Service Management

Presented to: Prof. Ankita

Group Members: Shekhar Erande 1073 Sameer Ghadi 1074 Ronak Nanda - 1090

Service Defination
Services are essentially intangibles. their purchase

does not result in the ownership of anything physical E.g.. - While you watch a movie , you purchase the viewership for entertainment but you do not purchase the movie . - You can only seek advice of Doctor , you do not purchase him

Service
A service is an act or performance offered by one party

to another. Although the process may be tied to a physical product. The performance is essentially intangible & does not normally result in ownership of any factors of production.
Service are those separately identifiable , essentially

intangible activities that provide want satisfaction , and are not necessarily to sale of the product or another service .

Goods vs. Services

Good: tangible physical object; created and transfered;

existence over time

Service: intangible; created and used simultaneously;

only the effect has an existence over time

Physical goods

Services

tangible
homogeneous

intangible
heterogeneous

Production and distribution are separated from consumption

A thing Core value processed in factory Customers do not participate in the production process Can be kept in stock Transfer of ownership

Production, distribution and consumption are simultaneous processes

An activity or process Core value produced in the buyerseller interaction Customers participate Cannot be kept in stock No transfer of ownership

Types of service

Important services in India

Trade, Hotels and Restaurants Transport, storage & Communication

Banking, Real Estate etc

Source: Central Statistics office

Salient features of Service business format

Service Quality is Difficult to Evaluate
Time Factor It is very difficult to standardize services

5 I's of Services
Intangibility
Inseparability Inconsistency Inventory Inability to own

Intangibility
Service firms primarily deliver intangibles and service quality and consistent delivery over time are crucial aspects. It is important for international service firm to institutionalize the knowledge gained abroad in terms of procedures, manuals, service processes, IT solutions. Service firms must pay attention to recruiting foreign staff, using local knowledge and developing relationships.

Inseparability
It refers to the simultaneous production and consumption of services. This has two main problems for internationalization of services. First is the problem of customer accessibility to the service delivery system service firms usually have to be in foreign countries because it is quite hard to export service. Second is the problem of difference in culture. But in this context, Two kinds of service firms should be distinguished: soft (it is impossible to decouple production and consumption of services, e.g. hairdressing) and hard services firms (it is possible to separate production and consumption, e.g. software).

Inconsistency
The process consists of three sets of recourses and each of them may impact differently on the final service quality during and after this process .First are customer recourses and their style of participation the service encounter. Second are contact recourses (service provider and their style of delivering the service).Third are physical recourses. Services firma intending in internationalizing should take cultural differences into account. Approaches found to be effective in one market need not be effective in other market

Inventory
Technology has a tremendous impact on the opportunities to internationalize service firms and also on the choice of their entry mode. It can be possible to avoid the necessity of the physical presence during the service encounter a service firm does not have to have its complete offering on a particular site and it simplifies operations. Technology influences all the 5 Is.

Inability to own
It may create a lot of insecurity about the service, especially when perceived risk is high. Trust is the most important factor in creating bonds between the service provider and the customer and makes the possibility to build marketing relationships.

Role of Service In Economy

Service have to come to stay more as culture than a

commodity . this has significant ramifications for any economy . As any economy attempts to strengthen itself , it depends largely on contribution in terms of domestic product largely coming for services A quick review of numbers will suggest that for most developed countries ,barring japan ,the contribution of services to GDP is nearing 70 % .

Share of service in ECONOMY- Country Wise

HDI 2 Rank Country Agricultur e (%GDP) Industry (%GDP) Services (%GDP)

1
2 3 4 5 10

Canada
Norway United States Japan Belgium United Kingdom

NA
02 02 02 01 02

NA
32 27 38 21 31

NA
66 71 60 78 67

50
132

Mexico
India

05
25

26
30

69
45

Share of Services in ECONOMY Region Wise

Region Developed East Asia (excluding China) Agriculture (%GDP) 02 04 36 Industry ( % GDP) Services (%GDP) 64 60

Latin America , Caribbean

South Asia South Asia (excluding India) East Europe , CIS

08
25 25 11

32
29 26 36

60
46 49 53

Least Developed
All Developed Countries

33
13

25
36

42
51

Localization
Experts are optimistic that services will be more

beneficial for the host countries, especially the Third world. Most Developing & underdeveloped economies are struggling with their export performance, rising imports, currency rates, recessions, bailouts. Due to inherent characteristics of intangibility, services have to located near their customers.

Localization
Nations are increasingly realizing that economic performance needs to reflect the aspirations of the local community also. Services largely do that Service operations & processes operate locally Services have greater propensity to absorb unskilled & semi-skilled workforce of the community. Service tend to offer better wages than manufacturing.

Socio- Economic Factors for Growth of Services

ICE Age Industrialization Greater Life Expectancy Greater Complexity of Life Higher Disposable income Changing social & Cultural values

Advances in Product Technology

Political-Economic Factors
Change in government Attitude
Pressure on Public & non-Profit Enterprises Private Initiative

Internationalization & Globalization

Technological Innovations Franchising Boom Leasing , Renting & Financing

Is India now a Service Economy ???

A major shift to Service Sector from Last Decade

Service Sector has out-performed Agriculture &

Industry. Services sector accounts for 55.2% of Indias GDP (2009-10) Growth by 10% annually (2009-10) Contributing to about a quarter of total employment Recording very fast(27.4percent) export growth through the first half of 2010-11

Source: indiabudget.nic.in