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Management Assignmnet Guide 2 , suitable for student
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Companies race towards the market proposition of advanced technological into a product could translate into value destruction. On the contrary, the development of differentiation strategies rooted in the product-service paradigm may represent a key element for competitive advantage. Servitisation of manufacturing ➔ transformational journey, which commits industrial organisations to move along a continuum, from the provision of products and artefacts, through the proposition of product–service solutions, to a change in their structural and infrastructural capabilities and decision-making processes. It often means higher investment and greater risks. a. Aim of the article is to provide a contribution to the debate on understanding the transformation process that industrial companies are experiencing by identifying the main organizational and operational drivers which would enable and foster their transition to services. Space, time and alignment in the transition to service:
Service paradox ➔ substantial investment in extending the business leads to increased service offerings and higher costs, but does not generate the expected correspondingly higher returns. Services being more labour intensive and intangible, services might produce more sustainable compettive advantages. Extending to service proceeds along three lines: financial benefit (higher profit margins), marketing opportunities (better services for selling more products), and strategic argument (competitive strategy based on service). a. Provide guidance for managers seeking to successfully extend the service side of manufacturing companies.
While going through the servitization path, the increase in total revenue follows the increase in service revenue. It means good sold revenue is pretty stable, which is consistent with Berry (compete on value rather than on price). Figure 3: only 11% get more than 40% of their revenues from service revenues. Cognitive phenomenon can explain managerial aversion to invest in service :
many companies struggle to implement these organizational arrangements successfully because of several unanticipated side effects.
a. The article examines success factors for designing and delivering hybrid offerings in business markets.
competences to help customers optimize processes, or specific process elements in their operations. PSS are tailored to customer contexts and needs. Customers’ willingness to pay tend to be high. PSS are priced similar to professional services. To succeed in PSS, manufacturers have to leverage their service-related data processing and interpretation capabilities to gain knowledge on their customers.