ROLE OF SERVICES IN AN ECONOMY 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 the features of preindustrial, industrial, and postindustrial societies. Describe the features of the new service economy

1. ROLE OF SERVICES IN AN
ECONOMY
Welcome to
Service Management
By: Dr. Gharakhani

2. WHAT IS SERVICE?

3. SERVICE

4. SERVICE

5. SERVICE

6. SERVICE

7. SERVICE

8. CH 1:ROLE OF SERVICES IN AN ECONOMY
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 the features of preindustrial, industrial, and postindustrial
societies.
Describe the features of the new service economy

9. 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

10. 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

11. DEPENDENCY OF MANUFACTURING ON
SERVICES

12. STAGES OF ECONOMIC ACTIVITY

13. PERCENT SERVICE EMPLOYMENT FOR SELECTED NATIONS
Country 1980 1987 1993 2000
United States 67.1 71.0 74.3 74.2
Canada 67.2 70.8 74.8 74.1
Israel 63.3 66.0 68.0 73.9
Japan 54.5 58.8 59.9 72.7
France 56.9 63.6 66.4 70.8
Italy 48.7 57.7 60.2 62.8
Brazil 46.2 50.0 51.9 56.5
China 13.1 17.8 21.2 40.6

14. TRENDS IN U.S. EMPLOYMENT BY SECTOR
0
10
20
30
40
50
60
70
80
90
Proportationoftotalemployement
Year
Service
Manufacturing
Agriculture

15. STAGES OF ECONOMIC DEVELOPMENT DANIEL
BELL, HARVARD UNIVERSITY
Society Game Predominant
activity
Use of
human labor
Unit of
social life
Standard of
living
measure
Structure Technology
Pre-
Industrial
Against
Nature
Agriculture
Mining
Raw muscle
power
Extended
household
Sub-sistence Routine
Traditional
Authoritative
Simple hand
tools
Industrial Against
fabricated
nature
Goods
production
Machine
tending
Individual Quantity of
goods
Bureaucratic
Hierarchical
Machines
Post-
industrial
Among
Persons
Services Artistic
Creative
Intellectual
Community Quality of
life in terms
of health,
education,
recreation
Inter-
dependent
Global
Information

21. GROWTH OF U.S. NONFARM JOBS,1992-
2002

22. THE NEW EXPERIENCE ECONOMY
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

25. THE FOUR REALMS OF AN EXPERIENCE
Customer Participation
Passive Active
Environmental
Absorption Entertainment
(Movie)
Education
(Language)
Relationship Immersion Esthetic
(Tourist)
Escapist
(ScubaDiving)

26. EXPERIENCE DESIGN PRINCIPLES
Theme the Experience (Forum shops Los Vegas)
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)

31. JUNGLE MIST + SOUND + CAFE

32. SOURCE OF SERVICE SECTOR GROWTH
Innovation
Push theory (e.g. Post-it)
Pull theory (e.g. Cash Management)
Services derived from products (Video Rental)
Information driven services
Difficulty of testing service prototypes
Social Trends
Aging of the population
Two-income families
Growth in number of single people
Home as sanctuary

33. DISCUSSION TOPICS
Illustrate how the type of work he or she does influences a person’s
lifestyle. For example, contrast a farmer, a factory worker, and a
school teacher.
Is it possible for an economy to be based entirely on services?
What is the value of self-service in an economy?

34. INTERACTIVE CLASS EXERCISE
The class breaks into small groups. Each group identifies service firms
that should be listed in the top Fortune 500 and places them in rank
order of estimated annual revenue.
http://money.cnn.com/magazines/fortune/fortune500/2013/full_list/index.ht
ml?iid=F500_sp_full

35. DEFINITION OF 'FORTUNE 500'
An annual list of the 500 largest companies in the United States as
compiled by FORTUNE magazine. The list is put together using the
most recent figures for revenue and includes both public and private
companies with publicly available revenue data. Exxon Mobil,
Walmart, General Electric and Chevron have vied for the top spots on
the list in recent years. To be a Fortune 500 company is widely
considered to be a mark of prestige.

37. TOP 10 LIST
Rank Company Name Revenues ($b) Profits ($mm)
1
Wal-Mart
Stores
469.2 16,999
2 Exxon Mobil 449.9 44,880
3 Chevron 233.9 26,179
4 Phillips 66 169.6 4,124
5
Berkshire
Hathaway
162.5 14,824
6 Apple 156.5 41,733
7
General
Motors
152.3 6,188
8
General
Electric
146.9 13,641
9 Valero Energy 138.3 2,083
10 Ford Motor 134.3 5,665