CMA Intermediate · Operations Management and Strategic Management · Digital Strategy
A manufacturer sells smart water purifiers and earns recurring revenue from sensor-driven filter replacements and usage-based service plans, using data collected from the devices. Which strategic shift in value creation does this best represent?
The firm is shifting from one-time product sales to data-enabled services and recurring revenue. Sensors in the purifiers generate usage data that supports filter replacements and service plans, creating continuing customer relationships and income rather than a single sale, which is a core digital value-creation approach.
- AMoving from one-time product sales to data-enabled services and recurring revenueCorrect
- BVertical integration into raw material supply
- CPure cost leadership through lower wages
- DDivestment of the core business to reduce asset base
Explanation
Connected devices generate data that enables ongoing services such as predictive filter replacement, converting a one-off sale into recurring revenue. Nothing in the scenario concerns raw material supply, wage-based cost leadership or divestment.
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