Business Model Choice for Heavy Equipment Manufacturers
56 Pages Posted: 25 Sep 2018 Last revised: 3 Oct 2023
Date Written: October 1, 2023
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
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