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Lecture 4 PDF
Lecture 4 PDF
Lecture 4 PDF
Learning objectives
ACTION
Acquisition and deployment of
organization’s assets
(Business processes, plant and equipment,
know-how, organizational structure and
financial resources)
A competitive service strategy must consider the customer’s expectations and the
competitive environment. A service organization has to define service value which
should be aligned with the perceptions of customers. To win over customers or
market share. Service organization analyze critically the competitive environment.
After capturing service value and competitive environment, a service organization
may develop competitive service strategy towards strategic service vision.
Strategic service vision needs a cross-functional approach with clear service
concept to develop appropriate service delivery system. Following steps will help
service organizations to formulate service strategy.
Formulation of appropriate strategy is the most challenging task for any sector or
organization. Due to the nature of services, which exhibit distinctive characteristics
as compared to manufactured goods, formulating right strategy for services
becomes very difficult for the following reasons.
Value can be defined as the ability of goods or service a need or provide benefits to
a customer. Value is subjective, which depends on the perception of a customer.
Porter’s model of 5 forces to define the competitive environment as shown in Figure 2.6.
New Entrants
Intensity & rivalry among competitors
Substitutes
Buyers
Suppliers
FIGURE 2.6: PORTER’S FIVE FORCE MODEL OF COMPETITIVE
ENVIRONMENT
• Companies which are equal in size and resources. Examples are HCL and
TCS, which are ITeS companies.
• Competition is more in slow-growing industry. Each company fight for
market share.
• Intense price competition due to high fixed costs. High fixed costs create
pressure to use full capacity of a company.
- Reduction in revenues.
Examples
• Earlier BHEL was the only company bidding for state electricity projects till
new entrants came like ALSTOM, Mitsubishi and L&T.
• Jet Airways has also entered into the race of air transport services where
Indian Airlines had long been the only public sector enterprise in this
industry.
• For certain service sectors there are government policies such as licensing
requirements in healthcare, which poses challenges to new entrants.
2.4.3 Substitutes
2.4.4 Buyers
2.4.5 Suppliers
• Airlines have only two main options to buy aircrafts from: Boeing and
Airbus.