Konecranes: Lifting not just ‘things’, but entire businesses, to new heights

• Main Authors: LINDBERG-REPO, Kirsti, JOSHI, Havovi
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2014
• Subjects: Konecranes; Industrial Internet; service-oriented company; customer solutions; preventive maintenance; industrial cranes; reactive maintenance; emerging markets; Business Administration, Management, and Operations; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/cases_coll_all/86; https://cmp.smu.edu.sg/case/2371
• Institution: Singapore Management University

Konecranes was a leading manufacturer of lifting equipment, and a market leader in industrial cranes and components. Headquartered in Finland, the Group had the world’s most extensive crane service network. By December 2012, almost 420,000 units around the world were covered by Konecranes preventive maintenance contracts, of which approximately 25 percent were also manufactured by Konecranes. The Americas were geographically the best performer for the Group, accounting for around a third of its global sales. However, it had become increasingly clear to the Group that most potential growth in the future would come from the emerging markets in Asia, South America, Africa and the Middle East. But Pekka Lundmark, president and chief executive officer of Konecranes, recognised that the operating environment in the emerging markets was more complex, and required considerably more time and patience to understand and meet profit targets as compared to the established markets. Hence, a year back, in mid-2012, Lundmark took the radical decision to relocate his CEO’s office from Finland to Singapore as he perceived that achieving the right balance between established and emerging markets would be critical to the company’s success - particularly in an environment where forecasting demand development had become increasingly difficult. Lundmark was also aware that the emerging markets had far more potential to improve on their safety and productivity frontier – an area that the company was passionate about. He was determined that Konecranes should continue on its journey of shifting its strategic vision from that of a product-oriented company, to one of a high-end service-oriented company. Konecranes was recognized as a pioneer across the globe in migrating its customers from reactive to preventive maintenance, and Lundmark was convinced that this strategy was the key to future success. Was Lundmark taking the right approach? What would be the implications of this change on Konecranes’ business model? This case study can be used to teach the range of factors that large well-established multinationals need to consider while developing a marketing strategy to enter emerging markets, and also explore issues that are central when a company transforms its business logic from being a product-oriented company to a service-oriented company. Through this case, students will be able to generate various analytic insights regarding the strategic and tactical solutions that would work best for Konecranes in its current situation. They could also use the new body of knowledge from the case study to debate about the use of the Industrial Internet, and its pros and cons - in general for industrial companies, and specifically for Konecranes. This case study is best suited for senior under-graduate, graduate and executive level classes in marketing and strategy.