Service transition strategies of industrial manufacturers

Manufacturers are increasingly adopting service based strategies to maintain competitiveness in the face of commoditization, slower growth, and declining profitability in core product markets. The objective of this study is to explicate the transformation process towards services in more detail. We find that manufacturers develop product related services through a dedicated service division designed to exploit the commercial opportunities of servicing an installed base of equipment. At the same time, the strategy of integrated solutions is utilized to enhance the competitiveness of their core product offering under industry conditions which make it difficult to maintain competitive advantage purely through technological leadership. These logics are investigated through case studies of two industrial manufactures.

Research Highlights
► Service strategies of industrial manufacturers are found to conform to two distinct logics.
► Product related services capture the commercial opportunities of servicing an installed base.
► Integrated solutions enhance competitiveness of the core product business.
► These logics are explored in detail through in-depth case studies of two global manufacturers.