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Interface Case Study

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Submitted By sarangd
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Sustainable Operations Sarang Deshmukh
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MBA 713 Case#1
1. Regarding the conventional economic arguments for providing services (i.e., leasing) rather than simply selling a product, which of these is most important in the carpet industry?
The conventional economic arguments for providing services argue that the value of the option comes from higher margins, stable revenue streams and long-term customer relationships. For the carpet industry, the long-term relationship aspect of the argument is most important. The industry is unique such that the each and every customer (building owner) in the industry has to continue availing the product and services of the industry for a long time, until the building ceases to exist. Thus the business of the customer is a repeat business. In traditional product selling approach the industry stakeholder (carpet manufacturer) gets the business every few years, typically 7-10 years. Due to the large gap in time when the business happens in a traditional market, it may not be possible for the manufacturer to maintain the relations with the customers to secure the repeat business. The long-term customer relationship aspect of the services model enables the seller of the service to maintain the relationship with the customer and get the repeat business after expiry of the lease thereby increasing the retention rate.
2. What is your assessment of Interface’s Evergreen Services business model in 2002? Why is Interface having difficulty in selling Evergreen Service Agreements?
From 1995, when Interface started offering the Evergreen Services to the customers, its approach has been to provide a complete end to end solution for floorcovering needs of its customers. In order to achieve the goal, Interface tried to make the offering financially appealing to the customers by offering the

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