Management of Management of Service Service

OperationsOperationsProfessor Ron SedlockProfessor Ron Sedlock

Welcome toWelcome to

Learning Objectives Learning Objectives (Chap 1)(Chap 1)

1.1. Describe the central role of services Describe the central role of services in an economy.in an economy.

2.2. Discuss the evolution of an economy Discuss the evolution of an economy from an agrarian society to a service from an agrarian society to a service society.society.

3.3. Describe the features of preindustrial, Describe the features of preindustrial, industrial, and postindustrial industrial, and postindustrial societies.societies.

4.4. Describe the features of the new Describe the features of the new service economyservice economy

Service DefinitionsService Definitions A service is a time-perishable, A service is a time-perishable,

intangible experience performed for intangible experience performed for a customer acting in the role of a co-a customer acting in the role of a co-producer.producer.

James James Fitzsimmons Fitzsimmons

Role of Services in an Role of Services in an EconomyEconomy

Trends in U.S. Employment Trends in U.S. Employment by Sectorby Sector

0

10

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30

40

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60

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Year

Prop

orta

tion

of to

tal e

mpl

oyem

ent

Service

ManufacturingAgriculture

Stages of Economic Stages of Economic DevelopmentDevelopment

Pre- Use of StandardPre- Use of Standard dominant human Unit of of living dominant human Unit of of living Society Game activity labor social life measure Structure TechnologySociety Game activity labor social life measure Structure Technology

Pre- Against Agriculture Raw Extended Sub- Routine Simple Pre- Against Agriculture Raw Extended Sub- Routine Simple handhand

Industrial Nature Mining muscle household sistence Traditional toolsIndustrial Nature Mining muscle household sistence Traditional tools power Authoritative power Authoritative

Industrial Against Goods Machine Individual Quantity Bureaucratic Machines Industrial Against Goods Machine Individual Quantity Bureaucratic Machines fabricated production tending of goods Hierarchical fabricated production tending of goods Hierarchical naturenature Post- Among Services Artistic Community Quality of Inter- InformationPost- Among Services Artistic Community Quality of Inter- Information industrial Persons Creative life in terms dependentindustrial Persons Creative life in terms dependent Intellectual of health, GlobalIntellectual of health, Global education,education, recreation recreation

The New Experience The New Experience EconomyEconomy

Economy Agrarian Industrial Service Experience

Function Extract Make Deliver Stage

Nature Fungible Tangible Intangible Memorable

Attribute Natural Standardized Customized Personal

Method of supply

Stored in bulk

Inventoried Delivered on demand

Revealed over time

Seller

Trader

Manufacturer

Provider

Stager

Buyer

Market

User

Client

Guest

The Four Realms of an The Four Realms of an ExperienceExperience

Customer Participation

Passive Active

Environmental

Absorption Entertainment (Movie)

Education (Language)

Relationship Immersion Esthetic (Tourist)

Escapist (ScubaDiving)

Experience Design Experience Design PrinciplesPrinciples

• Theme the Experience (Forum shops)Theme the Experience (Forum shops)• Harmonize Impressions with Positive Harmonize Impressions with Positive

CuesCues(O’Hare airport parking garage)(O’Hare airport parking garage)

• Eliminate Negative CuesEliminate Negative Cues(Cinemark talking trash containers)(Cinemark talking trash containers)

• Mix in Memorabilia (Hard Rock T-shirts)Mix in Memorabilia (Hard Rock T-shirts)• Engage all Five Senses (Mist in Engage all Five Senses (Mist in

Rainforest)Rainforest)

Source of Service Sector Source of Service Sector GrowthGrowth

• InnovationInnovationPush theory (e.g. Post-it)Push theory (e.g. Post-it)Pull theory (e.g. Cash Management)Pull theory (e.g. Cash Management)Services derived from products (Video Services derived from products (Video Rental)Rental)Information driven servicesInformation driven servicesDifficulty of testing service prototypesDifficulty of testing service prototypes

• Social TrendsSocial Trends Aging of the populationAging of the populationTwo-income familiesTwo-income familiesGrowth in number of single peopleGrowth in number of single peopleHome as sanctuaryHome as sanctuary

Discussion TopicsDiscussion Topics• Illustrate how the type of work he or Illustrate how the type of work he or

she does influences a person’s lifestyle. she does influences a person’s lifestyle. For example, contrast a farmer, a For example, contrast a farmer, a factory worker, and a school teacher.factory worker, and a school teacher.

• Is it possible for an economy to be Is it possible for an economy to be based entirely on services?based entirely on services?

• What is the value of self-service in an What is the value of self-service in an economy?economy?

• How does trade barriers affect a How does trade barriers affect a nation’s economy?nation’s economy?