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Internalizing the product

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This report is both a synopsis of the presentation at the workshop entitled Internalizing the Product and the key findings from the research project that commenced in May 1995. The idea of internalizing the product goes back to the notion of externalities. The objective is to minimize the social costs (or externalities) associated with a simple exchange of goods between the producer and the consumer. We argue that this can be achieved by a service-oriented approach, on the part of the firm. A service-oriented company is one that has deliberately undertaken to maximize customer service, while retaining ownership or long term responsibility for the product. We propose that the most optimal (or profitable) way for a firm to go about internalizing the product is through a service-intensive approach. We discuss the key findings from the research project, which includes: motivating factors, economics of remanufacturing, the role of design, organizational structure and the impact on the environment

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