welcome to service management the role of services in an economy james fitzsimmons seay professor of...
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Welcome to Service Management
The Role of Services in an Economy
James FitzsimmonsSeay Professor of Business Emeritus
University of Texas at Austin
McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives Identify traits that all services have in common. Discuss the central role of services in an economy. Identify and differentiate the five stages of
economic activity. Describe the features of preindustrial, industrial,
and postindustrial societies. Describe the features of the new service economy. Contrast the push vs. pull theories of innovation. Identify the sources of service sector growth.
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Service Definitions
Services are deeds, processes, and performances.
Valarie Zeithaml & Mary Jo Bitner
A service is a time-perishable, intangible experience performed for a customer acting in the role of a co-producer.
James Fitzsimmons
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Definition of Service Firms
Service enterprises are organizations that facilitate the production and distribution of goods, support other firms in meeting their goals, and add value to our personal lives.
James Fitzsimmons
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Percent Employment in ServicesTop Ten Postindustrial Nations
Country 1965 1975 1985 1995 2005
United States 59.5 66.4 70.0 74.1 78.6
United Kingdom 51.3 58.3 64.1 71.4 77.0
The Netherlands 52.5 60.9 68.3 73.4 76.5
Sweden 46.5 57.7 66.1 71.5 76.3
Canada 57.8 65.8 70.6 74.8 76.0
Australia 54.6 61.5 68.4 73.1 75.8
France 43.9 51.9 61.4 70.0 74.8
Japan 44.8 52.0 57.0 61.4 68.6
Germany 41.8 n/a 51.6 60.8 68.5
Italy 36.5 44.0 55.3 62.2 65.5
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Role of Services in an Economy
INFRASTRUCTURE SERVICE· Communications· Transportation· Utilities· Banking
PERSONAL SERVICES· Healthcare· Restaurants· Hotels
CONSUMER(Self-service)
GOVERNMENT SERVICES· Military· Education· Judicial· Police and fire protection
DISTRIBUTION SERVICES
· Wholesaling · Retailing · Repairing
FINANCIAL SERVICES · Financing · Leasing · Insurance
MANUFACTURINGServices inside company:
· Finance· Accounting· Legal· R&D and design
BUSINESS SERVICES· Consulting· Auditing· Advertising· Waste disposal
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Stages of Economic Activity
Primary (Extractive): Agriculture, Mining, Fishing, Forestry
Secondary (Goods-Producing): Manufacturing, Processing
Tertiary (Domestic Services): Restaurants, Hotels, Laundry, Maintenance
Quaternary (Trade and Commerce): Transportation, Communications, Retailing, Finance, Government
Quinary (Extending Human Potential): Health, Education, Research, Arts, Recreation
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Trends in U.S. Employment by Sector
0
10
20
30
40
50
60
70
80
9018
50
1860
1870
1880
1890
1900
1910
1920
1930
1940
1950
1960
1970
1980
1990
2000
Year
Pro
po
rtat
ion
of
tota
l em
plo
yem
ent
Service
Manufacturing
Agriculture
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Stages of Economic Development
Pre- Use of Standard dominant Human Unit of of Living Society Game Activity Labor Social Life Measure Structure
Technology
Pre- Against Agriculture Raw Extended Sub- Routine Simple hand Industrial Nature Mining muscle household sistence Traditional tools
power Authoritative
Industrial Against Goods Machine Individual Quantity Bureaucratic Machines fabricated production tending of goods Hierarchical nature Post- Among Services Artistic Community Quality of Inter- Information industrial Persons Creative life in terms dependent Intellectual health, education, recreation
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Percent Distribution of U.S. Employment by Industry
Construction 5%
Manufacturing 9%
Government 17%
Information 2%
Trade, transportation, and utilities 19%
Other services 4%
Financial activities 6%
Leisure and hospitality 10%
Educational and health 15%
Professional and business services 13%
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Projected Percent Change in U.S. Employment by Industry
-20% -10% 0% 10% 20% 30%
Health care and social assistance
Professional and business services
Educational services
Financial services
Leisure and hospitality
Other services
Construction
Transportation and utilities
Information
State and local government
Retail and wholesale trade
Federal government
Agriculture and mining
Manufacturing
All Industry Average
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Economic Evolution
Economy Agrarian Industrial Service Experience
EconomicOffering
Food Packagedgoods
Commodityservice
Consumer services
Businessservices
Function Extract Make Deliver Stage Co-create
Nature Fungible Tangible Intangible Memorable Effectual
Attribute Natural Standardized Customized Personal Growth
Method of Supply
Stored in bulk
Inventoried Delivered on demand
Revealed over time
Sustained over time
Seller Trader Producer Provider Stager Collaborator
Buyer Market Customer Client Guest Collaborator
Expectation Quantity Features Benefits Sensations Capability
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The Four Realms of an Experience
Customer Participation
Passive Active
Environmental
Absorption Entertainment (Movie)
Education (Language)
Relationship Immersion Esthetic (Tourist)
Escapist (ScubaDiving)
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Experience Design Principles
Theme the Experience (Forum shops) Harmonize Impressions with Positive Cues
(O’Hare airport parking garage) Eliminate Negative Cues
(Cinemark talking trash containers) Mix in Memorabilia (Hard Rock T-shirts) Engage all Five Senses (Mist in Rainforest)
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Typology of Services in the 21st Century
Core Experience Essential Feature Examples
Creative Present ideas Advertising, theater
Enabling Act as intermediary Transportation, communications
Experiential Presence of customer Massage, theme park
Extending Extend and maintain Warranty, health check
Entrusted Contractual agreement Service/repair, portfolio mgt.
Information Access to information Internet search engine
Innovation Facilitate new concepts R&D services, product testing
Problem solving Access to specialists Consultants, counseling
Quality of life Improve well-being Healthcare, recreation, tourism
Regulation Establish rules and regulations Environment, legal, patents
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Source of Service Sector Growth Information Technology (e.g. Internet) Innovation
Push theory (e.g. Post-it) Pull theory (e.g. Cash Management) Services derived from products (e.g. Netflix)
Exploiting information (e.g. Auto part sales) Difficulty of testing service prototypes Changing Demographics
Aging of the population Two-income families Growth in number of single people Home as sanctuary
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Distribution of GDP in the US Economy
Product Services
Physical
Information
6%
10%
31%
53%
37%
63%
84%16%
D
BA
C
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