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1 MANAGEMENT 435 SERVICE MANAGEMENT PowerPoint Set 2.

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1 1 MANAGEMENT 435 SERVICE MANAGEMENT PowerPoint Set 2

2 2 Topic 5 Service Strategy Strategy is the first step in the management process. –Growth of the service sector in the US economy –Pg 37: The purpose and place of a service firm in the market begins with an entrepreneur's idea and an unmet need (leading to) formulating a strategic service vision Competitive environment of services is different/difficult 36 –Low entry barriers. Low economies of scale. High demand fluctuations. Little buying power against suppliers. Substitutions threatening. Harder to attain customer loyalty. Exit barriers.

3 Service Strategy Strategy Formulation Process Mgmt 339 Pg 35- –Environmental analysis. External environment. Factors. Opportunities and threats Internal environment. Elements. Strengths and weaknesses Vision. Mission and values –SWOT analysis. Life cycle stage. –Grand strategies: Growth (concentration/expansion; diversification; vertical integration/using economies of scope; mergers/acquisitions) –Competitive Strategies (also called Business level strategies). 38- Cost leadership 39; Differentiation 40; Focus 41 Cost leadership: low cost services; standardized services; no personal service; no flexibility; no conveniences 39 Differentiation by quality, availability (convenience; speed), dependability (safety), flexibility/variety (customization; personalization) Focus 41: Goes with CL and Differentiation 3

4 4 Service Strategy Implementing strategy 37 –Strategic (long term) decision making areas Service design. Recall the 5 elements in service package Service process design Technology Capacity Quality Facilities: Location. Layout. Focus Workforce Suppliers. Supply chain Implementation tools –Policies; Procedures; Budgets

5 5 Service Strategy Role of IT in competitive strategy 42 – 50 Information for customers. Information about customers. Supplier transactions. Electronic record keeping/privacy and security issues. Making intangible services more tangible. Influencing customer expectations and perceptions, Reducing uncertainty and perceived risk Service strategy is something that evolves over time Four stages 51 Service strategy and service process – Volume/variety considerations How firms formulate strategy. New service development process Articles 12, 14 and 15.. Pg. 66- Service blueprinting 71 Flowcharts 72

6 6 Service Strategy Global service strategy issues –Domestic growth and expansion strategies 340 –Single site v. Multisite. Single service v. Multiservice –Focused Service; Clustered Services; Focused Network; Diversified Network –Franchising strategy 342 Benefits/Issues –Generic International Strategies 346 Force towards global integration Force towards Local Responsiveness Global, Multi domestic and Transnational strategies

7 7 Service Strategy –Factors in the international environment crucial for services 347 Country – political/legal; economic factors Customers – socio-cultural; Cultural transferability 348 Competition Company resources and corporate culture Workers: norms and values 348 Hofsteads five dimensions 349 – Power Distance, Individualism, Masculinity, Uncertainty Avoidance, Long term orientation –Common global service strategies 351 Multi-country expansion; Importing customers; Following customers; Service Off shoring; Beating the clock Articles 16 and 19 –Service Off-shoring issues Article 18

8 8 Topic 6 Service Design Three areas designed together –Service, Marketing and HR What do we design – Service Package –Explicit services, Implicit services, Facilities, Facilitating Goods, Information Design principles –Information sources. QFD 116 –Phases of design. Feasibility studies –Ensuring effective delivery of designed service. Methods Generic approaches to designing explicit services 75 –High volume standardized services 75 – Production line approach. Technology predominant –Customer participation in the process 77 Self service and SST. –Customer contact level 78 High and low contact operations. Separation 79

9 9 Service Design Designing implicit services and Facilitating goods –Capacity management: managing demand and supply 257 – –Yield management 270 –Waiting time/appointment systems 262; 293- –Complaint systems. Call centers –Service recovery –Cultural and linguistic issues –Service standards –Supplier issues Designing Facilities 202- ; –Locating service facilities. Commercial facilities. Public facilities –Strategic location considerations 226 –Servicescapes. 198 Physical surroundings –Layout. 207 Balancing flows. Minimizing distances Selected Articles from


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