introduction of elevators that went above 90 metres. Otis also introduced the automatic elevator that did not require an operator. The company however merged with French firm Ascenseurs in the year 1964 and taken over by United Technologies (UTC) thereby operating as a subsidiary. Otis also introduced the remote systems for access that enabled the company in maintaining the elevators at a distance thereby receiving the early indications of the problem and ensuring shorter downtimes. The company also has an eservice system that allows the operators of the elevator in tracking performance of the equipment and ensuring requests for log service from the computers.

Adak, Duru & Duru (2013) stated that the Otis capabilities helped in transforming the industry in the beginning of new millennium through introduction of polyethane coated and flat steel belt for lifting the elevator rather than the steel cables used for over a century. The newer technology helped in improving the energy efficiency, smoothening of the ride and elimination of the necessity of a machine room that made it one of the best selling products.

On the hand according to (otisworldwide.com, 2018), Otis Global Major Projects Group (GMP) undertakes coordination with complex and large projects at an international level. The Otis team have wide experience on some of the well-known and iconic buildings. The team in collaboration with the consultants, architects, developers, general contractors and end users supported execution of the mega projects irrespective of the complexity of the job. Further, Otis GMP helps in managing project execution, optimizing the development of resources and driving product development as per the customer needs. The Otis High Rise Contracts & Logistics Centre (HRLCC), a division of GMP, helps in serving the global customers with required consultancy support and higher rise project management. The centre have experienced and multinational team consisting of the high-rise operations and engineering experts. The GMP however had its headquarters in London for coordinating the teams across various time zones. The global resources however remain available to the key project consumers for ensuring Otis to be the finest high-rise partner.

However, according to Zhang et al. (2014) the core competencies of the company are defined by their strengths, weakness, opportunities and threats. The strength of the company lies in the fact that Otis elevators find an application on some of the famous structures across the world like the Eiffel Tower, Burj Khalifa and the Petronas Twin Towers. In fact, Otis is an acclaimed brand with services over 200 countries. The company ensures constant investments in the technologies, newer products and the intelligent systems and recruits over 60,000 people. The strength of the company also lies in its competitive advantage that makes the barriers to entry relatively higher. The weakness of the company lies in the competition that it faces from the bigger players like the ThyssenKrupp, Kone, Mitsubishi Elevator and Schindler Group. Several accidents in the past have hurt the company’s brand image. As stated by Pate (2013), the opportunities of the company lies in the strong growth it faces  in India, China, Brazil and other countries of Asia which the  Otis should capitalize because of the stagnation it faces in the developed markets. The company also has wide Research and Development resources that enable it in continuously implementing newer technologies. The opportunities of the company also lies in the business boost due to its tie up with the construction and the real estate companies. Otis also faces threat in the form of strong competition from the other players who are not only equals its size but possess similar experience and resources. The threat to Otis also lies in the replication of the technology by other competitors in spite of heavy investment in research and development.

Analysis of the Capabilities and Competencies in Coping with Future Challenges 

In the rapidly changing industry, evolution remains critical for the organizations in remaining competitive in spite of it being one of the service providers and manufactures of escalators, elevators and the moving walkways Labonnote & Høyland (2017). Otis thus continues in expanding with an increasingly diversified and globalized workforce. In other words, the organization looks forward in enhancing the processes and infrastructure through cultivating, attracting and retaining the top talent as its top priorities. Besides, Otis constantly tried to reinvent itself through the transformation of its services by focusing on the people including the mechanics thereby improving the experiences in an urbanized world. The company’s approach is not just about the utilization of the newer mechanic tools or the utilization of the predictive maintenance but rather lies in developing a globalised, connected and digital ecosystem that helps in keeping the users informed and improve their uptime.

The company does so through the introduction of the digital solutions like the spare parts app that allows the mechanics in searching for the parts even while they remain at an onsite location with the customers. Otis also has an inspection app that helps in replacing heavy and expensive equipment (Kim, Kim & Park, 2015). The company also introduced a safety app for ensuring an extra protective layer for the mechanics. Besides, everything else, the company has quite a number of mobile applications for putting control in the hands of the mechanics along with opening up the lines of communications with the customers.

Conclusion:

To conclude, one can say that Otis acts as the key player in elevator industry. Although competition does not threaten the company directly but it is present as all major players remains well prepared. Nevertheless, it can be said that the industry is undergoing a change and the newer is used for improving the profitability and the performance. Thus, it is vital for the company to outsource research and development for improving the productivity along with ensuring the manufacture of the larger elevators.   

References: 

Adak, M. F., Duru, N., & Duru, H. T. (2013). Elevator simulator design and estimating energy consumption of an elevator system. Energy and Buildings, 65, 272-280.

Brock, J., (2013). The structure of American industry. Waveland Press.

Czinkota, M. R., & Ronkainen, I. A. (2013). International marketing. Cengage Learning.

Finkel, G. (2015). The economics of the construction industry. Routledge.

Kim, W. Y., Kim, S., & Park, S. G. (2015). The Implementation Model of the Emergency Video Call System for Deep-Depth and High-Rise Buildings Lifts.  Journal of Science and Technology, 8(25).

Labonnote, N., & Høyland, K. (2017). Smart home technologies that support independent living: challenges and opportunities for the building industry–a systematic mapping study. Intelligent Buildings International, 9(1), 40-63.

Luo, Y., & Zhao, H. (2013). Doing business in a transitional society: Economic environment and relational political strategy for multinationals. Business & Society, 52(3), 515-549.

Macaulay, S. (2018). Non-contractual relations in business: A preliminary study. In The Law and Society Canon (pp. 155-167). Routledge.

Mayo, E. (2014). The social problems of an industrial civilisation. Routledge.

otis.com. (2018). Retrieved from https://www.otis.com/en/us/about/vision-and-values/

otisworldwide.com. (2018). Retrieved from https://www.otisworldwide.com/capabilities.html

Pate, E. A. (2013). A history of “Elevator World”, the first international trade publication for the elevator and escalator transportation industry. University of South Alabama.

Schaltegger, S., & Wagner, M. (2017). Managing the business case for sustainability: The integration of social, environmental and economic performance. Routledge.

Spykman, N. J. (2017). America's strategy in world politics: the United States and the balance of power. Routledge.

Zhang, Z., Ni, X., Zheng, Y., & Zhang, X. (2014). The Comparison Mechanics Analysis of Two Simplified Models about Elevator Bearing Beam. Applied Mechanics & Materials, (533).

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