Introduction
Hilti is a multinational corporation that manufactures and sells tools, equipment, and services to the building and construction industries. The primary market for the company is developing countries. Despite this, the company has struggled in recent years due to increased competition in its industry as well as the ever-changing needs of its customers (Frishammar, 2019). In this essay, we will look at the corporate strategy changes that could have been recommended for Hilti, the industry’s dominant business models, customer concerns, customer value, barriers and impediments to the competitive imitation of FMI, and alternative methods by which Hilti could have responded to customer needs and industry challenges (Casadesus-Masanell & Sauer, 2017). We will specifically examine how Hilti could have responded to customer needs and industry challenges.
Changes in Corporate Strategy
Hilti, which is well-known for manufacturing and selling high-quality power tools and other construction equipment, recently realized that its business model, known as Hilti Fleet Management (HFM), has proven to be highly effective. Despite this, the case study “Hilti Fleet Management (A): Turning a Successful Business Model on Its Head” shows that HFM’s success may not be long-term due to changes in customer tastes and the development of new technologies (Frishammar, 2019). As a result, Hilti must revise its corporate strategy to thrive in the market and maintain its competitive position.
The first and most crucial thing Hilti should do is invest in technology to create an online platform for managing its tool and equipment inventory. The platform must have an easy-to-use user interface that allows clients to place orders, manage fleets, and track the location of their vehicles in real time. Customers will appreciate the ease of use and the fact that it saves them time and effort. Hilti should be able to monitor the operation of its equipment using the platform’s features. This will allow any problems to be identified and resolved immediately. Furthermore, Hilti may use big data to give customers insights on maximizing fleet utilization and finding cost-cutting opportunities to serve their needs better (Casadesus-Masanell & Sauer, 2017).
Second, Hilti should broaden its product offering to provide a more comprehensive range of tools and gadgets. This would enable them to provide better service to their customers. As a result of this advancement, Hilti will be able to serve as a one-stop shop specializing in construction equipment and meet the diverse needs of its customers (Baecker & Weking, 2021). Furthermore, Hilti should invest in research and development (R&D) to develop innovative solutions that meet the changing needs of the construction industry, including concerns about safety and the environment.
Finally, Hilti’s commercial endeavors should revolve around the needs and preferences of the company’s clientele. This entails understanding the needs and preferences of customers and adapting the organization’s products and services accordingly. For example, Hilti may offer customers customized lease packages based on their typical consumption patterns and any special requirements they may have. Furthermore, Hilti should prioritize long-term customer relationships by providing high levels of customer service and support (Frishammar, 2019).
Lastly, Hilti should look into the possibility of expanding into new markets and geographic regions to acquire new customer bases. This could be accomplished through strategic partnerships with other companies with a strong presence in the target market or through outright purchasing such companies. Furthermore, Hilti should invest in marketing and other brand-building activities to increase the brand’s exposure and awareness (Baecker & Weking, 2021).
Dominant Business Models in the Industry
There are many different types of business organizations in the construction industry today, some of which include renting, leasing, and outright ownership of construction machinery. Equipment rental is a popular business model for contractors who work in the construction industry because it allows contractors who need machinery for specific projects to rent equipment on a short-term basis without committing to long-term ownership (Casadesus-Masanell & Sauer, 2017). Another popular option among contractors is leasing, which allows them to use machinery for a more extended period than they would be able to with ownership but without the initial financial outlay required for ownership. To summarize, ownership is a common type of business organization because it gives contractors complete control over their tools and allows them to use them as frequently as needed to meet their requirements.
On the other hand, Hilti’s fleet management model offers an innovative and forward-thinking approach to the process of purchasing construction equipment. The core of Hilti’s fleet management strategy is providing comprehensive services to construction companies as part of a single, all-encompassing agreement. These services can be used for a wide range of purposes. The services provided include acquiring, maintaining, and repairing various pieces of construction equipment. Companies can focus on their core competencies while Hilti manages its equipment by implementing this strategy (Frishammar, 2019).
Furthermore, Hilti’s fleet management model is unique in allowing for a high level of customization. Regarding fleet management contracts, construction companies can tailor them to their specific needs by choosing from various service levels and pieces of equipment to include in their respective package deals. This technique can help construction companies improve the efficiency of their equipment use, reducing unnecessary downtime and increasing output. The strategy is highly adaptable and can help construction firms maximize the efficiency of their equipment utilization (Baecker & Weking, 2021).
The three most common types of company structures used in the construction industry are equipment leasing, ownership, and rental. Nonetheless, Hilti’s fleet management model is a novel approach to the equipment purchasing process. This product allows construction companies to access a flexible and highly configurable solution. With Hilti’s fleet management approach, construction companies can focus on their core competencies while Hilti’s team of qualified professionals handles all aspects of equipment administration. This is accomplished by providing our customers with comprehensive service options (Frishammar, 2019).
Customers’ Concerns
According to “Hilti Fleet Management (A): Turning a Successful Business Model on Its Head,” customers’ primary concerns are the performance and accessibility of their tools and equipment. Construction firms and contractors rely heavily on their tools to complete projects on time; thus, delays caused by faulty or unavailable equipment can result in significant financial losses (Casadesus-Masanell & Sauer, 2017).
Hilti’s traditional business strategy has proven beneficial in providing high-quality tools and equipment to clients through direct sales. However, the company noticed that consumers’ concerns were broadening to include a more comprehensive view of tool management. Customers wanted a comprehensive solution that provided exceptional items and ensured their continued availability and performance.
Hilti developed Hilti Fleet Management as a comprehensive solution allowing clients to rent Hilti’s tools and equipment while receiving maintenance, repairs, and replacements as needed. Hilti claimed responsibility for ensuring that its clients’ tools were always available and in good condition with this strategy, allowing clients to focus on completing their tasks effectively (Baecker & Weking, 2021).
The clients were also concerned about the total cost of ownership. Customers who lease tools from Hilti Fleet Management can better manage their budgets and save money on purchasing new equipment. Furthermore, the program increased transparency on tool ownership costs, allowing clients to choose the best instruments for their specific needs.
Customers are typically more concerned with tool and equipment functionality, the total cost of ownership, and accessibility. Hilti Fleet Management addresses these concerns by providing customers with a comprehensive tool management system with greater cost transparency and flexibility (Frishammar, 2019).
Customer Value
Customer value, which refers to the perceived benefits customers receive in exchange for their investment in a product or service, is the central concept of HFM. The heart of HFM’s customer value proposition is to provide consumers with a simple and cost-effective solution for managing their tools and equipment.
Customers can outsource their tool management needs to Hilti through HFM, freeing time and resources to focus on their core business. For a monthly fee, Hilti offers a comprehensive service that includes tool procurement, maintenance, repair, and replacement (Casadesus-Masanell & Sauer, 2017). Clients can budget more effectively now that they do not have to worry about unexpected maintenance or replacement costs.
In addition to cost savings, HFM provides clients with several other advantages. Customers can track the usage and location of their tools using Hilti’s fleet management software, reducing the likelihood of theft or loss. Furthermore, because Hilti can quickly replace ineffective or faulty tools, HFM ensures that clients always have the right tool for the job (Baecker & Weking, 2021).
HFM’s key client value is to provide a comprehensive and hassle-free tool management solution. Clients who outsource their tool management needs to Hilti can save money, increase efficiency, and concentrate on their core competencies. By allowing clients to focus on their projects rather than their equipment, HFM provides enormous value in the construction industry, where time is money (Frishammar, 2019).
Barriers and Impediments to Competitive Imitation of FMI
Hilti Fleet Management is a unique business concept that has proven advantageous in the construction industry (FMI). However, there are several constraints and impediments to the competitive replication of FMI. The following obstacles prevent competitors from replicating FMI.
As a prerequisite, the FMI business model necessitates a significant investment in infrastructure and technology. Hilti has invested heavily in infrastructure and technology to create a comprehensive fleet management system (Baecker & Weking, 2021). The system comprises a tracking system, data processing tools, and specific hardware and software installations. As a result, the initial investment required to build a comparable system represents a significant barrier for competitors.
A customer-centric approach is the second pillar of FMI’s success. Hilti has tailored its services to meet the specific needs of its customers. The company has invested in training its sales team to provide competent customer recommendations. Furthermore, Hilti has established a dedicated customer support team to handle consumer inquiries and complaints. As a result, competitors will need help to match Hilti’s exceptional customer service (Casadesus-Masanell & Sauer, 2017).
Third, Hilti has strong brand recognition within the construction industry. Hilti is well-known for its high-quality products and services. Customers rely on Hilti to provide reliable and efficient fleet management services. Competitors attempting to enter the market face significant barriers due to Hilti’s strong brand image (Baecker & Weking, 2021).
Fourth, the FMI business model is supported by long-term client contracts. Hilti has built long-term customer relationships by providing dependable and efficient fleet management services. Furthermore, the high switching costs associated with canceling long-term contracts with Hilti present a significant barrier for competitors (Frishammar, 2019).
Lastly, Hilti offers a wealth of information and statistics on consumer preferences and behavior. Hilti has invested in data analysis technologies, allowing it to assess consumer preferences and behavior. As a result, the company can tailor its services to its customer’s specific needs (Casadesus-Masanell & Sauer, 2017). Competitors need help replicating the volume of data and information Hilti have access to.
Alternative Methods Hilti could have reacted to market demands and business challenges.
As an alternative to the fleet management program, Hilti could have broadened its product and service offerings, partnered with other retailers, provided financing options, and developed subscription services to meet customer needs and industry constraints (Frishammar, 2019). Hilti can expand its distribution network and reach a wider audience by forming alliances with other construction-related retailers. Customers who do not have the funds to purchase tools outright may benefit from the availability of lease and payment plan options. Subscription services may reduce customers’ financial risk by providing a less expensive alternative to purchasing tools outright. Finally, diversifying the company’s products and services may assist it in attracting more customers and increasing revenue (Casadesus-Masanell & Sauer, 2017).
Conclusion
In the construction industry, Hilti faces several significant challenges, the most prominent of which are rising levels of competition and shifting customer expectations. The company needed to expand its products and services, create an online sales channel, form relationships with other merchants, offer various financing options, and begin selling subscription services to overcome these obstacles. By implementing these strategies, Hilti will be able to continue meeting the ever-changing needs of its customers while maintaining its position as the industry leader. Hilti must exercise caution when expanding its business to maintain its brand and maintain its fundamental principles. If Hilti wants to remain a significant player in the construction industry despite the significant change, the company must maintain its adaptability and responsiveness to market developments.
Furthermore, to maintain customer satisfaction and loyalty, Hilti should continue to prioritize the delivery of high-quality goods and services, dependable customer service, and effective fleet management. Suppose Hilti can adapt to changing market conditions and implement an effective business strategy. In that case, the company has a good chance of remaining a profitable and successful player in the construction industry.
References
Baecker, J., Wollmann, M., & Weking, J. (2021). Opportunities and Challenges of Use-oriented Business Models in Industrial Settings. In AMCIS. https://www.mdpi.com/2199-8531/8/1/19#
Casadesus-Masanell, R., Gassmann, O., & Sauer, R. (2017). Hilti Fleet Management (A): Turning a Successful Business Model on Its Head. Harvard Business School case study, pp. 717–427. https://www.hbs.edu/faculty/Pages/item.aspx?num=52550
Frishammar, J., & Parida, V. (2019). Circular business model transformation: A roadmap for incumbent firms. California Management Review, 61(2), 5-29. https://doi.org/10.1177/0008125618811926
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