Chapter 15

Question 1

What are the features of services?

Answer 1

Intangibility, inseparability, perishability and variabilty

Question 2

what is intangibility?

Answer 2

Services are activities undertaken by the organisation on behalf of its customers and therefore cannot be packaged for the customer to take away with them

Question 3

what is inseparability?

Answer 3

services are often created by the organisation at the same time as they are consumed by the customer e.g., taxi driver

Question 4

what is perishability?

Answer 4

services cannot be stored for later?

Question 5

What is variability?

Answer 5

each service is unique and cannot usually be repeated in exactly the same way, making offering a standardised service to customers very difficult

Question 6

What are charge out rates?

Answer 6

This the the hourly rate which the company charges clients. It should be higher than salary and it should include a share of overheads

Question 7

What is estimating costs?

Answer 7

Problems arise in determining the amount of overhead to be included in the charge-out rate. Also if the service takes longer to provide than expected, the company may not be able to pass on the extra cost

Question 8

What are problems measuring benefits?

Answer 8

Market conditions may mean that the charge out rate contains a very low profit element. The company may question whether it is worth carrying out these services.
Problem is that benefits are intangible and not easy to measure, but real