SKF Bearings: Market Orientation Through Services

Market Orientation Through Services
by S. Vandermerwe and Marika Taishoff, Case Study abstract from Harvard Business Online

The changes in the competitive landscape were so significant and unexpected at the time that Swedish based SKF, one of the world’s largest bearing companies, saw no other option: if it were to improve profitability and return on assets, it would have to totally restructure and transform the company. Production had already been rationalized and was fully automated, leaving little room for savings. Neither could R&D expenditures be shaved, given the company’s longstanding reputation for technology and quality. The only viable long-term solution was to change the strategic orientation of SKF from the production line to the market.

The change and implementation process would be lengthy and involved all facets of the organization: from structural design, to rewarding and motivating people, and from reformulating the product/service portfolio, to branding and repositioning. It also involved a new way of working with the vast distribution network.

Adapted from Harvard Business Online abstracts; full case available at: www.hbsp.harvard.edu