Role of Service Industry

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CHAPTER 1

The Role of Services in an Economy

LEARNING OBJECTIVES

After completing this chapter, you should be able to:

1. Describe the central role of services in an economy.

2. Discuss the evolution of an economy from an agrarian society to a service society.

3. Describe the features of preindustrial, industrial, and postindustrial societies.

4. Discuss the role of service managers with respect to innovation, social trends, and

management challenges.

Services lie at the very hub of economic activity in any society. Writing about the role ofthe service sector in world development, Dorothy Riddle formulated the economic modelshown in Figure 1.1. This model shows the flow of activity among the three principalsectors of the economy: extractive (mining and farming), manufacturing, and service,which is divided into five subgroups. All activity eventually leads to the consumer.Examples of services in each of the five subgroups are:

Business services. Consulting, finance, banking

Trade services. Retailing, maintenance, repair



Infrastructure services. Communications, transportation

Social/personal services. Restaurants, health care

Public administration. Education, government

Infrastructure services, such as transportation and communications, are the essentiallinks between all sectors of the economy, including the final consumer. In a complexeconomy, both infrastructure and trade services function as intermediaries between theextractive and manufacturing sectors and as the channel of distribution to the finalconsumer. Infrastructure services are a prerequisite for an economy to becomeindustrialized; therefore, no advanced society can be without these services.

In an industrialized economy, specialized firms can supply business services tomanufacturing firms more cheaply and efficiently than manufacturing firms can supplythese services for themselves. Thus, more and more often we find advertising,

consulting, financing, testing, and other business functions being provided for themanufacturing sector by service firms.

Except for basic subsistence living, where individual households are self-sufficient,service activities are absolutely necessary for the economy to function and to enhancethe quality of life. Consider, for example, the importance of a banking industry totransfer funds and a transportation industry to move food products to areas that cannotproduce them. Moreover, a wide variety of social and personal services, such asrestaurants, lodging, cleaning, and child care, have been created to move formerhousehold functions into the economy.

Public administration plays a critical role in providing a stable environment forinvestment and economic growth. Services such as public education, health care, well-maintained roads, safe drinking water, clean air, and public safety are necessary for anynation's economy to survive and people to prosper.

Thus, it is imperative to recognize that services are not peripheral activities but ratherintegral parts of society. They are central to a functioning and healthy economy and lieat the heart of that economy. The service sector not only facilitates but also makespossible the goods-producing activities of the extractive and manufacturing sectors.Services are the crucial force for today's change toward a global economy.

CHAPTER PREVIEW

We begin with a discussion of economic evolution, finding that modern industrializedeconomies are dominated by employment in the service sector industries. Thisrepresents a natural evolution of economies from preindustrial to industrial and, finally,to postindustrial societies. The economic activity of a society determines the nature ofhow its people live and how the standard of living is measured. The nature of theservice sector is explored in terms of employment opportunities, contributions to



economic stability, and sources of economic leadership. Finally, the role of the servicemanager is discussed in terms of innovation, opportunities for new services based ondemographic trends, and the many managerial challenges in an expanding serviceeconomy.

ECONOMIC EVOLUTION

In the early 1900s, only three of every ten workers in the United States were employedin the services sector. The remaining workers were active in agriculture and industry. By1950, employment in services accounted for 50 percent of the workforce. Today,services employ about eight out of every ten workers. During the past 90 years, wehave witnessed a major evolution in our society from being predominantlymanufacturing-based to being predominantly service-based.

Economists studying economic growth are not surprised by these events. Colin Clarkargues that as nations become industrialized, there is an inevitable shift of employment

from one sector of the economy to another

1

.As productivity increases in one sector, thelabor force moves into another. This observation, known as the Clark-Fisher hypothesis,leads to a classification of economies by noting the activity of the majority of theworkforce.

1Colin Clark, The Conditions of Economic Progress, 3d ed., The Macmillan Co.,London, 1957.

Table 1.1 describes five stages of economic activity. Many economists, including Clark,limited their analyses to only three stages, of which the tertiary stage was simplyservices. We have taken the suggestion of Nelson N. Foote and Paul K. Hatt andsubdivided the service stage into three categories.2



Today, an overwhelming number of countries are still in a primary stage ofdevelopment. These economies are based on extracting natural resources from theland. Their productivity is low, and income is subject to fluctuations based on the pricesof commodities such as sugar and copper. In much of Africa and parts of Asia, morethan 70 percent of the labor force is engaged in extractive activities.

Based on the work activity of their populations, however, many of the so-calledadvanced industrial nations would be better described as service economies. Table 1.2is a partial list of industrialized countries ranked in order of the percentage of thoseemployed in service-producing jobs. This table contains some surprises, such as findingCanada and Australia (known for their mining industries) high on the list. Severalobservations can be made: global economic development is progressing inunanticipated directions, successful industrial economies are built on a strong servicesector, and just as it has in manufacturing, competition in services will become global. Infact, many of the largest commercial banks in the world at present are owned by theJapanese. Trade in services remains a challenge, however, because many countries

erect barriers to protect domestic firms. For example, India and Mexico, among others,prohibit the sale of insurance by foreign companies.

2N. N. Foote and P. K. Hatt, "Social Mobility and Economic Advancement," American Economic Review, May 1953, pp. 364-378.

As Figure 1.2 shows, the service sector now accounts for more than three-fourths oftotal employment in the United States, which continues a trend that began more thanone century ago. Therefore, based on employment figures, the United States can no

longer be characterized as an industrial society; instead, it is a postindustrial, or service,society.

STAGES OF ECONOMIC DEVELOPMENT

Describing where our society has been, its current condition, and its most likely future isthe task of social historians. Daniel Bell, a professor of sociology at Harvard University,has written extensively on this topic, and the material that follows is based on his work.3



To place the concept of a postindustrial society in perspective, we must compare itsfeatures with those of preindustrial and industrial societies.

Preindustrial Society

The condition of most of the world's population today is one of subsistence, or apreindustrial society. Life is characterized as a game against nature. Working withmuscle power and tradition, the labor force is engaged in agriculture,, mining, andfishing. Life is conditioned by the elements, such as the weather, the quality of the soil,and the availability of water. The rhythm of life is shaped by nature, and the pace ofwork varies with the seasons. Productivity is low and bears little evidence of technology.Social life revolves around the extended household, and this combination of lowproductivity and large population results in high rates of underemployment (workers notfully utilized). Many seek positions in

3Daniel Bell, The Coming of Post-Industrial Society: A Venture in Social Forecasting,

Basic Books, Inc., New York, 1973.



services, but of the personal or household variety. Preindustrial societies are agrarianand structured around tradition, routine, and authority.

Industrial Society

The predominant activity in an industrial society is the production of goods. The focus ofattention is on making more with less. Energy and machines multiply the output perlabor-hour and structure the nature of work. Division of labor is the operational "law" thatcreates routine tasks and the notion of the semiskilled worker. Work is accomplished inthe artificial environment of the factory, and people tend the machines. Life becomes agame that is played against a fabricated nature--a world of cities, factories, andtenements. The rhythm of life is machine-paced and dominated by rigid working hoursand time clocks.

An industrial society is a world of schedules and acute awareness of the value of time.The standard of living becomes measured by the quantity of goods, but note that the

complexity of coordinating the production and distribution of goods results in thecreation of large bureaucratic and hierarchic organizations. These organizations aredesigned with certain roles for their members, and their operation tends to beimpersonal, with persons treated as things. The individual is the unit of social life in asociety that is considered to be the sum total of all the individual decisions being madein the marketplace. Of course, the unrelenting pressure of industrial life is softened bythe countervailing force of labor unions.

Postindustrial Society

While an industrial society defines the standard of living by the quantity of goods, the

postindustrial society is concerned with the quality of life, as measured by services suchas health, education, and recreation. The central figure is the professional person,because rather than energy or physical strength, information is the key resource. Lifenow is a game played among persons. Social life becomes more difficult, becausepolitical claims and social rights multiply. Society becomes aware that the independentactions of individuals can combine to create havoc for everyone, as seen in trafficcongestion and environmental pollution. The community rather than the individualbecomes the social unit.

Bell suggests that the transformation from an industrial to a postindustrial society occursin many ways. First, there is a natural development of services, such as transportation

and utilities, to support industrial development. As labor-saving devices are introducedinto the production process, more workers engage in nonmanufacturing activities, suchas maintenance and repair. Second, growth of the population and mass consumption ofgoods increase wholesale and retail trade, along with banking, real estate, andinsurance. Third, as income increases, the proportion spent on the necessities of foodand home decreases, and the remainder creates a demand for durables and then forservices.



Ernst Engel, a Prussian statistician of the nineteenth century, observed that as familyincomes increase, the percentage spent on food and durables drops while consumptionof services that reflect a desire for a more enriched life increases correspondingly. Thisphenomenon is analogous to the Maslow hierarchy of needs, which says that once thebasic requirements of food and shelter are satisfied, people seek physical goods and,

finally, personal development. However, a necessary condition for the "good life" ishealth and education. In our attempts to eliminate disease and increase the span of life,health services become a critical feature of modern society.

Higher education becomes the condition for entry into a postindustrial society, whichrequires professional and technical skills of its population. Also, claims for moreservices and social justice lead to a growth in government. Concerns for environmentalprotection require government intervention and illustrate the interdependent and evenglobal character of postindustrial problems. Table 1.3 summarizes the features thatcharacterize the preindustrial, industrial, and postindustrial stages of economicdevelopment.

NATURE OF THE SERVICE SECTOR

For many people, service is synonymous with servitude and brings to mind workersflipping hamburgers and waiting on tables. However, the service sector that has grownsignificantly over the past 30 years cannot be accurately described as



composed only of low-wage or low-skill jobs in department stores and fast-foodrestaurants. Instead, as Table 1.4 shows, the fastest-growing jobs within the service



sector are in finance, insurance, real estate, miscellaneous services (e.g., health,education, professional services), and retail trade. Note that job areas whose growthrates were less than the rate of increase in total jobs (i.e., less than 31.8 percent) lostmarket share, even though they showed gains in their absolute numbers. Theexceptions are in mining and manufacturing, which lost in absolute numbers and thus

showed negative growth rates. This trend should accelerate with the end of the cold warand the subsequent downsizing of the military and defense industry.

Changes in the pattern of employment will have implications on where and how peoplelive, on educational requirements, and, consequently, on the kinds of organizations thatwill be important to that society. Industrialization created the need for the semiskilledworker who could be trained in a few weeks to perform the routine machine-tendingtasks. The subsequent growth in the service sector has caused a shift to -collaroccupations. In the United States, the year 1956 was a turning point. For the first time inthe history of industrial society, the number of -collar workers exceeded the number ofblue-collar work-



ers, and the gap has been widening since then. The most interesting growth has beenin the managerial and professional-technical fields, which are jobs that require a collegeeducation. Figure 1.3 shows the shift in employment from an industrial society ofmachine operators to a postindustrial society of professional and technical workers.

Today, service industries are the source of economic leadership. During the past 30years, more than 44 million new jobs have been created in the service sector to absorbthe influx of women into the workforce and to provide an alternative to the lack of jobopportunities in manufacturing. The service industries now account for approximately 70percent of the national income in the United States. Given that there is a limit to howmany cars a consumer can use and how much one can eat and drink, this should not be

surprising. The appetite for services, however, especially innovative ones, is insatiable.Among the services presently in demand are those that reflect an aging population,such as geriatric health care, and others that reflect a two-income family, such as daycare.

The growth of the service sector has produced a less cyclic national economy.Duringthe past four recessions in the United States, employment by service industries hasactually increased, while jobs in manufacturing have been lost. This suggests that



consumers are willing to postpone the purchase of products but will not sacrificeessential services like education, telephone, banking, health care, and public servicessuch as fire and police protection.

Several reasons can explain the recession-resistant nature of services. First, by their

nature, services cannot be inventoried, as is the case for products. Becauseconsumption and production occur simultaneously for services, the demand for them ismore stable than that for manufactured goods. When the economy falters, manyservices continue to survive. Hospitals keep busy as usual, and, while commissionsmay drop in real estate, insurance, and security businesses, employees need not belaid off.

Second, during a recession, both consumers and business firms defer capitalexpenditures and instead fix up and make do with existing equipment. Thus, service

jobs in maintenance and repair are created.

ROLE OF THE SERVICE MANAGER

Successful growth of the service sector will depend on innovation and skilledmanagement that will promote an ethic of continuous improvement in both quality andproductivity.

Innovation

The product development model that is driven by technology and engineering could becalled a push theory of innovation. A concept for a new product germinates in thelaboratory with a new scientific discovery that becomes a solution looking for a problem.

The 3M experience with Post-it notes is one example of this innovation process. Thelaboratory discovery was a poor adhesive, which found a creative use as a glue fornotes to be attached temporarily to objects without leaving a mark when removed.

Information technology provides many examples of the push theory of serviceinnovation. The growth of the World Wide Web as a place of commerce is changing thedelivery of services. People can browse the Internet for every imaginable product orservice from around the world. In fact, to stay competitive, many businesses may soonbe required to offer new cost-effective and convenient services for customers who havehome computers equipped with modems.

For services, the Cash Management Account introduced by Merrill Lynch is an exampleof the pull theory of innovation. During the period of high interest rates in the 1980s, aneed arose to finance short-term corporate cash flows, and individual investors wereinterested in obtaining an interest rate that was higher than those currently available onpassbook bank deposits.

The French Revolution provides another view of service formation, this time based onchanging demographics. Before the revolution, only two restaurants were in existence in



Paris; shortly afterward, there were more than 500. The dispossessed nobility had beenforced to give up their private chefs, who found that opening their own restaurants wasa logical solution to their unemployment.

For a manufacturing firm, product innovation is often driven by engineering-based

research, but in service firms, software engineers and programmers are the technocratswho develop new innovations. Customers interact directly in the service process;therefore, the focus on meeting customer needs drives service innovation and explainswhy marketing plays such a central role in service management.

The introduction of a new technology, however, does have an ancillary effect on serviceinnovation. For example, the VCR has spawned a video rental business and created arenewed demand for old movies. Thus, the creation of an innovative service enterprisehas many sources.

Service innovation also can arise from exploiting information available from other

activities. For example, records of sales by auto parts stores can be used to identifyfrequent failure areas in particular models of cars. This information has value both forthe manufacturer, who can accomplish engineering changes, and for the retailer, whocan diagnose customer problems. In addition, the creative use of information can be asource of new services, or it can add value to existing services. For example, an annualsummary statement of transactions furnished by one's financial institution has addedvalue at income tax time.

Service innovators face a difficult problem in testing their service ideas. The process ofproduct development includes building a laboratory prototype for testing before full-scale production is initiated. New services are seldom tested before they are launched

in the marketplace, however, which provides a partial explanation for the observed highfailure rate of service innovations, particularly in retailing and restaurants. At present,new service concepts usually must prove themselves in the field instead of in a"laboratory" setting. Methods to simulate service delivery systems before theirintroduction must be developed. One example of an effort in this direction is provided byBurger King, which acquired a warehouse in Miami to enclose a replica of its standardoutlet. This mock restaurant was used to simulate changes in layout that would berequired for the introduction of new features such as drive-through window service anda breakfast menu. The marketing concept of a "focus group," consisting of customersselected to review service proposals in a roundtable discussion, is another means ofevaluating new service ideas. The difficulty in service prototyping is the need toevaluate the service delivery system in operation where technology, service providers,and customers are integrated.

Social Trends

Three social trends will have a major influence on services: the aging of the U.S.population, the growth of two-income families, and the increase in the number of singlepeople. As the baby boom generation matures, the percentage of older people in



America will increase greatly. Currently, 6.2 million Americans are older than 80 yearsold. By the year 2000, this figure is projected to be 8 million, and by the year 2010, thenumber will be 21.1 million.4 This aging of the population will create opportunities forretired people to take part-time work, in part because of fewer young people enteringthe workforce. In the future, companies facing

4Susan B. Garland, "The Graying of America Spawns a New Crisis," BusinessWeek,Aug. 17,1987, pp. 60-62.

a labor shortage may be forced to hire retired workers, at least on a temporary or part-timebasis, and this trend is already apparent. For example, The Travelers' InsuranceCompany has developed a Retirement Job Bank of its retired employees that is used asa source of skilled labor to fill in during peak work times, absences, and vacations.5 Also, elderly people are living longer and have more active lives, with consequentdemands on health care, public transportation, and leisure services.

The two-income family is fast replacing the traditional family of the 1950s, whichconsisted of a husband, a housewife, and two children. The new two-income family unithas created demands for services such as day care, preschool, and "eating out"services. For two-income families, time is at a premium, and they are willing to pay forservices that give them more free time. As a result, many new services have beencreated that focus exclusively on saving time for these individuals. Examples includehome delivery services and personal shopping services for everything from gifts toclothing. Increased disposable income from two wage earners also may translate intoincreased demands for leisure, entertainment, and tourism services.

The number of single people in America is growing, and this trend is expected to

continue.

6

Recreational sports and other group-oriented activities will be in demand,because they will offer the opportunity to meet other single people. Home food deliveryservices that now offer pizza may find a market for the delivery of gourmet meals tosingle people.

All of these social trends support the notion that the home will become a sanctuary forpeople in the future, and that sanctuary will be supported by a communication systembringing video and electronic messages from the global community into the living room.

Management Challenges

Complacency in the management of service industries, inattention to quality, disregardfor customer concerns, and exclusive attention to short-term financial orientation allthreaten to undermine the service sector of the economy. It is important to realize thatunder the pressures just mentioned, the service sector could become as vulnerable toforeign competition as the manufacturing sector has. The following discussion of thecompetitive challenges in services is based in part on a classic article by James BrianQuinn and Christopher E. Gagnon, in which they caution the reader that services couldfollow manufacturing into decline.7



Quinn and Gagnon point out that the economic trends in services are undeniable, andthat they are similar to the recent experience in manufacturing. Since the early 1980s,the net positive trade balances in services have fallen steadily. For example, a seriousloss of market share has been experienced in international airline travel as the oncepowerful carriers, Pan Am and TWA, de

5Harold E. Johnson, "Older Workers Help Meet Employment Needs," Personnel journal,May 1988, pp.100-105.

6Edward Cornish, "The Coming of the Singles Society," The Futurist, July-August 1987,p. 2.

7J. B. Quinn and C. E. Gagnon, "Will Services Follow Manufacturing into Decline?"Harvard Business Review, November-December 1986, pp. 95-103.

clared bankruptcy in the face of foreign competitors that upgraded their fleets and

emphasized quality of service.

Purely domestic services are not immune to foreign competition, either. Direct foreigninvestment in the U.S. service sector is substantial. Many famous names in services,such as 20th Century Fox, Stouffer's Hotels and Restaurants, Marshall Field, and GiantFoods, are now foreign-owned. In California, Japanese banks are changing the natureof competition and winning accounts by taking a much longer view in making businessloans to new ventures at very competitive interest rates.

The nature of competition in services also is changing, because the forces ofderegulation and new technologies have restructured service industries in recent years.

Deregulation has caused significant restructuring in the domestic airline industry, withsuccessful new regional carriers appearing (e.g., Southwest and Alaska) and old giantsdeclaring bankruptcy (e.g., Eastern and Braniff). New route networks have formedaround the hub-and-spoke concept to provide service in a more cost-effective manner.The use of computer reservation systems has allowed airlines to provide a variety ofcompetitive fares based on preselling seats at a discount; thus, they can ensure high-load factors and profitable operations. Service managers need to understand these newcompetitive dimensions to take advantage of opportunities to improve service qualityand performance, thereby creating barriers to the entry of foreign and domesticcompetitors. Competing on the traditional dimensions of quality, price, and availabilitywill always be important, but consider the following additional dimensions based on the

use of information technologies, which are the source of the value added by servicefirms.

Economies of Scale

Economies of scale are realized when fixed costs in new technology are allocated overincreased volume; the result is reduced cost per transaction. For example, automationof the securities trading process changed the entire structure of the industry and made



possible the handling of daily volumes in the millions of shares. The old system oftransferring shares from seller to buyer manually has been replaced by an electronicclearinghouse. Without using a central electronic depository, Wall Street could notfunction as an efficient securities marketplace. New and expensive medicaltechnologies, such as the CAT or MRI scanners, have resulted in regional treatment

centers and the concentration of medical services at these large hospitals. Thus, wefind that the introduction of capital-intensive technologies has resulted in theconcentration of services and aggregation of demand.

Economies of Scope

Economies of scope, a new and somewhat controversial concept, describes thebenefits that are realized when entirely new service products move through establisheddistribution networks with little added cost. For example, once the communications andinformation-handling technologies are in place, a much wider set of services can bedistributed to a more diffuse customer base at low marginal costs. In addition, this

information technology base can offer strategic benefits through more rapid productintroduction and faster response to competitors' moves. Insurance companies thatautomated their back-office operations in the 1960s to improve billing and collectionsfound themselves with a competitive advantage during the interest rate explosion of the1980s. Companies had to alter their products rapidly to attract interest-sensitive newcustomers and to avoid the losses from current customers borrowing against theirpolicies at low interest rates. Only those companies with the flexibility of computerinformation systems could design and deploy their products quickly enough to obtain acompetitive edge. Some companies added new computer-intensive financial servicessuch as cash management accounts to attract funds. A very common example ofeconomies of scope can be found at any local convenience store that has added self-

service gasoline and microwave meal service to its original grocery stocks.

Complexity

Since deregulation, the domestic airline industry has witnessed an ever-changing farestructure so complex that fares can no longer be published in flight schedules.Computerized reservations systems allow airlines to analyze the status of flights andcustomer buying behavior in such detail that they can optimize margins on each type ofdemand and meet competitors' responses. The ability to monitor hundreds of flights andmake seat allocation decisions on an hourly basis is accomplished with significantcomputer support and software algorithms. This special use of computer information tomanage perishable capacity and to maximize revenues is called yield management, atopic that will be treated in detail in Chapter 13, Managing Capacity and Demand.

Sophisticated use of information systems to manage complexity also can be found inretail stores. Bar-code scanners give instant feedback on sales and inventorymovements, which results in a better match of inventory to customers' needs. Thisinformation has enabled major chains to customize the stock featured at their stores so



that they can accommodate regional preferences and compete better with smallspecialty shops.

Boundary Crossing

Competition among services once thought to be in different industries is now becomingcommonplace, some of the most striking examples are found in the financial services.Today, many consumers use their banks and brokers almost interchangeably, becauseneither is seriously restricted in its scope of operations. Banks, insurance companies,and brokerage houses offer a similar range of financial products and services and nowcompete in one market, without the traditional boundaries. As noted earlier,convenience stores now compete with fast-food restaurants as well as with servicestations, and even manufacturing firms such as GM and Ford have entered the servicearena by offering financing services to auto buyers. The ability of auto manufacturers tofinance the sales of their cars has allowed them to offer loans at reduced interest ratesas an incentive to buy their products. In fact, at present, General Motors Acceptance

Corporation is the nation's largest single holder of consumer debt. Thus, we can readilysee that competition in services can come from any quarter.

International Competitiveness

The worldwide service trade is growing with the help of cheaper and more flexibletransportation and communication capabilities. During the 1960s, only 7 percent of theU.S. economy was exposed to foreign competition. Today, that figure is greater than 75percent, and it is still climbing. With the world heading toward a single economy, or"global village," this trend toward greater international competition is expected tocontinue for both manufacturing and service firms. 8 For example, the purchase of

Flying Tigers by Federal Express has enabled it to guarantee delivery anywhere in theworld in two days; as a result, it joins DHL and others for a share in the growingbusiness of global package delivery. Geographic distance is no longer a barrierbetween nations, and the challenges of ethnic diversity in the domestic market aremultiplied by the difficulties of delivering a service in an international market withdifferent cultural and language barriers.

SUMMARY

We have discovered that the modern industrial economies are dominated by em-ployment in the service sector. Just as farming jobs migrated to manufacturing in the

nineteenth century under the driving force of labor-saving technology, manufacturing jobs in due time migrated to services. Chapter 2 will conclude our discussion of the roleof services in our new society and prepare us for developing new managerial skills byarguing that the distinctive characteristics of services require an approach tomanagement significantly different from that found in manufacturing.

KEY TERMS AND DEFINITION



Clark-Fisher hypothesis a classification of economies according to the activity of themajority of the workforce.

Economies of scale allocation of the fixed costs of technology over an in creasedvolume of sales (e.g., airline reservation system).

Economies of scope movement of new service products through establisheddistribution networks (e.g., convenience stores adding self-serve gasoline pumps).

Industrial society a society dominated by factory work in mass-production industries.

Postindustrial society a service society in which people are engaged in information,intellectual, or creative-intensive activities.

Preindustrial society an agrarian society structured around farming and subsistenceliving.

Pull theory of innovation service innovations that are driven by customer needs.

Push theory of innovation product innovations that originate in scientific laboratories.

TOPICS FOR DISCUSSION

1. Illustrate how a person's lifestyle is influenced by the type of work that he or shedoes. For example, contrast a farmer, a factory worker, and a schoolteacher.

2. Is it possible for an economy to be based entirely on services?

3. Speculate on the nature of the society that may evolve after the postindustrial society.

4. What would be the impact on the service industry of the emerging social trend calledvoluntary simplicity (i.e., people choosing to spend less time working to enjoy lifemore)?

5. Comment on the role that marketing plays in the service innovation process.

8John Greenwald, "Down and Down the Dollar Goes," time, Sept. 7,1992, pp. 36-37.







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Role of Service Industry