Questions and Answers
Which of the following activities is classified as a primary sector according to Browning & Singelmann (1978)?
Extractive activities
What is a characteristic of Tradable services according to Sabolo (1975)?
They can be sold or bought across regions or countries
Which of the following is a Service-Dominant Logic Foundational Premise?
The customer is always a co-creator of value
According to the Service-Dominant Logic, what is the role of goods in service provision?
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What is a key feature of Operations Service Management as an open system?
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What is the result of the customer's presence in the service process?
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What is the primary focus of a service firm according to Service-Dominant Logic?
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What is the term used to describe the simultaneous production and consumption of services?
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What is the percentage of GDP accounted for by the service sector?
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Which of the following is a characteristic of services that makes it difficult to control quality?
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What is the purpose of governments intervening in service industries?
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What is the Riddle Model (1986) used to classify?
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What is a solution to the problem of perishability in services?
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Why does the service sector rely heavily on the reputation of the service provider?
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What is the benefit of considering the customer as another productive factor in the service sector?
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Why are service innovations difficult to patent?
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Study Notes
Service Sector and Utilities
- Fastest growing companies, sector with the highest GDP (65%)
- Macroeconomic: Tertiary Sector
- Microeconomic: Intangible activities between clients and service employees
Riddle Model (1986)
- Divided into 5 groups:
- Business Services: Banks, Consultancies
- Trade Services: Retailing, Maintenance, Repairs
- Infrastructure Services: Communication, Transportation
- Personal Services: Restaurants, Hotels
- Public Administration: Education, Health, Security
Basic Characteristics of Services
Intangibility
- Ideas and concepts, no patent for service innovations
- Customers can't test service performance before consumption, rely on reputation
- Governments intervene to ensure acceptable service performance
Perishability
- Can't store services, manage demand fluctuations
- Solutions: influencing demand or adjusting service capacity
Heterogeneity
- Hard to standardize services due to customer variability
- Solutions: training and motivating employees
Simultaneity
- Created and consumed simultaneously, permanent customer contact
- No distribution channels, customer is a productive factor
Types of Services & Classification of Service Businesses
- Extractive activities: primary sector
- Transformative industry: secondary sector
- Infrastructure activities: transportation, communications, trade, utilities
- Manufacturing services: banking, finance, accounting, legal, insurance, R&D, design
- Personal services: restaurants, hotels, hairdresser, domestic service, entertainment
- Government Services: Health, Education, judicial, military, security
Tradable and Non-Tradable Services
- Tradable services: sold/bought across regions or countries
- Non-Tradable Services: Government and Public Administration, locally provided and consumed
Distinctive Features of Utilities
Service-Dominant Logic Foundational Premises
- Service as the basis of exchange
- Goods as distribution mechanisms for service provision
- All economies are service economies
- Customer as co-creator of value
Operations Service Management
- Customer as central point of decisions and actions
- Production and marketing in an open system with customer as participant
- Process is the product (simultaneity)
- Customer presence makes it an open system and co-producer
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