VALERIE MATHIEU PAPER NO. 13 Presented By Jared Norrell Service strategies within the manufacturing sector: Benefits, costs and partnership.

Purpose of Article “This paper proposes an original typology of service maneuvers achieved by manufacturing companies and addresses the implementation issue within the framework of this typology” (Mathieu, 2001).

Previous Work Levitt (1972)  Everyone is in the business of service Berry and Parasuraman (1991)  Manufacturing companies are also service companies Bitner (1997)  All businesses are service businesses in some form Jack Welch  “The service market is bigger than we ever dreamt”

Overview Typology for manufacturing service 1. Service specificity 2. Organizational intensity Benefits from implementation of service strategy 1. Financial benefits 2. Strategic benefits 3. Marketing benefits Costs inherent in implementation of service strategy 1. Competitive cost 2. Political cost The collaborative option for implementing a service strategy 1. Collaborative continuum 2. Potential partners 3. Points of application 4. Costs of collaborative option

Typology for manufacturing service (Ways manufacturing companies can take to embrace service field) Service specificity- content of manufacturing service maneuver. 1. Customer service- addresses general quality of interactions between seller and customer. 2. Product services- support the supplier’s product in such ways as physical distribution, after-sale service, or technical assistance. 3. “Service as a product”- type of service which is independent from a company’s goods, may experience a company’s service without consuming its goods. Organizational intensity- manufacturing service maneuver refers to both the strength and the scope of its impact on the firm. 1. Cultural- reshapes the mission of the firm and has potential to modify some fundamental characteristics of the firm. 2. Strategic- aims to add some key competency to a firm’s portfolio. 3. Tactical- specific actions within the marketing mix of the firm.

Benefits from implementation of service strategy 1. Financial benefits Commercialization of services around a tangible product can raise revenues. Product services tend to reduce vulnerability and volatility of cash flow allowing for a higher shareholder value. 2. Strategic benefits Service strategy can provide a competitive advantage through differentiation. Service strategy can help in building industry barriers to entry. 3. Marketing benefits Have potential to augment the goods offering and appeal to the client. Product service strategies can influence overall client satisfaction. Superior service can increase both first-time and repeat sales, thus increasing market share.

Concerning the financial and strategic benefits, the more intense and specific the service maneuver, the higher the benefits For marketing benefits, the more intense the service maneuver, the higher the benefits.

Costs inherent in implementation of service strategy Competitive cost- manufacturing firm must build its own competitive advantage with three opportunities. 1. Using drivers of positional advantage- skills and resources which have the highest leverage on competitive advantage non-accessible to the competitors. 2. Weakening the competitors’ drivers- Ex. An auto dealer changing oil not only on its own cars but also on its competitors’ cars. 3. Develop new sources of competitive advantage- many manufacturers have developed global strategies and can now use these geographic odds in order to set up specific competitive positions. Political cost- emergence, adoption and implementation of service maneuvers is expected to pose a threat to some organizational units and present an opportunity to others. Two ways to counter resistance. 1. Interpret service maneuver as an innovation. 2. Necessity to implement service management principles.

Strategic cost or political cost are proportional to both the service specificity and the organizational intensity.

The collaborative option for implementing a service strategy (Implementation of partnerships with potential competitors) 1. The collaborative continuum- existence of various intensities and diverse realities in the potential collaboration. Internalizing- keeping entire service maneuver at home. Outsourcing- entrusting a partner with the whole implementation of the service maneuver. Partnering- In between internalizing and outsourcing. Benchmarking- manufacturing firm must consider this as one of the very first steps in the implementation of service maneuver. 2. Potential Partners- distributor, client, service provider, and now the traditional competitor.

The collaborative option for implementing a service strategy, Continued 3. Points of application- potential domains for collaboration. Two main phases of any service maneuver by a manufacturing company. 1. Service development- generate “customer-driven service designs and standards.” 2. Service performing- focuses on service delivery. 1. Back office- support employees, physical facilities, and technology. 2. Front office- front-line employees, physical evidence and technology. 4. Costs of the collaborative option 1. Role specification- decisions and functions are assigned to the parties in the relationship. 2. Nature of planning- viewed as frameworks within which subsequent adaptations can, and are expected to, take place. 3. Nature of adjustments- must be prepared to show flexibility and to accept jointly negotiated changes. 4. Monitoring procedures- establishment of the extent to which contractual compliance has taken place. 5. Incentive systems- type of incentives used and to the basis on which they are distributed. 6. Means of enforcement- must be considered above and beyond incentives and must be an ongoing relationship.

Conclusion Broadly speaking, the article has aimed at contributing to the field of service maneuvers within the manufacturing sector. The more intense and specific the service maneuvers, the higher the benefits, the strategic and cultural costs, and the cost of running the collaborative option.