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 the features of preindustrial,
  industrial, and postindustrial societies.
• Describe the features of the new service economy

3
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

4
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

5
Role of Services in an Economy
6
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

7
Trends in U.S. Employment by Sector

8
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 of
  health, Global
• 
  
  education,
• 
  
  recreation
  

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
Source of Service Sector Growth

• InnovationPush theory (e.g. Post-it)Pull theory
  (e.g. Cash Management)Services derived from
  products (Video Rental)Information driven
  servicesDifficulty of testing service prototypes
• Social Trends Aging of the populationTwo-income
  familiesGrowth in number of single peopleHome
  as sanctuary

13
Discussion Topics

• Illustrate how the type of work he or she does
  influences a persons 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?

14
Interactive Class Exercise

• The class breaks into small groups. Each group
  identifies service firms that should be listed in
  the top Fortune 100 and places them in rank order
  of estimated annual revenue.www.fortune.com/lis
  ts/F500/index.html