Business Model Choice for Heavy Equipment Manufacturers

56 Pages Posted: 25 Sep 2018 Last revised: 3 Oct 2023

See all articles by Philippe Blaettchen

Philippe Blaettchen

Bayes Business School (formerly Cass)

Niyazi Taneri

University of Cambridge - Cambridge Judge Business School

Sameer Hasija

INSEAD - Technology and Operations Management

Date Written: October 1, 2023

Abstract

Technological advances enable new business models for heavy equipment manufacturers wherein customers access equipment without ownership. We seek to understand the profitability and environmental performance of different emerging business models in light of salient economic and operational factors. We develop a game- theoretic model to identify the optimal choice between a traditional ownership-based business model and two access-based models: servicization and peer-to-peer sharing. After-sales services, equipment characteristics, usage environments, and fuel prices affect this choice. We also provide a novel framework to analyze business models’ environmental impact, which incorporates trade-offs between economic value and environmental costs and shows that all models may create win-win situations for the manufacturer and the environment.

Keywords: Business model innovation, Environmental impact, Sharing economy, After-sales, Durable Goods

Suggested Citation

Blaettchen, Philippe and Taneri, Niyazi and Hasija, Sameer, Business Model Choice for Heavy Equipment Manufacturers (October 1, 2023). INSEAD Working Paper No. 2020/43/TOM, Available at SSRN: https://ssrn.com/abstract=3254790 or http://dx.doi.org/10.2139/ssrn.3254790

Philippe Blaettchen

Bayes Business School (formerly Cass) ( email )

United Kingdom

Niyazi Taneri

University of Cambridge - Cambridge Judge Business School ( email )

Trumpington St.
Cambridge, CB21AG
United Kingdom

Sameer Hasija (Contact Author)

INSEAD - Technology and Operations Management ( email )

Boulevard de Constance
77 305 Fontainebleau Cedex
France

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