Operations in the Service SectorOperations in the Service Sector

Characteristics of GoodsCharacteristics of Goods

Tangible productTangible product

Consistent product Consistent product definitiondefinition

Production usually Production usually separate from separate from consumptionconsumption

Can be inventoriedCan be inventoried

Low customer Low customer interactioninteraction

© 1995 Corel Corp.

Characteristics of ServiceCharacteristics of Service

Intangible productIntangible product

Produced & consumed at Produced & consumed at same timesame time

Often uniqueOften unique

High customer interactionHigh customer interaction

Inconsistent product definitionInconsistent product definition

Often knowledge-basedOften knowledge-based

Frequently dispersedFrequently dispersed

© 1995 Corel Corp.

Service EconomiesService EconomiesProportion of Employment in the Service Proportion of Employment in the Service

SectorSector

0

10

20

30

40

50

60

70

80

Country

Goods Versus ServicesGoods Versus Services

Can be resoldCan be resold

Can be inventoriedCan be inventoried

Some aspects of Some aspects of quality measurablequality measurable

Selling is distinct Selling is distinct from productionfrom production

Reselling unusualReselling unusual

Difficult to Difficult to inventoryinventory

Quality difficult to Quality difficult to measuremeasure

Selling is part of Selling is part of serviceservice

GoodsGoods ServiceService

Goods Versus Services - Goods Versus Services - ContinuedContinued

Product is Product is transportabletransportableSite of facility Site of facility important for costimportant for cost

Often easy to Often easy to automateautomateRevenue generated Revenue generated primarily from primarily from tangible producttangible product

Provider, not product Provider, not product is transportableis transportableSite of facility Site of facility important for important for customer contactcustomer contactOften difficult to Often difficult to automateautomateRevenue generated Revenue generated primarily from primarily from intangibleintangible service. service.

GoodsGoods ServiceService GoodsGoods ServiceService

Goods Contain Services / Services Goods Contain Services / Services Contain GoodsContain Goods

0 25 50 75 100255075100

AutomobileComputerInstalled Carpeting

Fast-food MealRestaurant Meal

Auto RepairHospital Care

Advertising AgencyInvestment Management

Consulting ServiceCounseling

Percent of Product that is a Good Percent of Product that is a Service

Organizations in Each Sector – Organizations in Each Sector – Table Table 1.41.4

Service SectorService Sector ExampleExample % of % of all all

JobsJobsProfessional Professional services, services, education, legal, education, legal, medicalmedical

New York City PS108, New York City PS108, Notre Dame University, San Notre Dame University, San Diego ZooDiego Zoo

24.324.3

Trade (retail, Trade (retail, wholesale)wholesale)

Walgreen’s, Wal-Mart, Walgreen’s, Wal-Mart, NordstromsNordstroms

20.620.6

Utilities, Utilities, transportationtransportation

Pacific Gas & Electric, Pacific Gas & Electric, American Airlines, Santa Fe American Airlines, Santa Fe R.R, Roadway ExpressR.R, Roadway Express

7.27.2

Organizations in Each Sector – Organizations in Each Sector – Table 1.4Table 1.4

Service SectorService Sector ExampleExample % of % of all all

JobsJobsBusiness & Business & Repair ServicesRepair Services

Snelling & Snelling, Waste Snelling & Snelling, Waste Management, Pitney-Management, Pitney-BowesBowes

7.17.1

Finance, Finance, Insurance, Real Insurance, Real EstateEstate

Citicorp, American Express, Citicorp, American Express, Prudential, Aetna, Trammel Prudential, Aetna, Trammel CrowCrow

6.56.5

Food, Lodging, Food, Lodging, EntertainmentEntertainment

McDonald’s, Hard Rock McDonald’s, Hard Rock Café, Motel 6, Hilton Hotels, Café, Motel 6, Hilton Hotels, Walt Disney Paramount Walt Disney Paramount PicturesPictures

5.25.2

Public Public AdministrationAdministration

U.S., State of Alabama, U.S., State of Alabama, Cook CountyCook County

4.54.5

Organizations in Each Sector – Organizations in Each Sector – Table 1.4Table 1.4

Manufacturing Manufacturing SectorSector

ExampleExample % of % of all all JobsJobs

GeneralGeneral General Electric, Ford, U.S. General Electric, Ford, U.S. Steel, IntelSteel, Intel

14.814.8

ConstructionConstruction Bechtel, McDermottBechtel, McDermott 7.07.0

AgricultureAgriculture King RanchKing Ranch 2.42.4

MiningMining Homestake MiningHomestake Mining 0.40.4

Organizations in Each Sector – Organizations in Each Sector – Table 1.4Table 1.4

SummarySummary

SectorSector % of all Jobs% of all Jobs

ServiceService 75.4%75.4%

ManufacturingManufacturing 24.6%24.6%

1850 75 1900 25 50 75 2000 40 50 60 70 1970 75 80 85 90 95 2000

Percent

United States

Canada

France

Italy

Britain

Japan

W Germany

19702000

Services

Industry

Farming

250

200

150

100

50

0

80

%70

60

50

40

30

20

10

0

U.S. Employment, % Share Services as a Percent of GDP U.S. Exports of Services

In Billions of Dollars

Year 2000 data is estimated

Development of the Service Development of the Service EconomyEconomy