CHAPTER 10 SERVICE STRATEGY SERVICE STRATEGY

CHAPTER 10 SERVICE STRATEGY

SERVICE STRATEGY • Characteristics of Services • Capacity Management • Concentrated Service Niches • Major Services

CHARACTERISTICS OF SERVICES • Produced and consumed at the same time • More variability in quality control • Intangible • No inventory with services

CAPACITY MANAGEMENT Matching supply and demand for services Examples • Hotel weekend specials • Travel in Europe in low season • Ski resorts in March

INCOME TAX Preparation by CPA’S April 10 $500 Feb 10 $400

CONCENTRATED SERVICE NICHES • USAA Military Market • Lending Tree Online lending • Hotels Last minute reservations

HYATT PRICING Monday-Thursday $200 Friday-Sunday $100

LENDING TREE State Law – Cannot take out equity except by a Texas lending company

MAJOR SERVICES • Professional Services • Health Services • Financial Services • Educational Services

PROFESSIONAL SERVICES • Lawyers • CPAs • Real Estate

SIMPLE LEGAL SERVICES • Simple wills • Simple tax filing • Uncontested divorces

MAJOR CPA SERVICES • Auditing • Taxes • Consulting

MAJOR ACCOUNTING FIRMS Big Four 2009 Big Eight 1989 Price Waterhouse Coopers & Lybrand Deloitte Touche Tohmatsu Deloitte Haskins & Sells Touche & Ross Ernst & Young Arthur Young Ernst & Whinney KPMG Peat Marwick & Mitchell Arthur Anderson

PROFESSIONAL SERVICES CHANGES • Lawyers Price Fixing • CPA’s Soliciting Competitors’ Business & Advertising

HEALTH SERVICES • Doctors and nurses • Hospitals and clinics • Medical insurance

DOCTORS AND NURSES • General Doctors • Specialist Doctors • Role of Nurses

% OF U. S. MEDICAL SCHOOL DOCTORS AS GENERAL PRACTIONERS 1970 40% 2013 15%

HOSPITALS AND CLINICS • Large hospitals • Emergency centers • Minor health clinics

USE OF HOSPICE CARE 2000 22% 2009 42%

MEDICAL INSURANCE • Medicare • Medicaid • Insurance providers

HOSPITAL PRICING City Hospital Procedure Hospital Cost #1 #2 Dallas Lower Joint Replacement $162 k $43 k New Jersey Respiratory Ailment $100 k $7 k Alabama Pneumonia $150 k $14 k

FINANCIAL SERVICES • Banking • Insurance • Stock Brokers

DISCOUNT STOCK BROKERS • Fidelity • Vanguard • Schwab

EDUCATION SERVICES • High Schools • Community Colleges • Universities

HIGH SCHOOL CHOICES • Public schools • Private schools • Charter schools • Home schooling

COMMUNITY COLLEGES IN HOUSTON AREA • Houston Community College • San Jacinto College • Lone Star College

UNIVERSITIES • State Public Universities • State Private Universities

DIFFICULTY OF CHANGE IN EDUCATION Reforming and changing a curriculum is about as difficult as moving a cemetery