Service Economy

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Welcome to Service Management Chapter 01 Role of Services in an Economy James Fitzsimmons Seay Professor of Business Emeritus University of Texas at Austin McGraw-Hill/Irwin Service Management: Operations, Strategy, and Information Technology, 6e Copyright © 2008 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.

1-2

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 1-3

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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Role of Services in an Economy
FINANCIAL SERVICES · Financing · Leasing · Insurance INFRASTRUCTURE SERVICE · Communications · Transportation · Utilities · Banking

MANUFACTURING Services inside company: · Finance · Accounting · Legal · R&D and design

DISTRIBUTION SERVICES · Wholesaling · Retailing · Repairing

PERSONAL SERVICES · Healthcare · Restaurants · Hotels

CONSUMER (Self-service)

BUSINESS SERVICES · Consulting · Auditing · Advertising · Waste disposal

GOVERNMENT SERVICES · Military · Education · Judicial · Police and fire protection 1-5

Percent Employment in Services
Top Ten Postindustrial Nations
Country United States United Kingdom The Netherlands Sweden Canada Australia France Japan Germany Italy 1965 59.5 51.3 52.5 46.5 57.8 54.6 43.9 44.8 41.8 36.5 1975 66.4 58.3 60.9 57.7 65.8 61.5 51.9 52.0 n/a 44.0 1985 70.0 64.1 68.3 66.1 70.6 68.4 61.4 57.0 51.6 55.3 1995 74.1 71.4 73.4 71.5 74.8 73.1 70.0 61.4 60.8 62.2 2005 78.6 77.0 76.5 76.3 76.0 75.8 74.8 68.6 68.5 65.5 1-6

Proportation of total employement 60 70 80 90 10 20 30 40 50 0 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Service Agriculture Manufacturing Year 1-7

Trends in U.S. Employment by Sector

Distribution of GDP in the US Economy (GDP:Gross Domestic Product) Product A Physical 6% 31% Services B 37%

Information

10%

53%

63%

C 16% 84%

D

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Stages of Economic Development
Society PreIndustrial Game Against Nature Predominant Activity Agriculture Mining Use of Human Labor Raw muscle power Standard Unit of of Living Social Life Measure Structure Extended household Subsistence Technology

Routine Simple hand Traditional tools Authoritative Bureaucratic Machines Hierarchical

Industrial

Against Goods Machine Individual fabricated production tending nature Among Services Persons

Quantity of goods

Postindustrial

Artistic Community Quality of Interlife in terms dependent Creative Intellectual health, education, recreation

Information

1-9

Economic Evolution
Economy Economic Offering Function Nature Attribute Method of Supply Seller Buyer Expectation Agrarian Food Industrial Packaged goods Make Tangible Standardized Inventoried Producer Customer Features Service Commodity service Deliver Intangible Customized Delivered on demand Provider Client Benefits Experience Consumer services Stage Memorable Personal Revealed over time Stager Guest Sensations Business services Co-create Effectual Growth Sustained over time Collaborator Collaborator Capability 1-10

Extract Fungible Natural Stored in bulk Trader Market Quantity

The Four Realms of an Experience
Customer Participation Passive Active

Absorption Entertainment Education (Movie)...
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