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

2. Learning Objectives n 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, industrial, and postindustrial societies. n Describe the features of the new service economy

3. Service Definitions Services are deeds, processes, and performances. 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. A service is a time-perishable, intangible experience performed for a customer acting in the role of a co-producer. James Fitzsimmons James Fitzsimmons

4. 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. 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 James Fitzsimmons

5. Role of Services in an Economy

6. Percent Service Employment for Selected Nations Country 1980 1987 19932000 United States 67.1 71.0 74.374.2 Canada 67.2 70.8 74.874.1 Israel 63.3 66.0 68.0 73.9 Israel 63.3 66.0 68.0 73.9 Japan 54.5 58.8 59.972.7 France 56.9 63.6 66.470.8 Italy 48.7 57.7 60.2 62.8 Italy 48.7 57.7 60.2 62.8 Brazil 46.2 50.0 51.9 56.5 Brazil 46.2 50.0 51.9 56.5 China 13.1 17.8 21.2 40.6 China 13.1 17.8 21.2 40.6

7. Trends in U.S. Employment by Sector

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

9. The New Experience Economy

10. The Four Realms of an Experience

11. Experience Design Principles n Theme the Experience (Forum shops) n Harmonize Impressions with Positive Cues (OHare 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)

12. Source of Service Sector Growth 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 n Social Trends Aging of the population Two-income families Growth in number of single people Home as sanctuary

13. Discussion Topics n 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. n Is it possible for an economy to be based entirely on services? n What is the value of self-service in an economy?

14. 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/F500/index.html