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Otis Elevators Essay

691 words - 3 pages

Otis Elevator was the world leader in elevator sales and service. Revenue for Otis was $2B in 1984. The company itself was structured regionally. They had divisions in North America (NAO), Latin America Operations, Pacific Area Operations and Transcontinental Operations. Otis was world renowned for its reliable and quality products, its superior customer service and its technology leadership in the industry. Due to these facts customers were willing to pay more and in most cases selected Otis because of its competitive advantage of having a large and highly respected service organization. They had three different product lines, Otis Hydraulics for low rise buildings, Otis Geared for mid-rise buildings and Otis gearless for high rise buildings. They were most successful in selling elevators for projects that were large and in most cases required some customization or required state of the art technology.The industry itself is broken out into two primary markets, sales and service. Sales represented approximately a $1B market while service was a $2B market in North America. Otis had a number of highly competitive rivals. Westinghouse, Dover, Montgomery and Schindler are some of these competitors who were fighting for increased market share. Due to the nature of the Sales market where it is cyclical due to the fact that it is directly related to the building cycle most companies focused on the service market where that was more stable and more profitable. Most companies low balled the price of the elevators to get the service contract because 60% to 80% of contracts for new elevators were awarded to the current service provider. The strategy to win the original bid would almost guarantee keeping the service contract and incoming revenue for the life of the building.In 1982, OTISLINE was implemented, which affected all of NAO's business functions, and was the tool that gave Otis a significant competitive advantage. By 1985 with new enhancements to OTISLINE which could save $5M annually, cut down the number of irritated customers thus enhancing the image of Otis's customer service...

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