Challenge or opportunity? A case of tire rental servitization from financial and channel perspectives

Abstract

Using a case study of a Korean tire manufacturing firm that became a tire rental servitization provider during 2015-2019, this study disentangles revenue and cost implications and highlights moderating factors (i.e., the internal and external channel conflicts) that hinder firm performance. The study mitigates the inherent time lags of the firm's product and service portfolio variables and analyzes financial data. The servitization and non-servitization revenue streams are independent and non-cannibalizing. Initial profitability is small, given the operational costs increase with the service growth. Internal organizational change affects servitization performance, challenging manufacturing firms to maintain servitization profitability.