Slide 19: Strategic positioning through process structure 14
Slide 20: Service system design 14
Slide 21: Managing capacity and demand 15
Slide 22: Service supply chain 15
Slide 23: Value chain 16
Slide 24: Marketing 16
Slide 25: Positioning and branding 17
Slide 26: Communications 18
Slide 27: Pricing – cost based? Value based? 18
Slide 28: The “P’s” 19
Slide 29: What’s different in marketing of services? 20
Some questions to consider 20
Activities 1 21
Slide 30: Activities 2 21
And on the web 22
Slide 1: Title
This module includes some considerations for the management of services in strategic management, operations, and marketing activities.
Slide 2: Objectives
The focus of this unit is to introduce you to the notions about what differs in the management of services versus traditional operations or manufacturing management. We assume you have foundational knowledge about techniques of business management; and refer you to various sources to read up on these subjects. We’d like you to think about why these activities are different:
Note: The discussion about strategic planning that follows was drawn from information from our Pearce and Robinson text. It should be noted that the authors have drawn upon works by Henry Mintzberg and Michael E. Porter.
Strategic planning is a process by which:
The strategic planning process is much the same for services as it is for products. A services firm would follow the same steps as a manufacturer.
For example, there is usually a department or function called perhaps, marketing intelligence whose members are tasked with reading about the competition and the future as well as talking with customers. They compile the information and make predictions about what might happen, and analyze what is happening. The business takes all this into consideration when it decides what it wants to invest in or divest of.
Think about a fast food company – seeing the Atkins diet trends and putting plans in place to update their menu. They might sell the same things, but with different names to appeal to the public, or they might stop buying buns.
Slide 4: Components of the strategic management model
Using the components of the model from the Pearce and Robinson text becomes, in effect, the process by which strategy is developed. Strategy formulation is a circular process because circumstances constantly change. It needs to be done continually, not at set intervals. The steps are:
These are very similar for services and products. The items in bold below are mentioned in several texts as being particularly important in a services business, and will be covered in more detail later in this module:
Look up one or two services businesses on the web and see if you can find a mission statement. Some publish them, some don’t. A mission statement is supposed to tell customers and employees in simple concise terms, just exactly what the business does. It should be so easy to remember that people can use it to help choose their day to day priorities.
Internal analysis – the quality and quantity of the firm’s resources; strengths and weaknesses; and competencies
If DB2 is the next big thing and your company has no one trained, then you have to decide whether to use sub-contractors or purchase training. The answer will depend on what core competencies support your chosen mission.
External environment – forces over which the firm has little to no control.
If you can’t control the market, your customers, your competition then you need to develop plans to be able to work within those outside constraints (or opportunities).
Your crystal ball must be better than your competition (you hope) in order to set your goals to make you the winner in the marketplace.
The goal is to achieve objectives in terms of: profitability, productivity, competitive position, employee development, employee relations, technological leadership, and public responsibility. These goals are common to most businesses.
Generic and grand strategies – the firm’s competitive posture (generic); and the firm’s plans to achieve long-term goals (grand).
There are only 3 generic strategies, and the grand strategies will be associated with one of the three. An example might be Wal-Mart, with a clear generic strategy of low-cost leadership. Their grand strategy (or one of them) most likely was associated with having the fastest supply chain. It does not appear that they have adopted differentiation in services provided to customers.
Action plans and short-term functional tactics
These result from the higher level planning above, and are typically annual plans and budgets.
Policies that empower action – allow people to make decisions in sync with strategy without having to check with the boss.
For services, keeping the decision maker at the front lines is usually very important to differentiation in service. Think about calling the help desk for a computer problem, and it needs to be replaced. Is it not much better for you to be informed that the process indicates you’ll get a new PC in 3 days, and you don’t need three signatures to get it?
Restructuring, reengineering and refocusing the organization
This could occur when your analysis indicates you need to exit a line of business. For example, when IBM sold its personal computer division.