Assignment 001

Answer all.

Question 1

Here are two approaches that capture the essence of 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 and does not normally result in ownership of any of the factors of production. Services are economic activities that create value and provide benefits for customers at specific times and places, as a result of bringing about a desired change in - or on behalf of - the recipient of the service. More amusingly, services have also been described as 'something which can be bought and sold, but which you cannot drop on your foot'. Studies suggest that parallel situations prevail to varying degrees in many Europe- an countries. Technology and specialized skills enable many people to earn their living (or to supplement it) through service-based self-employment from their homes; the resulting income is relatively easy to conceal. The Economist reports that the underground (or shadow) economy is believed to range from about 14 per cent in Germany to over 25 per cent of GDP in Italy (which even adjusts its official statistics upwards to take account of missing output). 5 In Russia, it is thought that the underground economy may be as large as the official one. Service organizations range in size from huge international corporations like airlines, banking, insurance, telecommunications, hotel chains and freight transportation to a vast array of locally owned and operated small businesses, including restaurants, laundries, taxis, opticians and numerous business-to-business services. Franchised service outlets - in fields ranging from fast foods to bookkeeping - combine the marketing characteristics of a large chain that offers a standardized product with local ownership and operation of a specific facility. Some firms that create a time-sensitive physical product, such as printing or photographic processing, are now describing themselves as service businesses, because much of the value added is created by speed, customization and convenient locations. Regis McKenna has written, 'Companies best equipped for the twenty-first century will consider investment in real time systems as essential to maintaining their competitive edge and keeping their customers.' 6 There's a hidden service sector, too, within many large corporations, classified by government statisticians as being in manufacturing, agricultural or natural resources industries. So-called internal services cover a wide array of activities, potentially , office cleaning, landscape maintenance, freight transport and many other tasks. To a growing extent, organizations are choosing to outsource those internal services that can be performed more efficiently by a specialist subcontractor. Internal services are also being spun out as separate service operations offered in the wider marketplace. For instance, Ciba-Geigy, the Swiss-based pharmaceutical company, did this successfully with both their advertising department and their information unit.7As such tasks are outsourced, they become part of the competitive marketplace and are therefore more likely to be categorized as contributing to the services component of the economy. Even when such services are not outsourced, however, managers of the departments that supply them would do well to think in terms of providing good service to their internal customers. Governments and nonprofit organizations are also in the business of providing services, although the extent of such involvement may vary widely from one country to another, reflecting both tradition and political values . An important group of services consists of what are known as advanced producer services, whose principal function is to provide intermediate inputs into the production processes of client firms. They include advertising and market research; architectural and property-related services; banking, legal, computer and financial services; insurance; consultancy; and secretarial services. It used to be thought that most such services were consumed by manufacturing firms, but research in Leeds and Sheffield showed that the service sector (including government agencies) was more important as a source of clients for suppliers of advanced producer services. 8 In other words, the growth of the service sector is itself a stimulus for additional business-to-business services The Evolving Environment of Services Around the world, innovative newcomers offering new standards of service have succeeded in markets where established competitors have failed to please today's demanding customers. Many barriers to competition are being swept away, allowing the entry of eager newcomers, ranging from tiny start-up operations like garden maintenance or baby-sitting services to well-financed multinational firms importing service concepts previously developed and tested in other countries. Established businesses often find it hard to maintain customer loyalty in the face of competition from innovative firms offering new product features, improved performance, price- cutting, clever promotions and the introduction of more convenient, technology- driven delivery systems. Depending on the industry and the country in which the service firm does business, the underlying causes of such changes may include any of the twelve forces listed. Like the factors underlying any revolution, some of the origins of today's service sector revolution go back a number of years, whereas others reflect a chain of relatively recent events that The term of usefulness monetarily is characterized as the proportion among yield and info. Give an equation and elaborate on increment in efficiency can be brought about.

Question 2

Describe Porter's four generic business strategies.