Welcome to

Management of Service Operations

Professor Ron Sedlock

Learning Objectives (Chap 1)

1. 2.

3.
4.

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

Service Definitions
A service is a time-perishable, intangible experience performed for a customer acting in the role of a co-producer. James Fitzsimmons

Role of Services in an Economy

Trends in U.S. Employment by Sector

Proportation of total employement

90 80 70 60 50 40 30 20 10 0
18 50 18 70 18 90 19 10 19 30 19 50 19 70 19 90

Service Manufacturing Agriculture

Year

Stages of Economic Development

Society Game

Predominant activity
Agriculture Mining

Use of human Unit of labor social life

Raw Extended muscle household power Machine Individual tending

Standard of living measure Structure

Subsistence

Technology

PreAgainst Industrial Nature

Routine Simple hand Traditional tools Authoritative Bureaucratic Machines Hierarchical

Industrial Against Goods fabricated production nature PostAmong industrial Persons Services

Quantity of goods

Artistic Community Quality of InterInformation Creative life in terms dependent Intellectual of health, Global education, recreation

The New Experience Economy

Economy Function Nature Attribute Method of supply Seller Buyer Agrarian Extract Fungible Natural Stored in bulk Trader Market Industrial Make Tangible Service Deliver Intangible Experience Stage Memorable

Standardized Customized Personal Inventoried Delivered Revealed on demand over time Stager Guest

Manufacturer Provider User Client

The Four Realms of an Experience

Customer Participation Passive Active

Absorption Entertainment Education (Movie) (Language) Environmental Relationship Immersion Esthetic (Tourist) Escapist (ScubaDiving)

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)

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

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? How does trade barriers affect a nations economy?