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School of Business | Department of Information and Service Economy | Logistics | 2013
Thesis number: 14290
Capabilities and steps to increase services successfully in manufacturing companies: Analysis of service business development in Nordic process industry companies
Author: Kanninen, Tiina
Title: Capabilities and steps to increase services successfully in manufacturing companies: Analysis of service business development in Nordic process industry companies
Year: 2013  Language: eng
Department: Department of Information and Service Economy
Academic subject: Logistics
Index terms: tietotalous; knowledge economy; palvelut; service; prosessit; processes; kehitys; development; service design; palvelumuotoilu
Pages: 70
Key terms: servitization, capabilities, resource-based view, process industry
Objectives of the study The objective of this study was to gain a better understanding how process industry companies from developed economies can increase services successfully in their offering. This paper seeks to contribute to the existing servitization literature by examining what are the needed capabilities for industrial product manufacturers to increase services. Furthermore, the paper aims to suggest the steps to start and develop service business in process industry companies, and to analyze the needed capabilities in each of the steps. The research findings are derived from analyzing service business development in large international process industry companies, which are largely neglected in the existing studies on servitization.

Academic background and methodology The theoretical part of the paper is based on the research on servitization of manufacturing, and resource-based view (RBV) and dynamic capabilities literatures. These theories form a solid background for the empirical study, which focuses on analyzing servitization capabilities in process industry companies. Our two-phase research was conducted by using a qualitative multiple case-study methodology. The empirical study included an in-depth pre-study and a broad main study. A total of 14 internationally operating process industry companies from chemical, forest product, and metal industries were investigated through thematic research workshops and interviews. The empirical data was analyzed and compared to earlier research results to formulate the research findings.

Findings and conclusions As a result from the pre-study, we identified 14 important capabilities in process industry's service development. Our empirical findings revealed that to succeed in service business development, process industry companies need to change their operations in the customer interface and develop new capabilities in front office, back office and management. Most importantly, companies need new capabilities in sales, marketing, and quantifying and communicating the value created to the customers through new service offerings. Our study proposes six steps for successful service business development in manufacturing companies. First, companies should understand the different nature of the service business, identify the current services, and understand thoroughly the customer needs for services. Companies are encouraged to create service strategies and integrate the front and back office to foster fluent cross-functional communication. Moreover, we recommend manufacturing companies to implement new business models and pricing logics for services. Finally our findings suggest that manufacturing companies should develop their service capabilities continually, set measurable goals and incentives for service sales, and manage services as a separate unit.
Master's theses are stored at Learning Centre in Otaniemi.