A solutions strategy needs to be carefully thought through: Astute customer segmentation is necessary to accurately determine sufficient market demand and customization possibilities. Offerings need to be carefully designed with tight integration of individual elements into a whole that is worth more than the sum of its parts and therefore able to produce (either through effectively higher prices or reduced costs) a higher gross margin. This is required to cover upfront investment and increased overheads that implementation of solutions business usually entails. This means that solutions should essentially be an aggressive growth strategy from a position of strength, not a strategy to compensate for weakness. Service based solutions have similar characteristics to product based solutions, while integration of services and products is often more difficult (and/or requires more changes to the ways of doing business), chiefly because product companies need to master the business of providing advanced services the same time.
Read more under Management Guidance: ARE “SOLUTIONS“ THE RIGHT WAY TO COMPETE? – AN ANALYSIS IN THREE PARTS
Categories: Strategic Analysis