KONE was founded in 1910 in Finland to import elevator but already in 1918, the company shifted to manufacturing and installing its own elevators. Kone, which means "machine" or "industrial device" in Finnish, has been maintained as the company's name even after its acquisition by the Herlin family in 1924. After a successful initial public offering at the Helsinki Exchanges in 1966, the company started to enlarge its global vision. With an expansionary business strategy, the company made major acquisitions, such as Sweden’s Asea-Graham. This was followed by many other market strategies that expanded the reach of KONE across the Atlantic. From the 1990s onwards, the company has been excessively investing in research and development as well as gaining global market power through innovative products and services.
Business performance and development of KONE
Since the 1950s, KONE has steadily improved its business performance by maintaining a dynamic business strategy. Over the last decade, their annual revenue has doubled. Similarly, the annual order backlog of KONE increased by 61 percent in only a decade, reaching over 9.1 billion euros by 2022. In order to remain competitive and improve the product line of the company, KONE has invested more and more in research and development (R&D). Despite the coronavirus pandemic, the company increased its annual R&D expenditure during 2020 and 2021.
KONE in the global market
Between 2022 and 2030, the global elevator market is expected to grow continuously and this increasing market size is attracting more companies into the industry. The main competitors of KONE include Schindler Group, Otis Worldwide, and Mitsubishi Electric. Anti-competitive practices in the elevator market have been under macro-prudential criticism both within and outside Europe. Since there is a limited number of major corporations populating the global market for elevators, these companies have coordinated to corner the market for their own benefits. The issue is difficult to identify whether these companies compete intensively or if the market is growing sufficiently enough to accommodate the desired growth. For example, one could consider the fact that the number of new elevators and escalator installations worldwide has almost quadrupled over the last two decades, up from 260,000 installations per year in 2002 to roughly one million installations per year in 2022.
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