Several strategic goals for a company to engage in service business can be
identified. In practice these goals are not mutually exclusive, quite often
the goal is a combination of these with differing emphasis. The choice of a
specific service business strategy and it's implementation depends on the
overall business situation of the company ( e.g. customer demand, own
competences, competitor actions, requirements of authotrities, etc.) and it's
overall strategy. There is no one best strategy for service business.
Following general strategic goals can be identified:
Growing business is a key overall goal for any company. Service business
provides increasing revenue opportunities either directly through services
that are payable to customer or indirectly through services that support the
product sales (i.e. service is a product feature).
Growth through total business model, integrating product and service
businesses, requires profound changes of business logic, organizational
structures and processes to success. This is a time consuming process and
often requires incremental approach to development.
Often growth is pursued by a manufacturing company by acquiring service
companies, which is the the fastest way to get new knowledge, employees and
customers. This is an efficient way to do it, since it creates instant growth
to the acquiring company but not to the market. Challenge is to integrate
different organizations and their cultures.
Position in value chain / market place
Companies are always looking for better position in the value chain or market
place. Through better position the company is able to, e.g., get more control
of the business in the value chain or make the customers more dependent of its
offerings. Usually, service business requires closer cooperation with the
customer. Thus, it also provides possibility to influence customer's
decisions, e.g., giving an opportunity to guide customer's purchases more
towards the service provider's (and its partners) offerings.
Often requirements originate from customer’s customer’s business thus offering
access to their business as well. This opens possibilities either to novel
joint services with the customer or providing services directly to the
customer’s customer. The later makes it possible to radically change the
position and game in the value chain, but also carries the danger to alienate
the current customer.
Services provide extra means to differentiate the company in the marketplace
if the competitors have very similar products. The goal of the service may be,
e.g., to enable more efficient delivery or use of the physical products to the
customer. In some situations, uniquely structured product-service offering may
also make the comparison to the competitors difficult for the customer.
Learning and competence development
Customer knowledge is very vital in any business for a company to be
competitive. Service business, in which the service provider and the customer
are working together more closely, gives a company a possibility to get more
intimate data on the customer's operation. Thus, service business provides
possibilities to develop company competences and increase competitiveness.