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Importance of Maintenance Contracts.
Due to the 30 yearlong product life cycles of elevators, a huge source of profit comes from the maintenance of the each purchased elevator. Therefore, this profit is dependent on quick initial sales in order to have a customer base with elevators to maintain. Because of this, customization options should have been incorporated into the strategy since this would have attracted more buyers.
Lack of Communication with Staff.
Napoli was smart in hiring local talent to manage the India branch. It gave him access to local market knowledge and set up an organizational culture than would further potentially attract more local employees. However, although he did inform them of his strategy beforehand, his narrow-minded approach automatically led the exclusion of his employees' market knowledge and suggestions in product design. Had Napoli been open to his employees experiences he might have been able to avoid the need of purchasing an imported glass elevator and instead produced it locally, thereby earning a much higher profit margin. A key feature of having a two-way communication channel is a more functional company culture that leads to better organizational capability. An added bonus to this is that a good company culture attracts better employees since they know their inputs will make a difference.
Transportation Costs.
Unexpected difficulty in assembling a fully functioning local manufacturing network was a problem for Napoli from the start. This is due to the difficulty in finding affordable and reliable suppliers in India as well unreliability in a developing infrastructure. However, because outsourcing of production is the key component to Napoli's plan, which was approved by the VLR, he has to find a way to make it work.
Irreversible Mistakes from the Start.
Looking back, Napoli should have considered setting up a wholly owned centralized production plant.