Key Themes
- What is a service business?
- What is a service?
- General trends in the rise of service businesses
- How to establish a service business
- Reading and managing service businesses
- The structure of this book
This book explores the challenges and problems of running and managing service businesses. It is not just about what works, but also about what does not work. The book’s focus is on understanding and managing private sector service businesses. Nevertheless, it is also relevant for understanding and managing public services and service functions within manufacturing-orientated production systems.
Terminology and typologies are important. The focus of this book is on service businesses. This includes understanding the on-going shift towards the production and sale of all types of service products. The term ‘service ’ both characterizes the process of producing a service and also describes the outcome of this process. This outcome is a ‘product’ or a ‘service product’. Product bundling occurs when a company combines different services together into a combined product or service package, for example, insurance policies or meal deals. A good is a ‘tangible manufactured thing’. Tangible goods are increasingly being combined with service products to produce hybrids. These are both goods and service products. Manufacturing firms, or firms that orchestrate the production of goods but are not directly engaged in production, are increasingly altering their position on the goods-service continuum to produce product-service combinations or product-service bundles.
The approach adopted in this book is to provide an overview of service research and theory (Chap. 2) before exploring strategy and operational issues (Chaps. 3, 4, 5, 6, and 7). This includes a discussion of service business models, operations and productivity and personnel management. The focus then shifts from process and product innovation (Chap. 7) to exploring marketing and customers (Chaps. 8 and 9) before exploring the internationalization of service firms (Chap. 10). The analysis then explores the role logistic services have made to underpinning internationalization and the shift within manufacturing companies towards the production of goods that are supported by services (Chap. 12). In Chap. 13, the measurement of company performance and customer satisfaction is explored before the book in Chap. 14 concludes with the development and application of an integrated case study approach to reading service businesses (Chap. 14).
Managers, employees, students, academics and others interested in understanding and running service businesses will benefit from this book. It can be used as a reference book where selected topics and tools can be found in each chapter, or it can be read entirely. Each chapter explores core business and management processes as they relate to the creation of services and to running and managing service businesses. This chapter presents definitions of the core phenomenon—service and service business. Part of the challenge is how to read a business or to engage in an analytical process that informs management decisions.
Services play an important role in enabling all types of economic activities and in facilitating everyday living. Logistics, financial services and information services underpin all economic transactions and all economic activities. Service businesses matter. This book is targeted at those whose working lives will be predominantly focused on the management and delivery of services. It develops a holistic and integrated approach to understanding service businesses by highlighting and exploring the key elements and processes required to develop and manage service businesses. It is intended to provide the reader with an integrated or systemic understanding of service businesses and this understanding will inform the reader’s ability to adopt, apply and use management and organizational tools. All businesses function through complex interactions between different but interrelated activity systems, or business domains, ranging from processes that focus on learning and development to monitoring and evaluation systems.
Firms are highly complex socio-technical systems formed by ever-shifting coalitions of people, technologies and organizational systems. To survive, such systems must contain adaptive capacity and must be open to new ideas and ways of organizing production. This book’s object of study is the totality of systems and processes that come together in service businesses of all types. These processes include marketing, operations, innovation, customer satisfaction and human resource management, and each is explored in this book with a focus on identifying key challenges, opportunities and business and management tools. To establish and run a service business it is essential to understand each of these processes and how they are woven together inside firms to support the co-creation of services between service providers and consumers.
The first section of this chapter defines service businesses and the concept of ‘service’. The next section then explores the development of service businesses by focusing on the shift towards service-led or service-dominated economies. The focus is on charting the rise of service businesses, activities and employment, but in relation to the whole economy. This section provides an overview of the history of the development of service firms, activities and employment. The final section explores the rationale and structure of this book with a focus on understanding how to read and manage service businesses.
1.1 Definitions
1.1.1 What Is a Service Business?
In principle, it is straightforward to define a service business as a commercial enterprise delivering work performed in an expert manner by an individual or team for the benefit of customers. The typical service business provides intangible products, such as accounting, banking, consulting, cleaning, landscaping, education, insurance, treatment and transportation services. Put another way, a service business helps in an organized, structured and skilled way to resolve problems experienced by its clients or customers. Look more closely at these statements and it rapidly becomes apparent that they incorporate some assumptions. For example, that a service business is a commercial enterprise, that it delivers work informed by expertise, that it delivers work to benefit customers or that it provides intangible products. You might be thinking that the notion of ‘intangible products’ is a contradiction; surely a product is a tangible (physical) object and it cannot be intangible. Yet, you will see plenty of references to ‘service products’ and this highlights the requirement to think more expansively about something that is produced—a commodity that has both a use and exchange value—alongside something that is marketed or sold as a commodity—a service.
Nonetheless, the distinction that is made in some official statistics between goods-producing and service-providing industries implies that there is a sharp distinction between these categories of business, but some further reflection may lead you to ask whether this distinction is actually very useful in understanding the production process.
1.1.2 What Is a Service?
The word service is very problematic as it has too many meanings and associations. The word comes from the Latin servitium or ‘sl...