Free Essay

Productivity Is Difficult to Improve in the Service Sector

In: Business and Management

Submitted By hazel1607
Words 933
Pages 4
Baumol (1967), many years ago stated that productivity improvements in services are harder to achieve than in goods producing industries. There is no exact data about this but only some notion of hypothesis by the economists and business men support Baumol that it is hard to improve productivity in service sector due to some reasons. Service industry means one is offering their service using a platform and most commonly used platform till today is the labour force. The first reason that leads to the difficulty in improving productivity of a company is because service industry typically needs the intensity in their labour force to compare to the manufacturing industry. This is because the labour will deliver their service to the customer. They tend to involve a significant amount of customization or customer interaction, so their operations rely heavily on these labours. The more services to be delivered or the more customers to be reached, the more labour force will be required which then, costly per each labour salary they need to pay. For example, Hotel industry is labour-intensive since they need to hire more labours to satisfy their customer since they are delivering intangible goods to the customers and the only important platform of delivering that service which is the labour, must be qualified and enough. Talking about the importance in delivering the service to satisfy the customer, this is said to be the other reason for its harder to improve the productivity in service industry. Usually in manufacturing industry, the marketer will find out first what is the customer’s buyer behaviour but they don’t directly seek for that while they talking to the customer, yet they study it from their behaviour. After that the marketers will conclude and give their company idea on what product to manufacture to be delivered to their target market. However, in service industry, they will deliver their service first then study to adapt the customers’ behaviour. This is hard since they need to tailor their service to many people which having different needs and wants. This means, the company need to hire qualified labour that can adapt to every different customer easily. For instance, in a college, the company cannot hire their lecturer with an average knowledge if they want to deliver best education to their student. Since they are facing with a lot of student, their hired lecturers need to know how to adapt to each of his student depending on their student’s behaviour because this will also affect the learning process. The success in bringing the best education their student means they are delivering good service and if the students satisfy and more get higher grade, this means the college is currently having increase in their productivity. The next reason for why it is hard to improve the productivity in service industry is because they need professionals labour to carry intellectual task. This means, the company will have to invest more money onto hiring these professional labours in order to carry an advanced task. The investment is basically high which basically the more educated and qualified the persons are, the higher they have to pay for their service. However, this will worth to invest if these labours can deliver their service really well to the customer. For instance, people whom had passed Degree level will be paid more than people with Diploma certificate. This is because they will need to carry tougher task which involve to critical thinking onto how to deliver their service to the customer really good so that the customer will be satisfy. Most of manufacturing industry today has been automated and mechanized to enhance the customer satisfaction. This is because, the use of technology will save a lot of time and make the production faster to be done. However, when we talk about the service industry, can we really mechanize our labour to deliver better and faster service? If we want to mechanize our service, we might need the labour to be replaced by robot. However, will the customer feel comfort dealing with robot? Another problem can be driven is about the customization. The machine or robot has been set its functionality earlier, means, the customer could not ask for more than what have been programmed into the machine or robot. We can take a look on example of a machine used in service industry which is the bank industry. It is true that ATM deliver faster service than dealing at the counter. The problem is, the customer can only do the programmed service on that machine, the rest they still need to go to the counter to deal it in person. This can cause to the decreasing of the productivity if the company mistake step on what part to mechanize and how if the customer is resistant to the mechanism. The last reason for why it is difficult to improve productivity in the service industry is because it is often difficult to evaluate the quality of service to compare as measuring the quality of a product. The fact is, raising the number of customers helped doesn't necessarily increase the quality of service they're provided. However, the opposite may be true, customers who feel they've been rushed through or given generic service may be unlikely to return. It may also be unsafe, in the health care industry, for example, nurses are judged based not just on the quantity of patients they help, but on the quality, as well. As a result, if increasing productivity is not in the best interests of the customer, there's little incentive to improve it.…...

Similar Documents

Free Essay

Reporting of Intangibles by Service Sector in India

...Title: Reporting of Intangibles by Service Sector in Indian context Introduction "I can make a whole lot more money skillfully managing intangible assets than tangible assets." – Warren Buffet In the current knowledge based economy, there is a transition from matter based economy to one based on ideas. The emphasis is shifting from natural resources to new thoughts and designs. With the shift from monetary economy to knowledge based economy, the wealth can be added by increasing the intangibles. The intangibles are the growth drivers for the Indian Economy. The high productive sector is the service sector whose contribution to GDP of the nation has displaced the contribution of Agriculture and Industry and the contribution is rising. In service sector nearly 22% of the population of the nation is contributing around 55% of GDP. The reason for high productivity can be attributed to only intangibility. The financial statements of the service sector enterprises do not depict the intangibles – because of difficulty in identification, measurement and valuation. The growth of the Service Sector may be slowed down if the service firms which are mostly knowledge driven are not growing and the two major obstacles in the growth of knowledge driven firms are (a) Finance and (b) Coverage of risk. Since the methodologies have not been developed for valuation of the intellectual properties, there are no reported resources on the basis of which sources for raising the......

Words: 1221 - Pages: 5

Premium Essay

Customer Service in Telecom Sector in Bangladesh

...CUSTOMER SERVICE IN TELECOM SECTOR (A CASE STUDY ON SYLHET ZONE) REPORT ON CUSTOMER SERVICE IN TELECOM SECTOR IN SYLHET ZONE Course Code: BUS-214 Course Title: Business Communication Submitted to: Tanvir Ahmad Torophder Lecturer Department of Business Administration Submitted by: Group Name: Name ID No. Samad Ahmed Chowdhury 1001010010 Tanzina Akther 1001010014 Rumena Akther Chowdhury 1001010016 Aysha Jahan Reme 1001010017 Nasima Begum 1001010018 S.M. Humayoun Kabir 1001010019 Md. Abdul Wadud 1001010036 24th Batch, Section-A Department of Business Administration Leading University, Sylhet Submission Date: May 5, 2011 May 05, 2011 Tanvir Ahmad Torophder Lecturer Department of Business Administration Leading University Sylhet- 3100 Subject: Submission of report on “Customer Service in Telecom Sector “(a case study on Sylhet zone) Dear Sir: We the SPARK group glad to present our report on “ Customer Service in Telecom Sector “ (a case study on Sylhet zone) that you have offered us to prepare as a requirement of Business Communication course. This report provides us with a learning experience & knowledge. We tried our best to gather most complete & relevant information. We are greatly hopeful that this report will meet up your expectation & will clarify the idea about the subject. We tried to prepare this report according to your prescribed guidelines. While working on this......

Words: 7890 - Pages: 32

Premium Essay

On the Front Line Service Sector

...Topic: Stress in today’s low end service jobs Significant Details: • Difficult relations with customers and often managers • Low pay • Time factors such as being understaffed and lack of manager support • Criticism and favoritism Relate: I am currently working a second job as a cashier in a grocery store. This article describes my stress and the reasoning behind it perfectly. Majority of the shifts that I work are understaffed and I end up with long lines and irate customers. I am often yelled at because they are in a rush and had to wait a long time on line. The managers on shift are usually nowhere to be found and most will not open another register to support me or any other cashier. Being 30 years old, customers often look down on me and assume I am dumb because I am working as a cashier. Little do they know, I have a full time job in the Human Resources field and could easily school them in multiple areas of information. Fortunately for them, thanks to “the customer is always right” I bite my tongue and just smile. React: As at least one other student stated, this is one of the main reasons I have gone back to school. Once I have obtained the degree I am pursuing, my current full time job will give me a pay raise and I will be able to quit my second job. As much as I would love to leave right now, I just keep telling myself, even at a little bit over minimum wage, the extra money at the end of the week helps....

Words: 271 - Pages: 2

Premium Essay

Service Sector in China

...Service sector in China * Structures, restrictions and recommendations University: Shanghai University – School of Economics Course: Service economics and Trade Tutor: Professor Dong Yinguo Author: Hake Feka Student ID: 13D62241 Abstract The result of the market-oriented reforms in China along with its opening up to the outside world were rapid industrialization and integration in international trade. The service sector has perceived a fast, continued development and has made huge contributions to the overall economy in terms of its share of gross domestic product (GDP) and employment. However, the development of the service sector has been inadequate and has lagged behind its overall stage of development according to international norms. Table of Contents 1. INTRODUCTION 2 2. THE IMPACT OF SERVICE SECTOR IN CHINA 2 3. DIFFERENCES AND GAPS 4 4. OBSTACLES AND RESTRICTIONS 6 5. RECOMMANDATIONS AND CONCLUSION 10 REFERENCES 12 1. INTRODUCTION The result of the market-oriented reforms in China along with its opening up to the outside world were rapid industrialization and integration in international trade. The service sector has perceived a fast, continued development and has made huge contributions to the overall economy in terms of its share of gross domestic product (GDP) and employment. The increasing of the service sector has caught up with the manufacturing sector, which indicates that China is moving into a new stage of......

Words: 3708 - Pages: 15

Premium Essay

Hrm in Service Sector ambience and service, with the widest choice. A customer could browse through the offerings to their hearts content without any pressure of buying through serene ambience in the classy glass and marble interiors designed by international architects. There was enough space for them to rest, take a break, have refreshments while shopping and then continue again. Staff at Green-Valley While the shops within each Green-Valley Store had its own staff, Green-Valley maintained its own staff to take care of housekeeping (cleanliness of public space like lobbies, staircases etc.) manage the car park, and provide security services. The staff at Green-Valley was trained to be unobtrusive; they were supposed to be present and vigilant at all times and respond to a specific customer request only when the customer required. They were there to help one make a choice or serve quietly and efficiently. With constant in-depth training, the Green-Valley staff was required to offer service to all customers with a positive attitude, pleasant disposition, and good communication skills Organizational Structure Each store was managed by a store-in-charge who was supported by four managers. The different managers took care of security, housekeeping, services and accounts. The staff strength for security, housekeeping and services varied from store to store based on the requirements. While the housekeeping took care of the general cleanliness of the stores, services......

Words: 2303 - Pages: 10

Premium Essay

Service Sector Management

...Services Management Introduction FALL 2006 Why study Services? • Service-based economies • Service as a business imperative in manufacturing and IT • Deregulated industries and professional service needs • Services marketing/management is different • Service equals profits – follow the money • It’s where the jobs are!!! Introduction to Services • Explain what services are and identify important trends in services. • Explain the need for special services management concepts and practices and why the need has developed and is accelerating. • Explore the profound impact of technology on service. • Outline the basic differences between goods and services and the resulting challenges and opportunities for service businesses. • Introduce the services variables and the philosophy of customer focus, as powerful frameworks and themes for managing services. Service Definitions • Services are deeds, processes, and performances. Valarie Zeithaml & Mary Jo Bitner • A service is a time-perishable, intangible experience performed for a customer acting in the role of a co-producer. James Fitzsimmons 4 Definition of Service Firms Service enterprises are organizations that facilitate the production and distribution of goods, support other firms in meeting their goals, and add value to our personal lives. Role of Services in our Economy 5 Percent Service Employment for Selected Nations Country United States Canada Israel Japan France Italy Brazil......

Words: 1404 - Pages: 6

Free Essay

Lean Manufacturing in Service Sector

...Resumo Este trabalho foca-se em dar uma introdução aos conceitos que formulam e suportam o Lean Manufacturing, de modo a introduzir esta temática ao sector terciário e a uma ferramenta, o PSS (Public Sector Scorecard). O PSS é uma ferramenta da gestão da qualidade e do melhoramento que é aplicada no sector público e terciário. É baseada no BSC (Balanced Scorecard) e foca-se nos resultados relativos à prestação de serviços do interesse dos utilizadores e das partes interessadas. Desta forma, auxilia a desenvolver os processos de forma mais eficiente e eficaz para atingir as metas a que as organizações se propõem seguindo o pensamento do PSS, em conformidade com a cultura da empresa e seus valores. Table of Contents Resumo iii Table of Contents v Índice de Figuras vii Introdução 1 Fundamentos do Lean Manufacturing 1 Estrutura do Lean Manufacturing 3 Análise da Cadeia de Valor 3 Os sete desperdícios 6 Ferramentas e técnicas de lean 7 Sector terciário 9 Introdução ao PSS (Public Sector Scorecard) 10 Funcionamento do PSS 13 Mapa estratégico 13 Melhoria contínua dos serviços 14 Medição e avaliação 14 Caso de estudo Stop Smoking Service Program [17] 16 Conclusões 18 References: 19   Índice de Figuras Figura 1 – Esquematização da estrutura do Lean Manufacturing [7]. 3 Figura 2 – Casa da qualidade (HOQ - House of quality): um modelo de 9 passos...

Words: 5954 - Pages: 24

Free Essay

Service Industry Productivity Measurement

...SOLUTION TO CASE STUDIES CASE: 1 “NATIONAL AIR EXPRESS” CASE: 2 “MINIT-LUBE, INC.” CHAPTER # 1 “OPERATIONS AND PRDUCTIVITY” CASE STUDY NATIONAL AIR EXPRESS 1. Is the productivity measure of shipments per truck still useful? Are there alternatives that might be effective? Answer: Productivity of company can be measured by the number of stops covered by each driver. This way the amount of services can be measured on every day basis and with the area covered by each driver. So the company can tell how much area has been covered by a driver in one day. This way productivity can be assessed in a measurable way. It can be formulized as: Productivity= NoSDrv Where, NoS = Number of Stops Drv = Driver 2. What if anything, can be done to reduce the daily variability in pickup call-ins? Can the driver be expected to be the several locations at once at five pm? Answer: This can be done by load balancing over the specified time duration. By load balancing I mean that we divide the crowded hours to reduce the pressure on peak time. Usually most of the telecommunication companies offer promotions at the night time when the network is not crowded so people only for important calls can use and benefit from the network and it does not affect the businesses by doing so. Problem shows that most of the calls are around 5 p.m. so the promotional strategy can be applied to reduce the load.  3. How should package pick up performance be measured are standards......

Words: 985 - Pages: 4

Premium Essay

Airbus Improves Productivity with Rfid

...Airbus improves productivity with RFID Introduction In order to face competition with Boeing, Airbus is implementing a new technology called the RFID system. This assignment will try to answer some questions related to the implementation of a new processing system within the organization. It is fundamental to understand how a new information technology can change the efficiency of the organization, and how that will affect people and business. It will also be useful to understand the issues and the steps the management level will have to face in order to achieve corporate goals and create an efficient strategy. 1. What are the drivers of the RFID project? By using Radio Frequency Identification (RFID), Airbus wants to improve its productivity and face competition with the ever-increasing Boeing Company. RFID is a wireless system whose purpose is to automatically identify and track tags attached to objects. This technology, used in manufacturing and in airplane maintenance, is a great opportunity for Airbus to reduce its production costs (by making its production process more efficient). RFID will replace some bar codes and offers 3 main advantages: a quick tracking of where items are in real time, finding extensive information about items and enabling quick inventory taking of items. However, Airbus is still using bar codes seeing tag prices remains high (1$). Here is an example of how RFID can be used by Airbus: crewmember walking down the aisle with an RFID...

Words: 1443 - Pages: 6

Premium Essay

Service Sector to the Contribution of Gdp

...------------------------------------------------- ------------------------------------------------- Sectors[edit] Percent labor employment in India by its economic sectors (2010).[110] The GDP contribution of various sectors of Indian economy have evolved between 1951 to 2013, as its economy has diversified and developed. Historically, India has classified and tracked its economy and GDP as three sectors — agriculture, industry and services. Agriculture includes crops, horticulture, milk and animal husbandry, aquaculture, fishing, sericulture, aviculture, forestry and related activities. Industry includes various manufacturing sub-sectors. India's definition of services sector includes its construction, retail, software, IT, communications, hospitality, infrastructure operations, education, health care, banking and insurance, and many other economic activities.[111][112] Agriculture[edit] Rice fields near Puri, Odisha on East Coast Main articles: Agriculture in India, Forestry in India, Animal husbandry in India, Fishing in India and Natural resources in India India ranks second worldwide in farm output. Agriculture and allied sectors like forestry, logging and fishing accounted for 17% of the GDP and employed 49% of the total workforce in 2014.[113] As the Indian economy has diversified and grown, agriculture's contribution to GDP has steadily declined from 1951 to 2011, yet it is still the largest employment......

Words: 5818 - Pages: 24

Free Essay

Productivity in Service Sector

...Topic: Productivity in Service Sector BRAC University BRAC Business School Spring 2016 Course: Production Operations Management (MSC301) Section: 001 Instructor: Md. Tamzidul Islam Assistant Professor, BRAC Business School Group Members Name ID Tasnia Jebin 12204103 Navid Anjum Khan 13104192 Rifat Shahrukh 13104047 Mohammad Muqtadir Ullah 13104061 Sadia Kamal 12204102 Atik Ilman Hossain 13104205 Date: April 4th, 2016 Question: What is Productivity? How do we measure productivity in a service environment such as restaurant? What are the factors that affect productivity? How does one can improve it? Answer: Introduction Goods and services are the products which have a demand in the market and generate enough revenue to make profit. Goods are tangible products which we can use, consume or otherwise have in our life. For example, cars, batteries, tables and everything which can be easily quantified by units of length, weight, volume. However, services are somewhat different products which are more intangible in nature. These products are usually ones which are rendered by human labor but also have some goods aspect to it. For example, A Hospital has syringes, medicines, MRI machines and lots of other goods. And they also have nurses and doctors who use these goods to give the patients (consumers) satisfaction as a total product package of both goods and services. One useful characterization of services is......

Words: 3434 - Pages: 14

Premium Essay

Private Sectors and Public Private Sectors to Improve the Entrepreneurial Mindset in Young Jamaicans?

...Denique Mitchel: 11100136 September 29, 2014 Abstract WHAT ARE POSSIBLE ARE POSSIBLE AVENUES THAT CAN BE TAKEN BY THE GOVERNMENT, PRIVATE SECTORS AND PUBLIC PRIVATE SECTORS TO IMPROVE THE ENTREPRENEURIAL MINDSET IN YOUNG JAMAICANS? By: Andrew Chin: 18100460 Petekaye Clarke: 11100138 Ellsworth Dixon: 26120390 Dana Sinclair: 11090085 Denique Mitchell: 11100168 Hervel Walker: 11100193 Advisor: Dr. Sachin Pilli ABSTRACT OF BUSINESS RESEARCH METHODS CLASS Research Paper Northern Caribbean University College of Business and Hospitality Management Title: WHAT ARE POSSIBLE ARE POSSIBLE AVENUES THAT CAN BE TAKEN BY THE GOVERNMENT, PRIVATE SECTORS AND PUBLIC PRIVATE SECTORS TO IMPROVE THE ENTREPRENEURIAL MINDSET IN YOUNG JAMAICANS? Name of Researchers: A. Chin, P. Clarke, E. Dixon, D. Sinclair, D, Mitchell, & H. Walker Name and Degree of Faculty advisor: Sachin, Pilli, Ph.D Date Completed: November 2014 This study is to examine the causes of the ineffective mindset of entrepreneurship of young people in Jamaica. Undergraduate students are to be interviewed on their perspective of entrepreneurial practices. We supposed that the government as well as private and public-private sectors plays a major role with the lack of innovation among young people. We hope that our theory will be proven accurate after the administrations of surveys and......

Words: 1378 - Pages: 6

Free Essay

Service Innovation in Different Sectors

...Course Code: FEAD06 Course Name: Service Innovation Title of Work: Service Innovation in Different Industries The Last Date: 2011-09-16 Name of Student/Students Family Name Given Name T-Number Bhatty | Usman Tariq | 840415-9256 (R238) | | | | | | | | | | | | | Name of the Teacher: Lars Witell Name of the Administrator: Frania Johansson ------------------------------------------------- Filled out by the examiner First Return: _____ Second Return: ______ Fourth Return: _________ Passed: _________ Received Points: _________ Grade: _________ Examiner: __________________ Service Innovation In different industries Contents Introduction 1 Service Innovation in Industries 1 Financial Services 1 Health Services 3 Hospitality Services 5 Brief Analysis & Conclusion 6 References 7 Appendix-1 1 Introduction The study of services innovation immediately poses the question of how a ‘service’ should be defined. From a conceptual standpoint there are a variety of views. Crespi et al. (2006) review the literature and conclude: “ is often useful to think of services as either intermediation activities, such as transport, that arise because consumers want to separate production and consumption, or contact services, such as haircuts or medical services, where production involves the consumer directly and where the output of the activity is embodied in the consumer ..... An important aspect of a service is the ‘jointness’ of......

Words: 3628 - Pages: 15

Premium Essay

Experiment Analysis in Increasing Productivity of Police Service Employees

...Experiment Analysis in Increasing Productivity of Police Service Employees Roger W. Clark University of Phoenix Research 320 Foundations of Research June 20, 2010 Experiment Analysis in Increasing Productivity of Police Service Employees Introduction In 1973, the city manager of Orange California is looking to boost the pay of police officers, without alienating the taxpayers. The city manager determined the police force is highly educated and intelligent allowing for the agreement of the incentive plan focusing on reducing reported crimes in the city. The experiment is designed to determine if an incentive pay program can increases police productivity. Indentifying the experiments control group, pilot group, independent variable, and dependent variables are essential to determining the experiment’s reliability and validity. Experiment The city of Orange California entered into agreement with the City of Orange Police Association to increase officers pay based on reported crimes in four categories, rape, burglary, robbery, and auto theft. Murder and assault were not included in the incentive plan because homicide and assault are considered a crime of passion, and larceny frequently involves theft from businesses (Staudohar, n.d., p. 520). The incentive plan could increase the agreed 7.5 percent pay increase in 1973 and six percent in 1974. The incentive increase for a reduction of 10% is an additional 2% and 3% for a reduction of 12% in reported crime......

Words: 838 - Pages: 4

Free Essay

Detail of Service Sector

...Detail of Service sector from 2009-10 Name: Shiva Kr. Yadav Roll No. 11316603911 SERVICES SECTOR: INTERNATIONAL COMPARISON Conventional wisdom suggests that during the early development phase of any country, expansion of output in manufactured goods precedes growth in the services sector. As a country progresses further manufacturing often takes a back seat, giving way to the services sector in terms of both output and employment, and manufacturing firms themselves become increasingly service centric in order to remain competitive. Some have argued that the decline in manufacturing and corresponding shift to services is unsupportable in the long run as services depend critically on manufacturing for their demand. Although this argument may be applicable for certain services such as retailing and transportation, it does not entirely hold for many other services. IT in particular very high services sector growth. Russia at 5.5 per cent and Brazil at 4.0 per cent are a distant third and fourth respectively. While India’s growth rate of the services sector at 10.1 per cent in 2009 was higher than that of China at 9.6 per cent, in 2010 it has decelerated to 7.7 per cent while China’s has remained constant (Table 10.1). All this highlights the prominence of the services sector for India. Despite the higher share of services in India’s GDP and China’s dominance in manufacturing......

Words: 2264 - Pages: 10