Service and Operation Management

Topics: Bank, Commercial bank, Service system Pages: 15 (2929 words) Published: June 23, 2013
Service Strategy


Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives
Formulate a strategic service vision. Discuss the competitive environment of services. Describe how a service competes using the three generic service strategies. Explain what is meant by qualifiers, service winners, and service losers. Discuss the competitive role of information in services. Explain the concept of the virtual value chain and its role in service innovation. Identify potential limits in the use of information as a competitive strategy. Categorize a service firm according to its stage of 3-2 competitiveness.

Strategic Service Vision
Target Market Segments
What are common characteristics of important market segments? What dimensions can be used to segment the market, demographic, psychographic? How important are various segments? What needs does each have? How well are these needs being served, in what manner, by whom?


Strategic Service Vision
Service Concept
What are important elements of the service to be provided, stated in terms of results produced for customers? How are these elements supposed to be perceived by the target market segment, by the market in general, by employees, by others? How do customers perceive the service concept? What efforts does this suggest in terms of the manner in which the service is designed, delivered, marketed?


Strategic Service Vision
Operating Strategy
What are important elements of the strategy: operations, financing, marketing, organization, human resources, control? On which will the most effort be concentrated? Where will investments be made? How will quality and cost be controlled: measures, incentives, rewards? What results will be expected versus competition in terms of, quality of service, cost profile, productivity, morale/loyalty of servers? 3-5

Strategic Service Vision
Service Delivery System
What are important features of the service delivery system including: role of people, technology, equipment, layout, procedures? What capacity does it provide, normally, at peak levels? To what extent does it, help insure quality standards, differentiate the service from competition, provide barriers to entry by competitors?


Southwest Airlines Strategic Service Vision
Service Delivery System Operating Strategy Service Concept Target Market Segment

• Fun cabin atmosphere to differentiate service • Use only Boeing 737 aircraft to control maintenance and operating costs • Hire cabin crew based on attitude

• Quick turnaround at gate results in high utilization of aircraft • No assigned seating rewards punctuality and promotes on-time performance

• Short flights with frequent departures • Serve peanuts and soft drinks only • Use of inner-city or low traffic airports avoids congestion • Carry-on luggage

• State of Texas residents • Business traveler who drives because of inadequate service • Inexpensive family travel on weekends


Competitive Environment of Services
Relatively Low Overall Entry Barriers Economies of Scale Limited High Transportation Costs Erratic Sales Fluctuations No Power Dealing with Buyers or Suppliers Product Substitutions for Service High Customer Loyalty Exit Barriers 3-8

Competitive Service Strategies (Overall Cost Leadership)
Seeking Out Low-cost Customers (e.g., USAA) Standardizing a Custom Service (e.g., H&R Block) Reducing the Personal Element in Service Delivery (promote self-service) (e.g., Alaska Airlines) Reducing Network Costs (hub and spoke) (e.g., FedEx) Taking Service Operations Offline (e.g., Taco Bell)


Competitive Service Strategies (Differentiation)
Making the Intangible Tangible (memorable) (e.g., Disney Theme Parks) Customizing the Standard Product (e.g., Ritz Carlton) Reducing Perceived Risk (e.g., FedEx) Giving Attention to Personnel Training (e.g., McDonald’s Hamburger University) Controlling Quality (e.g.,...
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