Essay About Otis’S Core Business And Profit Margin

The Otis Elevator Company
Business ContextThe Otis Elevator Company is the worlds largest manufacturer of vertical transportation systems[1] .Otis’s core business is the design, manufacture, installation, and service of elevators and related products, including escalators and moving walkways. By 2004, Otis had 1.5 million elevators and 100,000 escalators operating throughout the world. Revenues climbed from $6 billion in 2000 to $8 billion by the end of 2003 with 80% coming from outside the United States. Otis Differentiated itself from other Competitors with Focussing on orders-of-magnitude improvements in Logistics and service.Otis’s main competitors were Hitachi, Kone, Schindler, Toshiba and few others. While the industry competitors attained a profit margin of 5%-10%, Otis profit margin was way higher around 17.4%.Otis vision was “To become the recognized leader in service excellence among all companies—not just elevator companies—worldwide.” To achieve this vision Otis had to make significant changes in its business approach. Otis did not have the same focus on customer service process as it did on manufacturing process. They needed to completely revamp their Engineering, Supply Chain, Sales and Field Operations to set the stage for their transformation to become global leader in service excellence. Otis needed to move from a regional driven product strategy to a global one. Also most of the Otis companies lacked sophisticated customer relationship management (CRM) systems.Hence it became necessary for Otis to shift the centre of gravity of their business from manufacturing to logistics and information management.AnalysisLet us now try to understand some issues which Otis faced and the solutions it employed to overcome them.