Chapter 2

The Service
Economy:
Supersectors
and Ethical
Considerations
 Chapter Objectives

• Describe the nine supersectors that comprise the service economy.

• Identify the trends and concerns pertaining to the growth of the
service economy.
• Understand the reasons consumers are particularly vulnerable to
ethical misconduct within the service sector.
• Appreciate the types of ethical issues that often arise in the business
sector.
• Discuss the consequences of ethical misconduct.
• Explain strategies that attempt to facilitate positive ethical behaviors.

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What Is the Service Economy?

Education and
Health Services
Other Services
Financial
Activities
Wholesale and Service
Retail Trade Economy Government
Includes the “soft” parts of
the economy consisting of
nine industry supersectors
Transportation
and Utilities Information

Professional and Leisure and

Business Services Hospitality

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 Employment Growth in the Philippines

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duplicated, or posted to a publicly accessible website, in
whole or in part.
Employment rate was estimated at 94.0
percent in May 2022 or 94 in every 100
persons in the labor force had a job or
business in May 2022. This was higher
than the 92.3 percent employment rate
reported a year ago but lower than the
employment rate of 94.3 percent in April
2022.
The country’s unemployment rate
dropped to 6.0 percent in May 2022,
from 7.7 percent in May 2021.
However, it posted a 0.3 percentage
point month-on-month increase from
5.7 percent in April 2022.

The top five sub-sectors in terms of month-on-month increase on

employment from April 2022 to May 2022 were the following:
a. Wholesale and retail trade; repair of motor vehicles and motorcycles
(1.12 million);
b. Construction (232 thousand);
c. Fishing and aquaculture (104 thousand);
d. Manufacturing (90 thousand); and
e. Transportation and storage (70 thousand).
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 Education and Health
Services
• Educational services • Health care and social
subsector assistance subsector
– Health services are the
– Second largest largest employment
employment industry industry in the private
sector
– 13.3 million jobs in
– 14 million jobs in
• Schools
• Hospitals
• Colleges • Nursing care facilities
• Universities • Physician’s offices
• Training centers • Home health care
services
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website, in whole or in part.
Philippines Best Universities
2022 Times Higher
Education (THE) Impact
Rankings.

2022 Best Universities in the Philippines - TFE Times

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duplicated, or posted to a publicly accessible website, in
whole or in part.
Philippines
Best
Hospitals

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or duplicated, or posted to a publicly accessible
website, in whole or in part.
 Financial Activities

Insurance
– Firms that protect
clients against
financial loss from a
variety of incidents
(e.g., fire, auto
Banking accidents, theft, Securities,
– Establishments etc.) Commodities, and
primarily engaged Other Investments
in protecting money – Manage the
and valuables and issuance, purchase,
providing loans, and sale of financial
credit, and payment instruments
services

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Best Banks
in
Philippines

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copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
Government

• Three subsectors:
• Not-for-profit
• Advocacy
• Grantmaking
• Civic organizations
• Federal government
• State and local governments
• Publicly-owned establishments of federal, state, and local
agencies that administer, oversee, and manage public
services

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duplicated, or posted to a publicly accessible website, in
whole or in part.
 • Consists of establishments that produce and
distribute information and cultural products,
provide the means to distribute or transmit
these products, and/or process data
– Publishing industries
– Motion picture and sound recording
industries
– Broadcasting industries
– Telecommunication industries
Information – Internet service providers and web
search portals
– Data procession industries
– Information services industries.
• Modestly accounts for about 2.6 percent of all
employment and 1.9 percent of all
establishments

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website, in whole or in part.
 duplicated, or posted to a publicly
accessible w ebsite, in w hole or in

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Arts,

not be scanned, copied or

entertainm More than 40 percent of the workforce in
ent, and this sector has no formal education
recreation beyond high school
subsector

part.
Food One in five employees is between the

Leisure and services

and
drinking
ages of 16 and 19
Two out of five employees work part time
places Turnover creates many job opportunities

Hospitality

Hotels and
other Account for two-thirds of all leisure and
accommod hospitality employment
ations
Philippines Top 10 Fast Food Chains

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 duplicated, or posted to a publicly
accessible w ebsite, in w hole or in

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not be scanned, copied or
Consists of several subsectors,
including:

• Management, scientific, and technical consulting

part.
services
• Computer systems design and related services
• Advertising and public relations services
• Employment services
• Scientific research and development services

Professional Consulting is the fastest growing of

the professional and business services
and highest-paid
and Business
Growth has slowed, but the sector still
offers a projected growth of 19
percent

Job opportunities are best for

scientists and engineers who have
obtained doctoral degrees
 Transportation and
Warehousing and Utilities

Air
Transportation
– Projected
employment
growth is 7
Truck percent
Utilities
Transportation – Projected
and Warehousing employment
– Projected growth is 6 percent,
employment but high turnover is
growth is 15 expected due to
percent retirees

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 World’s Top 10 Airlines

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duplicated, or posted to a publicly accessible website, in
whole or in part.
 • Wholesale trade subsector
– Most wholesalers are small—
employing fewer than 20 workers
– Seven out of ten work in office and
administrative support, sales, or
Wholesale transportation and material moving
occupations
and Retail
• Retail trade subsector
Trade – Includes automobile dealers; clothing,
accessory, and general merchandise
stores; and grocery stores
– 84% of merchandise store workers are
in sales and administrative support
positions
 • Clothing, accessory, and general
merchandise stores sector
– Eighty-four percent of job opportunities
in this sector revolve around sales and
administrative support jobs
– Projected employment growth is 7
Wholesale percent
– Transfers create many job openings
and Retail
Trade • Grocery stores
– One-third of all jobs in this subsector
(cont’d) are occupied by 16- to 24-year-olds
– One-half of all jobs in this subsector
are comprised of cashiers and stock
clerks
– Projected employment growth is 1
percent
Top 10 Retailers to Work for Right
Now

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 Top Ten Grocery Items

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 • A “catch-all” for all the services that do not fit
neatly into the other eight supersectors
– Equipment and machinery repair
– Promoting or administering religious
activities
Other – Dry cleaning and laundry service
– Personal care
Services – Death care
– Pet care
– Photofinishing
– Temporary parking services
– Dating services

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website, in whole or in part.
 Lessons to Be Learned

Many service industries

Unfortunately, many service
share common service
firms suffer from service
delivery challenges and
myopia, looking only to
therefore would benefit
firms within their own
from sharing their
industries for improvements
knowledge with each other

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website, in whole or in part.
 duplicated, or posted to a publicly
accessible w ebsite, in w hole or in

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Materialismo snobbery:

not be scanned, copied or

belief that without
manufacturing there will
be less for people to

part.
service and so more
people available to do less
work
Materialismo
Snobbery Reflects the attitude that
only manufacturing can
create real wealth, and
that all other sectors of
the economy are parasitic
and/or inconsequential
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Poor wages paid by some service

not be scanned, copied or

industries, along with the shift of
the economy away from
manufacturing, will lead to a
further dichotomization of

part.
wealth—the rich will get richer
and the poor will get poorer

Dichotomization
of Wealth

Low wages are associated with

service employment
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1. Consumer
vulnerability in
services marketing

part.
2. Issues that create
Ethical ethical conflict

Considerations 3. Factors influencing

ethical decision
for Services making
Marketers 4. The effects of ethical
misconduct
5. Strategies for
controlling ethical
behavior
 What Are Ethics?

Ethical vigilance: paying close Ethics: a branch of philosophy

attention to whether one’s
actions are right or wrong, and
if ethically wrong, asking why
you are behaving in that
manner
dealing with what is good and
bad and with moral duty and
obligations; the principles of
moral conduct governing an
individual or group

Business ethics: the principles

of moral conduct that guide
behavior in the business world

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website, in whole or in part.
 What Are Ethics? (cont’d)
part.
public ly ac c es s ible webs ite, in whole or in
s c anned, c opied or duplic ated, or pos ted to a
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• Triple bottom line: takes the following into account as

the firm conducts its daily operations
– The firm’s economic prosperity
– Goals and objectives on environmental issues and
advancements
– Social justice and equality movements
 Intangibility complicates the
consumer’s ability to objectively
evaluate the quality of service
The
provided
Opportunity
for Ethical
Misconduct
Heterogeneity reflects the difficulty
in Services in standardization and quality control
Marketing

Inseparability reflects the human

element involved in the service
delivery process

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website, in whole or in part.
 Factors Contributing
to Consumer Vulnerability

Few search attributes

• Components of a product that can
be evaluated prior to purchase

Technical and specialized

services that are not easily
understood and/or
evaluated by consumers

Time lapse between • Service providers may not be held

performance and accountable for their actions in the
evaluation
short run

Sold without guarantees

and warranties

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copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
 Performed by boundary-spanning personnel
Factors • Personnel who provide their services outside the firm’s
Contributing physical facilities and are often not under direct supervision

to Consumer Variability somewhat accepted

Vulnerability
(cont’d) Outcome-based reward systems

Consumer participation in production

• Increases the opportunity for coercive influence strategies

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website, in whole or in part.
 Ethical Issues Encountered by
Businesses

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 Issues that Create Ethical
Conflict

Conflict of Interest: the situation in which a service

provider feels torn between the organization, the
customer, and/or the service provider’s own
personal interest

Organizational relationships: working relationships

formed between service providers and various role
partners such as customers, suppliers, peers,
subordinates, supervisors, and others
• Because of the sensitivity of information gained from these
relationships is often highly sensitive, ethical service providers are
required to maintain confidentiality in relationships to meet their
professional obligations and responsibilities
• Unethical service providers may use the information acquired
from organizational relationships for their own personal gain

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website, in whole or in part.
 Honesty issues

• Promises without follow-through

• Disrespecting the private property of clients
Issues that while services are provided in clients’ homes and
places of business
Create • Inaccurate billing

Ethical Fairness
Conflict • Service discrimination based on gender, race, or
(cont’d) economic status

Communication

• Making false claims about the superiority of the

company’s services
• Making false claims about competitive offerings
• Making promises that the company knowingly
cannot keep

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website, in whole or in part.
 • Personal effects
– Job-related tension
– Frustration
– Anxiety
– Ineffective performance
– Turnover intentions
The Effects – Lower job satisfaction

of Ethical
• Organizational effects
Misconduct – Customer dissatisfaction
– Unfavorable word-of-mouth publicity
for the organization
– Negative public image for the entire
industry
 Controlling Ethical
Decision Making
• Employee socialization
– The process through which a person adapts and
comes to appreciate the values, norms, and
required behavior patterns of an organization
• Standards of conduct
– Code of ethics: formal standards of conduct that
assist in defining proper organizational behavior
• Corrective control
– The use of rewards and punishments to enforce a
firm’s code of ethics
• Leadership training
• Service/product knowledge
• Monitoring of employee performance
• Building long-term customer relationships

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scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part.