The purpose of the study is to give an analytical report on the concept of strategic management based on the case study of the global elevator company Otis (Schonell, 2018). Hence in order to proceed with the discussion the paper will begin by giving an overview of the company in terms of its markets position and other aspects. In order to analyze in a detailed manner, the study will analyze the external environment of the company and its impact on it. The further discussion critically evaluates the capabilities and competencies of Otis and whether these factors help to remain in an advantageous position or not. Additionally the study also sheds light on whether the company is capable enough to address future challenges with the capabilities and competencies. Throughout the entire discussion, the whole discussion gives references to irrelevant theories of strategic management, and finally, the report concludes by summing up the entire discussion.
The company Otis is one of the leading companies among the elevator industry. Being part of the well known united technologies, Otis sells its products over 200 countries across the globe. Elisha Otis in the year of 1852, invented safety elevator for her employer and in the following year he went further, started inventing elevators (Schonell, 2018). In the year of 1854, then he sold 7 elevators and in the year of 1855, he sold 15 elevators. This is how the company started its journey. Soon after its establishment the company started exploring international markets of elevator industry and provided elevators for the popular Harbour Tunnel, Hungarian Royal Palace, Balmoral Castle, Eiffel Tower and many other buildings across Europe. The Otis brothers continued the process of innovation and by 1901, as an achievement the company made to possible to make elevators which were able to go up the more than 90 meters by enabling the revolution of skyscraper (Schonell, 2018). The other achievement of the company was ‘automatic elevator’ which does not require an operator. In the year of 1976, the United Technologies took over the company and started operating Otis as the subsidiary (Schonell, 2018). Over past decades Otis has been able to become a leading company in making energy saving elevators. The company also used digital technology in its product and continued incorporating innovations in its products while securing its position in the global market of the elevators as a leader. According to Schonell, (2018), the company presently has approximately 65000 employees, out of which 53000 employees belong from outside of USA. The revenue of the company marked US$13 billion in the year of 2014.
In order to analyze the external environment of the company, the PESTLE analysis will be conducted which will include political factors, economic factors, social factors, technological factors, legal factors and environmental factors.
Political factors
Since Otis operates in the global markets, the government policy of each of the country impacts the business of the company. As per Georgiou, (2014), the United States of America enjoys a quite stable climate in terms of politics. Apart from politically stable climate, the advanced in infrastructure made it possible for the country a favorable destination of business (Van den Berg, 2016). Thus the flexible trade policies of the government are one of the reasons why most of the multinational companies chose the country to set up its business. Hence, it can be said that the impact of the political factors of the on the company is positive to grow further.
Economical factors
The United States of America has the largest economy across the world. As per Statista.com, (2018), the GDP of the country increased by 1% in the second quarter of 2018 in comparison with the previous quarter. In the second quarter of 2018, the GDP of the country marked $5,100,626 million making up as the leading economy in the world. It is seen that such a healthy economy of a country pulls a large amount of investment both domestically and internationally. Thus it can be said that Otis is in an advantageous position in terms of the impact of the economical factors.
Social factors
The major social factor that influences the company most is the demand for elevators. The development of skyscraper has been seen to be increased in the past few decades in a rapid manner across the world (Kinateder, Omori & Kuligowski, 2014). Hence naturally the demand for elevators also was high creating a business opportunity for the company. The growing demand for automatic elevators without human assistance further created wider opportunities for Otis. Apart from the skyscraper, the inability of the elderly person to walk up stairs is another influencing factor on the company (Kwon & Beamish, 2013). Presently, it is seen that nearly all major buildings including residential as well as commercial have demand elevators so that people can save both time and physical energy. Hence the growing social trend of elevators in both the developed countries and developing countries positively influence on the business of Otis.
Technological factors
Over the years, Otis has been incorporating the latest technologies in the manufacturing of elevators. For example, polyurethane-coated steel belt, carbon fibre, energy saving technology, regenerative drive, digital technology and many other technologies are used by the company for the purpose of product innovation of the company (Schonell, 2018). Otis has brought revolutionary change in the elevator industry by introducing ‘automatic elevator’ (Anand & Mahesh, 2016). Beside of manufacturing, the company also provides technological support and service to its customers. Hence, it is seen that the extensive use of technology helped the company to position itself as the global leader in the elevator industry.
Legal factors
Since the company operates in the international market, it is required for the company to fulfill all the legal directives of the domestic market and international market in order to assure a smooth business process. The Safety Act of each of the markets that it operates in must be ensured since accidents often occurred in elevators. The recent Hong Kong Mall accident in regard to the legal obligation deserves mention. As per Scmp.com, (2018), 18 people died in the accident for which the Hong Kong business of Otis was fined US$40,800 on safety and security ground. Thus in order to avoid such obligations, the company needs to take precautionary measures since it affects the brand image of the company adversely.
Environmental factors
Being the largest economy in the world, the USA government has strict directives so that the business industry does not harm the ecological balance of the environment. Thus the company keeping the environmental factors in mind has introduced energy-saving technology which consumes less energy while operating (Sachs, Misuriello & Kwatra, 2015). Thus it can be said the company assures competitiveness in the industry by focusing on environmental aspect.
Before analyzing the capabilities and competencies of Otis Elevator Company, the competitors of the company need to be mentioned. ThyssenKrupp, Schindler Group, Kone and Mitsubishi Elevator are the major competitors of the company (Schonell, 2018).
The major future challenge or threats for the company are the strong competition and the imitation of the company’s product and technology. Thus from the above analysis, it can be seen that the strong history and customer base will enable the company to company to compete with other companies since trust is major factor in terms of safety. However, the company is in a vulnerable position as there is information available regarding the technology used by the company in its product. Thus Otis needs to focus more in order to keep the product details secret.
Conclusion
Thus conclusion can be drawn that the company is enough competitive in the industry. The company has enough resources and as strong brand image which helps the company to remain in the advantageous position. However, as per the above analysis, the company needs to give special attention on R&D since there is threat of imitation of the technologies use by the company.
References APA
Anand, R., & Mahesh, M. (2016, August). Analysis of elevator drives energy consumptions with permanent magnet machines. In Smart Energy Grid Engineering (SEGE), 2016 IEEE (pp. 186-190). IEEE.
Georgiou, M. (2014). Political Stability and Economic Growth: A Panel Data Analysis for EU, Japan and USA (1998-2013). Journal of International Relations 11(8)
Jorgenson, D., Gollop, F. M., & Fraumeni, B. (2016). Productivity and US economic growth (Vol. 169). Elsevier.
Kinateder, M. T., Omori, H., & Kuligowski, E. D. (2014). The use of elevators for evacuation in fire emergencies in international buildings (pp. 1-29). US Department of Commerce, National Institute of Standards and Technology.
Kwon, H. J., & Beamish, J. O. (2013). Older adults in multifamily housing: Residential satisfaction and intention to move. Family and Consumer Sciences Research Journal, 42(1), 40-54.
Sachs, H., Misuriello, H., & Kwatra, S. (2015). Advancing elevator energy efficiency. American Council for an Energy-Efficient Economy: Washington, DC, USA.
Schonell, S. (2018). Case 12 : Otis in the global elevator industry / Stuart Schonell [electronic resource]. Retrieved from https://cqu-a.alma.exlibrisgroup.com/view/delivery/61CQU_INST/1297405340003441
Scmp.com. (2018). Lift firm fined HK$320,000 over Langham Place escalator accident. Retrieved from https://www.scmp.com/news/hong-kong/law-crime/article/2136585/lift-firm-otis-fined-hk320000-over-hong-kong-mall-escalator
Statista.com. (2018). United States – Gross domestic product (GDP) 2022 | Statistic. Retrieved from https://www.statista.com/statistics/263591/gross-domestic-product-gdp-of-the-united-states/
Van den Berg, H. (2016). Economic growth and development. World Scientific Publishing Company.
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