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ACCA Strategic Professional · Strategic Business Leader · Cloud, mobile and smart technology

Dunmore Engineering sells industrial pumps. It adds sensors that report vibration and temperature, and now offers customers a contract paid per hour of pump availability, using predictive maintenance to schedule repairs before failure. Which statement best explains the strategic change this represents?

This is a shift from selling products to selling outcomes through a service-based model made possible by connected products. Sensor data allows predictive maintenance and pay-per-availability pricing, which creates recurring revenue but also moves performance and downtime risk onto Dunmore, rather than representing a price cut, integration or divestment.

  1. AA market penetration strategy, as the same product is sold to existing customers at a lower price
  2. BBackward vertical integration into component suppliers to secure input costs
  3. CA shift from selling products to selling outcomes through a service-based model enabled by connected products, changing revenue patterns and the risks Dunmore carriesCorrect
  4. DA divestment strategy, since Dunmore reduces its reliance on manufacturing

Explanation

Connected sensors let Dunmore monitor performance and charge for availability, so value moves from the physical pump to the outcome delivered. Revenue becomes recurring, and Dunmore now bears the risk of downtime. It is not a pricing cut, supplier integration or divestment, since manufacturing continues.

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