Role of Services in an Economy

1
Role of Services in an Economy

• Welcome to
• Service Management
• Professor James Fitzsimmons
• University of Texas at Austin

2
Learning Objectives

• Describe the central role of services in an
  economy.
• Discuss the evolution of an economy from an
  agrarian society to a service society.
• Describe and contrast the features of the new
  experience economy with that of previous
  economies.
• Describe the features of the new service economy
• Discuss the role of service managers with respect
  to innovation, social trends, and management
  challenges.

3
Interactive Model of an Economy
Extractive sector
Business services
Customer
Infrastructure services
Trade services
Public administration
Social/personal services
Manufacturing sector
4
Service Definitions

• A Service is a Time-perishable, Intangible
  Experience Performed for a Customer Acting in the
  Role of a Coproducer.
• James Fitzsimmons
• Services are deeds, processes, and
  performances.
• Valarie Zeithaml Mary Jo Bitner

5
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

6
Stages of Economic Development

• 
  Features
• 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 of
  health, Global
• 
  
  education,
• 
  
  recreation
  

7
Trends in U.S. Employment by Sector

8
Percent Service Employment for Selected
Industrialized Nations

• Country 1980
  1987 1993 1999
• United States 67.1
  71.0 74.3 80.4
• Canada 67.2
  70.8 74.8 73.9
• Japan 54.5
  58.8 59.9 72.4
• France 56.9
  63.6 66.4 70.8
• Israel 63.3
  66.0 68.0 70.7
• Italy 48.7
  57.7 60.2 61.1
• China 13.1 17.8
  21.2 26.4

9
The New Experience Economy
10
The Four Realms of an Experience
11
Experience Design Principles

• Theme the Experience (Forum shops)
• Harmonize Impressions with Positive Cues(OHare
  airport parking garage)
• Eliminate Negative Cues(Cinemark talking trash
  containers)
• Mix in Memorabilia (Hard Rock T-shirts)
• Engage all Five Senses (Mist in Rainforest)

12
Role of the Service Manager

• Entrepreneurial Innovation
• Capitalizing on Social Trends (the aging of the
  U.S. population, the two-income family, growing
  number of single people)
• Management Challenges Economies of Scale (MRI
  scanner) Economies of Scope(Convenience
  store) Complexity (Yield Management) Boundary
  Crossing (Bank vs Brokerage) International
  Competitiveness(Diversity)

13
Discussion Topics

• Illustrate how the type of work he or she does
  influences a persons lifestyle.
• Is it possible for an economy to be based
  entirely on services?
• Speculate on the effect that the Internet will
  have on the delivery of services.
• What is the value of self-service in an economy?
• Comment on the role that marketing plays in the
  service innovation process.