Environmental and developmental perspectives of functional sales

Abstract: Developing business strategies that create value forcustomers and have the potential to lower environmental impactsis considered to be a key factor for industrialized societiesto lower their environmental impact.The theme of this thesis has been to explore functionalsales from an environmental and developmental perspective. Ofparticular interest in this regard was to explore how theconcern for the environment has been taken into considerationwhile developing functional sales, and whether or notfunctional sales could be used as an instrument for achievingenvironmental benefits. The research has been conducted byempirical studies in six Swedish companies in the manufacturingsector, having product development and service development inspecial focus. The data collection method has mainly beenqualitative interviews.Academia and industry use several different terms forbusiness solutions. This confusion could lead to difficultiesin understanding each other. From an environmental perspectiveit is important to focus on what incentives to lowerenvironmental impact different business strategies give riseto.For the companies in the performed research the incentivesfor lowering environmental impact, stemming from functionalsales, affected the whole lifecycle of the product. Reuse,refurbishment and upgrading of products were performed inseveral companies. Several companies in the study had a strongfocus on lowering the lifecycle cost for the customer andclaimed that by internalizing costs the already existingstrategy for the companies was strengthened. The environmentalimpact of the use phase was lowered by optimizing theengineering solution or customer business. A new situationaffecting product design is that the product becomes less pricesensitive, which could lead to that more effort is put inproduct development to lower the total lifecycle cost.Environmental tools were used in product development butusually not when developing services or functional salesoffers.Most companies in the study added services to theirtraditional technology. For some companies new technicalsolutions gave incentive to offer functional sales since thenew technology was more expensive per operation but lowered thelifecycle cost.When developing functional sales offers, the complexity inthe development process increases. Functional sales developmentcould benefit from the following points:· Incorporating skills and expertise from all theparties involved throughout the product?s lifecycle intoproduct development. · Developing partnerships forproviding solutions to fulfill the desired functions. ·Developing the organization to handle for example financing,service and end-of-life considerations, and incorporating aservice culture into the company. · Formalizing thedevelopment process.