Role of Services in an Economy Welcome to

Role of Services in an Economy Welcome to Service Management Professor James Fitzsimmons University of Texas at Austin

Learning Objectives Describe the central role of services in an economy. n Discuss the evolution of an economy from an agrarian society to a service society. n Describe the features of preindustrial, and postindustrial societies. n Describe the features of the new service economy n

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

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

Role of Services in an Economy

Percent Service Employment for Selected Nations Country United States Canada Israel Japan France Italy Brazil China 1980 1987 1993 2000 67. 1 67. 2 63. 3 54. 5 56. 9 48. 7 46. 2 13. 1 71. 0 70. 8 66. 0 58. 8 63. 6 57. 7 50. 0 17. 8 74. 3 74. 8 68. 0 59. 9 66. 4 60. 2 51. 9 21. 2 74. 1 73. 9 72. 7 70. 8 62. 8 56. 5 40. 6

Trends in U. S. Employment by Sector

Stages of Economic Development Society Game Pre. Against Industrial Nature Predominant activity Use of human Unit of labor social life Agriculture Raw Extended Mining muscle household power Standard of living measure Structure Technology Subsistence Routine Simple hand Traditional tools Authoritative Quantity of goods Bureaucratic Machines Hierarchical Industrial Against Goods fabricated production nature Machine Individual tending Post. Among industrial Persons Artistic Community Quality of Inter. Information Creative life in terms dependent Intellectual of health, Global education, recreation Services

The New Experience Economy

The Four Realms of an Experience

Experience Design Principles Theme the Experience (Forum shops) n Harmonize Impressions with Positive Cues (O’Hare airport parking garage) n Eliminate Negative Cues (Cinemark talking trash containers) n Mix in Memorabilia (Hard Rock T-shirts) n Engage all Five Senses (Mist in Rainforest) n

Source of Service Sector Growth n n 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 person’s lifestyle. For example, contrast a farmer, a factory worker, and a school teacher. n Is it possible for an economy to be based entirely on services? n What is the value of self-service in an economy? n

Interactive Class Exercise n 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/lists/F 500/index. html