Edited by Roland T. Rust and Ming-Hui Huang
Chapter 17: Hybrid offerings: research avenues for implementing service growth strategies
A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large. (Henry Ford) In the business-to-business (B2B) domain, the march towards a more significant share of turnover generated from the provision of services seems, at least in the coming years, unstoppable (for example, Antioco et al. 2008; Davies et al. 2006; Neu and Brown 2008). There are a number of explanations why product-centered companies are pursuing service strategies. Among these, three drivers of growth in B2B services are of particular interest: 1. Outsourcing trends. Over the past years, asset optimization has become an issue of growing concern to many business customers. With increasing expectations for a higher return on assets, more flexible production units, and further technological advances, customers increasingly focus on their core businesses and are more willing to outsource nonstrategic processes. As a consequence, vendors in many business markets have witnessed an increased demand for services. 2. Saturation of installed base. Many companies have discovered that it has become increasingly difficult to continue the growth of their installed base. Indeed, in many product markets, a firm's installed base outnumbers new equipment sales by far. As an example, with global revenues of $1.8 billion in 2009, Electro-Motive Diesel (EMD) has the largest installed base of diesel-electric locomotives in the world and sold approximately 300 new locomotives worldwide while servicing an installed base of more than 70,000 engines throughout the world.
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