What problems manufacturing companies can face when providing services around the world?

Abstract

Purpose – This article aims to adopt a complementary line of reasoning by investigating the problems that manufacturers can face when providing services in different countries. Studies of the relationship between products and services have focused on concept, model and classification propositions; the importance of building relationships with clients; and approaches for bundling services and products. Design/methodology/approach – A qualitative, multi-case research design was employed. The authors aim was to study similar services provided by the same company in different countries. The authors investigated the six most important service units of a company that sells 1.2 billion/year. This approach differs from the majority of the previous studies conducted at the global level (multiple case studies and/or distinct business sectors). Findings – The provision of service in different countries may face some challenges in the capital goods industry. Such challenges arise from the following elements: regulations that protect the local service companies from the competition with the manufacturers; operational problems (employee turnover, the distance between resources and clients and a shared structure between service providers and the factory); the manufacturer culture (goods-dominant logic prevail over the services-dominant logic); commercial approaches (lack of an open relationships between the manufacturer and the client in unforeseen situations, a poor understanding about how each customer can generate revenues and profits in the long run, the contract rigidity and a single sales team to sell products and services); and the poor knowledge presented by the manufacturer about the value demands of their customers (includes the acquisition, dissemination and utilization of the knowledge). Research limitations/implications – The research findings are limited in generalizability because of the qualitative research methodology. Practical implications – Manufacturers of the capital goods must understand the constraints that limit the sales of services around the world. Such understanding will help them to redesign their value offerings, as well as their operational structure. Aiming to support them during the revision process, a preliminary model for global service management was included at the end of the article. Originality/value – The study contributes to the debate regarding the provision of global services. The analysis of the findings unveils some avenues for future studies, namely: alternatives for reducing the turnover of the service teams; alternatives to mitigate the conflicts between the service department and the other company departments (engineering and manufacturing); methods to evaluate how and when local competitors can generate gains to the manufacturer; alternatives to mitigate the customer’s concerns arising from the service outsourcing (e.g. reduction of their knowledge about the products maintenance); and methods to acquire, disseminate and utilize the knowledge required to improve the global service operations.