Servitization Strategy: Priorities, Capabilities, and Organizational Features

Servitization (Vandermerwe & Rada, 1988), as a process of value creation through bundling services to physical products, has been broadly recognized as a competitive manufacturing strategy to the conventional manufacturer in many industries. It was found that the conventional manufacturers can achieve more revenue from their service units (Quinn, 1992; Quinn, Doorley, & Paquette, 1990), and actually most of the added value comes from service constituents (Machuca, González-Zamora, & Aguilar-Escobar, 2007). Servitization strategy increasingly plays essential roles on the operations performance and competitive advantage (Sawhney, Balasubramanian, & Krishnan, 2004; Slack, Lewis, & Bates, 2004) of the conventional manufacturers, particularly during the economy recession time.

Two servitization strategies are identified based on the case studies in the PC industry and secondary documentation research. Product-centric servitization strategy focuses on providing physical products and associated services (normally after-sale services) to the customers on time, whereas service-centric strategy emphasizes on offering services or servitized products in a timely fashion. Hence, the capability requirements and organizational features are different for these two types of servitization strategies.

The results show that the choice of the servitization strategy largely depends on the core competence that have been established in the company. From the industrial perspective, development of the whole industry is substantially affected by the interrelationships of all the related industries. Furthermore, well-designed policies designed by the industrial associations and the government are vital to the further development of the PC manufacturing industry.