|| Group Kappa: A. Lamprou, A. Lazaridis, S. Louziotis, C. Paschou Group Kappa: A. Lamprou, A. Lazaridis, S. Louziotis, C. Paschou1 The Economist: The lift business: Top floor, please

||  People live and work more “vertically” than ever before  Trend towards urbanization  Every year 70m. people move to cities worldwide  By /3 of world population will reside in cities  Increase of 2.5 billion people  90% of the increase in Asia and Africa Group Kappa: A. Lamprou, A. Lazaridis, S. Louziotis, C. Paschou2 Lift: A continuous need Source: 2014 Revision of the World Urbanization Prospects Source: wikipedia

||  New installations: From 300’ years ago to 700’000 today, 67% of them in China  Market is moving east  China, India, Turkey, Middle East  Europe  50% of lifts worldwide  Maintenance  Refurbishment  Double revenues by Group Kappa: A. Lamprou, A. Lazaridis, S. Louziotis, C. Paschou3 Global Demand Source: 2013 KONE estimations

||  New installations  10% margin  Not stable revenues - affected by economy’s fluctuations  Maintenance  25–35% margin ($2,000–5,000 a year)  More stable revenues  Contracts at the time of installation act as barriers for newcomers  Antitrust authoriries  fine for fixing German & Benelux prices  Refurbishment … promising profits Group Kappa: A. Lamprou, A. Lazaridis, S. Louziotis, C. Paschou4 The Business – What drives profits? Source: BBC news magazine Source: avenuestosuccess.com

||  4 firms control the lion’s share  67% globally  In China growing competition from:  Mitsubishi, Hitachi  More than 500 Chinese local companies  Maintenance:  Captive business in Europe and America: big companies  China: local companies or not at all  Service business with lag for big companies Group Kappa: A. Lamprou, A. Lazaridis, S. Louziotis, C. Paschou5 Industry Competition Logos’ source: companies’ websites

||  Main Challenge: cost leadership  cheaper production, larger margins  Manufacture & R&D massively outsourced to Asia  Global standardization  Economies of scale  Sales of pricier offerings are on demand  Double-decker elevators  Keycard elevators  Sustainability  Speed & Comfort  Space Saving Group Kappa: A. Lamprou, A. Lazaridis, S. Louziotis, C. Paschou6 Business Challenges – Trends Source: Source:

||  Customer’s perspective  Little evolution  Dominant design  Producer’s perspective:  Significant additions that add value and differentiate from competitors but not great breakthrough  Patent war  Slows down evolution  New inventions must be cheap(-er)  cost leadership Group Kappa: A. Lamprou, A. Lazaridis, S. Louziotis, C. Paschou7 Lift Evolution

||  Main Advantages: 80% less energy, no machine room, no danger of being trapped, 100% environmentally friendly  A small manufacturer (Mezolift) first introduced the solar lift for small houses (2011)  Bigfirms followed (e.g. Schindler in 2013)  Rigid production process  Cost issues Group Kappa: A. Lamprou, A. Lazaridis, S. Louziotis, C. Paschou8 Case Study: Solar Lift Source: Schindlerhttp://elevatortoday.com/2012/10/13/mezolift-first-solar-elevator/

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