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Hilti Fleet Management A Turning a Successful Business Model on its Head Case Solution
The case that is being analyzed concerns with how Hilti undertook strategic decision making when it planned on implementing fleet management system. This basically meant that Hilti would adopt a new business model as it would switch from selling power tools to leasing them. Hence, this would act as a differentiating factor for the company from its competitors. Also, it was expected that such a strategic move would considerably improve the customer experience.
Since, Hilti was already successful using its current business model, it now had to make a decision if it should take the risk of restructuring its business model. The industry will be analyzed after which Hilti’s position will be evaluated and the customer problems studied to make an informed decision. The two business models will also be compared so as to determine the pros and cons associated with each choice and then making the final decision.
Following questions are answered in this case study solution
Dominant Business models in the Industry
Factors that made Hilti special
Customer Pain Points
Comparison between the Old and New Business Model
Requirements for carrying out the new business Model
Customer Value Creation Potential
Fleet Management- Good or Bad Idea?
Barriers to the competitive imitation of Hilti’s FM model
Alternative Ways to respond to customer needs
Case Analysis for Hilti Fleet Management A Turning a Successful Business Model on its Head
2. Dominant Business models in the Industry
The dominant business models in the industry comprise of direct selling business model and extant business model. Under the direct selling model, revenue was generated by selling the products and services to the end consumers with the help of a large sales workforce. These included the producers of the power tools which make use of extensive R&D and innovation to develop new products and the firms would aggressively compete over innovative products. Hence, such firms had a huge product portfolio as they aimed to meet the diverse needs of their target customers.
Under the extant business model, the power tools were owned by the firms. This meant that the construction companies were mainly responsible for managing those tools. These were the application experts as they were focused on the installation process of tools at the construction site. Hilti operated under the respective segment. Thirdly, there were service providers and retailers as well as they offered services on the construction sites that were concerned with demolition, cutting, grinding, insulation etc. at the construction sites. A major player operating such a business model was Wurth as it focused on earning a substantial market share through having control over job sites.
3. Factors that made Hilti special
There were a number of factors that made Hilti so special. Firstly, the company had maintained its direct selling approach since its inception. Also, it was making use of an extant business model which had played a huge role in driving the company towards success. Apart from this, the company had been involved in selling tools, spare parts, and maintenance services directly to the customers making it popular in the eyes of its customers.
Apart from this, the company very effectively separated its customers into regional segments based on the turnover and potential of the respective segments. This allowed the company to increase its reach. Further, the multi-channel approach to manage its customers was also quite a distinct approach. Also, it made use of videographers on the worksites to see how its customers would actually use its products. Hence, its customer centric approach was what made the company quite successful. It also focused on quality management together with customer interactions, which helped in improving the productivity of the company with way fewer researchers. This helps understand the company’s focus towards product centricity as well.
4. Customer Pain Points
Analyzing the case, it has been found that the customers wanted products that could be used for a variety of purposes and would have different functions. Not only this, but they required the products to be of high quality and durability. Further, many times the power tools were required to be replaced or repaired which resulted in unanticipated expenditures and delays in the core construction operation.
Further, broken tools would cost immense time as their repair would take an immense amount of time. Also, in most cases, customers would tend to cling on the products for a long period of time and would end up spending more money on repairs than they would have if they would have made a new purchase. Moreover, it was also found that the efficiency level of the power tools would reduce since they were not being serviced frequently. Lastly, customers would often fail to manage their fleet of tools over the period of time as a result of which they would fail to benefit from technologically innovative products.
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