The Growth of Services Flashcards
THE THREE MAIN SECTORS
Primary Sector: farming forestry, fishing (agriculture)
Secondary Sector: industrial: manufacturing; gas, mining and so on
Tertiary Sector - a synonym for the service sector, provides a service something that’s can’t be held in your hand, not tangible
SERVICES
services are intangible items that are in exchange between one party and another. Some services may support physical products. When handling services you pay for the experience, not the ownership. Designed to create a change from current experience
SERVICE ECONOMY
a service economy is one where more than half the gross national product (GDP) is produced within the services sector. Australia’s services count for well over half of its GDP
9 FORCES OF CHANGE
- changing patterns of government regulations
- relaxation of professional association standards
- privatisation of public and non-profit organisations
- computerisation and technological innovation
- growth of franchising
- expansion of leasing and rental businesses
- manufacturers as service providers
- businesslike behaviour by non-business organisations
- globalisation
GROWTH OF SERVICES EARLY THEORIES
Fisher (1935) and Clarck (1940), early theorists explainged that the increasing prominence of the services sector by the ‘traditional’ economic model. This model proses that an economy naturally moves from being predominantly agriculturally-based, through industrial revolution when it becomes mainly manufacturing-based, and finally to being services based, known as the post-industrial phase. They argused that this natural progression is due to the higher elaticitty of demand for services over manufacted foods, and so demand for services increases as incomes rise. Said now to be over-simplified. Akehurst (1989) argues that the demand and supply of consumer services depends on a variety of factoris, including leisure time trends, perceived lifestyle chanfes, female participation in the workforce, disposable income trans, income distribution, size of families, demographic factors, taxation and relative prices. Lewis (1988) adds, increasing complexity of life and the proferation of new and sophisticated products, which presumably need more services both for retail and repaid.
EXPLAIN ECONOMIC IMPORTANCE OF SERVICES SECTOR IN AUS
- represents about 70% of australias GDP and employs 4 out of 5 australians
- service exports growing by an average of 3/2% per annum over the last 5 years
- in 2014, services accounted for 19.5% of australias G and S, S accounted for 18.4%% of australlias total exports
- encouraging greater trade in services through open markets, and non-discriminatory treatment can lead to higher incomes and higher standards of living
HOW SERVICES DIFFER FROM PRODUCTS
- intangibility
- hetrogenitey or variability
- inseparability
- perishability
INTANGIBILITY
services are performances, largely intangible but sometimes have tangible elements. e.g. a plane flight - customers hare paying for travel, even though delivery of service includes tangible elements such as an airline ticket, seat and meal
HETROGENITEY OR VARIABILITY
services are experimental and their performance involves people, both as customers and employees. thus the performance of a service is often inconsistent and depends on both the reliever and receiver of that service
INSEPERABILITY
most services are derived in real time, their production and consumption are interconnected. customers have to be present to receive the fought, the meal andante the inflight entertainment and these services are performed at the same time as their consumption this unlike the purchase go tangible goods the delivery of services combines the factory, retail outlet and point of consumption into one
PERISHABILITY
services are developed in real time, they are also perishable. that is, they can’t be inventoried for use at a later date. this has implications for managing supply and demand for services
MANAGEMENT IMPLICATIONS
the majority of literate on services argues that managing a service business is very different from managing a manufacturing business, primarily bc of direct customer contact. that is, unlike manufacturing businesses, customers are present at the service factory and are often directly involved with a number of service performances. thus a number of implications arise for service management.
FRAMEWORD FOR CLASSIFYING SERVICES
to view the entire services sector as homogeneous doesn’t allow in-depth analysis due to the broad range of services which exist. neither does focusing on individual service industries generate useful insights which can be gained from comparing and contrasting management implications in several related industries, a more useful approach to classify service industries into different categories to encourage cross-fertilisation of concepts and strategies between industries which are different, but have common characteristics.
3 QUESTIONS TO HELP CLASSIFY
classifying services managers in answering the following questions which can help the organisation to market its services properly.
- what does our service actually do?
- what sorts of processors are involved in creating the core product that we offer?
- where do the customers fit in our operation?
CONSIDERING THE VALUE OF SERVICE PROCESSES
one way to classify different types of services is to consider the nature of the service process. a process can be described as a method of operation or a series of actions involving multiple steps that need to occur in a defined sequence.
