The US might eventually reach and equally high penetration of wireless device and acquire abundant number of content provider and dealers that target mobile users. It is hard to imaging however that people in US would spend at least 1 hour daily looking at their cellular phon. A phenomenon commence commuter in Japan. The legacy effect of excellent land line telephone services in the US would delay the rapid adoption of M-Commerce as weaknesses in other country.
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Using a customer as a partial employee in the service process has several organizational implication such use create the tradeoff between operational efficiency and operational control. When customer provides element of the service may result enhance efficiency of the service capacity because the capacity is added to the system at the moment it is needed. At the same time, however, much of the quality of the service may be out of the control of the organization mistake made by the customer may be costly. For example, the self-service yogurt machines in a grocery stall is a highly efficient delivery system but it may also result in waste extra work for the cleaning staff and damage to the equipment when customers misuse it.
The use as customer as “partial employee also require management to train the customer in how to behave often the training must take place at the time when the train sought failure to communicate the proper behavior may result in customer anxiety and dissatisfaction.
Customer who act as “partial employee” have implication for marketing operation, services may target the type of customer who desire a lot of control over the process and who is a quick learner. An example may be seen in the relationship between airline and frequent business traveler who are often control oriented and well education.
What possible dangers are associated with developing complementary services?
The possibility of increasing the firms’ liability because of those added services. For instance adding cold or hot sandwiches’ at convenient grocery store incur the possibility that a customer might suffer food poisoning and take legal action against the store.
Another example seen the addition self service guest bunk which involve the risk of fire damage and injuries.
When the complementary services attract customer who may hurt business consider a shopping mall that install a video arcade may become a heaven, for noisy and teenagers who will drive away those customer who want to shopping in peace.
Suggest diversions that could make waiting less painful.
Offer attention diversion suggests video games, travel poster, music and magazine.
Group waiting people in cluster to promote intention.
Acknowledge the customer present, inform the customer about the waiting time and advise the customer about any requirement of limitation of service for he or she is waiting.
Make the customer aware of any other services the organization might offer promote community services; provide information about non-competing organization by scenic side and etc.
Provide live entertainment, example musician in a restaurant; divert attention for customers who wait for services.
Provide toys to young children.
Offer education materials, suggest video tapes relating to customers need, example, the divert person will show the tapes related to condition.
How can effects of service recovery be understood as customer perceived fairness?
There are three dimension of perceive fairness in regard to the service process:
Distributive fairness related to the extent to reach recovery offer equates that the customer feel is deserved or needed.
Procedure fairness relates to how much influences, the customer feels has on the process and to how timely or convenient the recovery is.
Interactional fairness is concern with the quality of interpersonal interaction occurring during offer recovery. Example, fair, honest, empathy interaction, fair communication and behaviour.
An excellent recovery process can turn a quality disaster to positive experiences.
Explain why the goods analogy of a supply chain is inappropriate for services.
For physical goods, the analogy of a chain ideally capture the linear hand off of inventory between players in the distribution of product firm supplier â†’ Manufacturer â†’ Distributors â†’ Retailer â†’ Final Customer. The chain can be rather short, for Dell computer that sell directly but substantially longer for end for an automobile manufacturer selling through independent dealers. The simultaneously production and consumption nature of service doesn’t lend itself to the chain analogy but rather the service encounter is the essence of the service experience. The service provider can in turn have supplier but virtual analogy is a hub rather than chain.
Suggest some strategies for controlling the variability in service times.
To limit the service provider or to standardized them, eg. Fast food restaurant, they offer limited menu and standardized the ways in which the worker provide the services.
To partition demand into categories such as we see for commercial customer at bank or express lane customers at supermarkets.
Pizza Hut delivery services can guarantee delivery within a specific time by controlling variability to several measure. They standardize the preparation of the pizza and they locate store strategy throughout the town. They also organize the delivery people, so each one can make several delivery on each trip.
When the line becomes long at some fast-food restaurants, an employee will walk along the line taking orders. What ate the benefits of this policy?
To discourage customer to reneging once an order is taken the customer feel committed to follow.
Taking orders from customer while they still in line, save time when the counter is rich. The only tasks remaining are taking money and filling the order which reduce services time and increase the capacity to serve.
Such strategy establishes customer contact early in the encounter & may avoid having to play catch up point later.
Personnel who are on the floor taking orders during busy time can also keep wash for tables that need to be clean and make ready to accommodate the new customers.
Will the widespread use of yield management eventually erode the concept of fixed prices for any service?
More service establish to some extent the capacity constraint dilemma faced by airline and hotel there are unable to inventory their product (seat on flight or room for night) to avoid losing the revenue for time perishable capacity constraints airline/hotel services are motivated to presale the inventory when possible by using reservation and giving discount to avoid loss sales. eg. Travellers found that the publish room rate for under utilize hotels are quickly abandoned if the quest request a discount. The exemption to business that practise thus strategy are budget hotel that fill on those room each time, yield management has allocate customer to perishable measure of capacity constraints services and this knowledge will destroy fixed price for many service lead to price negotiation for all services.
Tutorial 12 (Managing Capital & Demand)
What organizational problems can arise from the use of part-time employees?
The uses of part time employees can be very helpful to businesses that have peak demand period such as restaurant, supermarket and bank. Part time employees are usually paid lower wages and they enjoy fewer if any benefits of company are provided for full time employees. Also, it is not generally flexible for a company to carry carrier development incentives to part time employees; it is also more difficult to fit them into their organization structure.
In addition, part time employees generally have lower experience than full time employee. As a result, part time employee may have bad attitudes and loss loyalty and commitment which could affect reliability performance & the quality of work. This situation can leave the direct impact on customer and the business.
In view of this condition, part time employee may require greater supervision and control that could be necessary for full-time employee. Also, there is usually a greater turnover in part time employee, so more time must be spent in training new employee. Finally, the business must hire more part time employee than full time people to start position which create more administration work for scheduling, personal record and payroll.
How can computer-based reservation systems increase service capacity utilization?
The main function of the reservation systems is to pre-sell the services. A reservation system allows the customer to reserve a service long before it is actually utilized. Allowing customer to make reservation has certain advantages. The reservation systems can be used to reflect demand to other times or location where services capacity is available. For example, if a passenger wants flight that is full reservation, the reservation clerk can suggest immediately suggest alternatives fly are available. Thus demand of service capacity has been effectively re-routed to under utilize capacity. Reservation systems also allow the services to over book its capacity when it reasonably expect to have no show.
Illustrate how a particular service has implemented successfully strategies for managing both demand and capacity.
Because a service is consume and produce simultaneously a failure to provide enough capacity to serve results in idle servers and facilities. Public school had been experiencing this variability in demand recently owing to frustration in the no. of school age children a move of family from center city to suburban and increasing enrollment in private school. Some strategies for managing the demand and supply are as followed.
Expand education services by offering adult education, early childhood education programs and before and after school child care program.
Offer social services such as community education program, job retraining programs, programs for senior citizen and summer recreation programs.
Promote of peak demand in some areas by offering summer school classes.
Use school building when classes are no longer held because of declining and enrollment for warehousing school supply or for admin office or lease those to other organization until school demographic change.
Hire teachers who are train in more than 1 subject in order to cope with a fluctuating demand for courses.
Hire part time teacher in small schools for support areas such as art, music and physical education.
Suggest some strategies for controlling the variability in service times.
To limit the services provider or to standardize them, fast food restaurant provide an excellent example of both approach they offer menu and they standardize the wears in which the worker provide the services.
To patricians demand categories such as we see for commercial customer at bank or express lane customers at market.
Pizza Hut delivery services can guarantee delivery within a specific time by controlling variability to several measure. They standardize the preparation of the pizza and they locate store strategy throughout the town. They also organize the delivery people. Each one can make one several delivery in each trip.
Discuss the functions of inventory for different organizations in the supply chain (i.e., manufacturing, suppliers, distributors, and retailers).
Manufacturing- factory inventory can be divided into 3 categories: raw materials, walk-in-progress (WIP) and finished goods. Raw materials are usually purchase in bulk quantities that often take advantages of price discount or forward buying in anticipation of future price increase. WIP is materials found on the factory floor in various steps of competition, WIP creates buffers between different manufacturing various steps and those allow some independent in operation. Finished goods if not representing a completed customer order ready for shipment are those available for immediately delivery.
Suppliers- in addition to the role of inventory share with other manufacturer, suppliers are expected to the role make delivery to their manufacturing cost on a just in time (JIT) basis. Using electronic data intra changes (EDI) suppliers are indirect contact with manufacturing contact with manufacturing cost and those they are reduce ordering delay significantly using EDI and JIT delivery, inventory level can reduce.
Distributors- act as consolidator of retail demand and provide more efficient distribution of goods because demand can be aggregated of regional level, distributors allow small manufacturer the opportunity to reach market efficiently by sharing the distribution cost with other firms.
Retailers at the retail level inventory are on display for ready accepts by customer. Lack of inventory for immediate sale that is stock out represent a lose sale and possible loss of future sales if the customers never return.
Suggest ways that service management can influence the arrival times of customers.
Use appointment or reservation.
Fill appointment times with walk in
Advertise the time during the day/week when the facility is seldom busy
Offer reduce rates for the services of weekends, example, telephone rates
Segment the market by time sensitivity, example, retire people with no schedules and business people at lunch time and student after school
Offer inducements suggest double stands on Wednesday gifts for the first specific customer who was arrived reduce the matinee rates for early theatre performance or meals.
Tutorial 13 (Growth and Globalization of Services)
Discuss the implications of service outsourcing for employees, stockholders, customers, and host-country economy when a firm outsources a call center overseas.
Employees of the firm will lose their job resulting in personal hardship, a lot of tax base of the local economy, unemployed employees and unexpressed of the government.
Stockholders will probably see some infinite improvement profit due to saving but this will dissipate when competitors follow the outsourcing practice.
Customers may be unaware the claim but could put off if the outsource call center is less responsive to customer need. Eg, Dell computer give up its oversea call center for its high dollar business clients following complaint poor service.
The host country economy and its citizen should benefit from the creation of new job.
In what ways are service sector inventory problems different from typical manufacturing inventory problems?
Services inventory problems differ from manufacturing inventory problems in the following ways:
Set up/ordering cost are typically not of great concern
Number of products is much larger
Shelf space limitation are a main concern
They are usually loss sales not back orders
Product substitution often occur in services
Demand variances is often much higher
Information accuracy is lower
What is the main difference between offshoring and outsourcing? Discuss THREE (3) potential risks of outsourcing.
Offshoring involve moving work to a different country, workers can be employes by the same firm or different firm.
Outsourcing involve moving work to a different company, workers can be in a same country or a different one.
Outsourcing vs. Offshoring
Outsourcer may collapse financially, go bankrupt, experience labor strike and a company might have to find a new solution on a short notice.
Outsourcer might share or sell the sensitive company information to competitors.
Company can become so tide or dependent on a particular outsources that outsource can drastically increase price in the future.
Potential Risk of outsourcing
Loss of direct control over quality
Jeopardizes employee loyalty because of job loss fears
Exposure to data and security and customer privacy issues
Dependence in one supplier compromises future negotiation leverage
Additional coordination expense and delays
Waste of in-house capability to perform outsourced service
What is the main purpose of yield management techniques? Suggest and explain FOUR (4) tactics to be used to manage supply.
Purpose of yield management techniques:
To sell right capacity to the right customer with right price.
manage demand & capacity to maximize revenue
4 tactics to manage supply:
â- Daily / weekly work shift scheduling
~ Carefully scheduling work shifts, profile of service capacity can be made to approximate demand
â- Cross training employees
~ cross -training employees to perform tasks in different operation creates flexible capacity to meet peaks in demand
â- Increase customer participation
~ Customer provides labor just at the moment it’s required
~ Thus, capacity to serve varies directly with demand rather than being fixed
â- Using Part-Time Employees
~ A ready part-time labor pool is available for who are interested in supplementing their primary source of income
Company can utilize creative work schedule to solve the problem of unevenness of customer demand throughout a day such as non-uniform starting time and work days that have variable work hours.
The traditional method for a control strategy cuts total labor by encouraging customer to participate in serving themselves.
By cross-training personnel for different jobs, a company can flexibly shift personnel temporary to increase the capacity of any position.
Capacity can offer be shared between department or between firm for personnel or equipments that is needed only occasionally. Eg., sharing the same secretarial accounting and office management team.
How is a service level determined for most inventory items?
Many factors are considered in determining a service level for an inventory item. The most of obvious included the cost of holding extra inventory as a safety stock and the cost associated with a stock out using an information database and expresses the delivery. This cause can be reducing significant need, for example, some retailers will have a stock out item, shop directly to the cost from another store. The competitive circumstances or willingness of the customer to place a back order also play a part. Rural store with competitors will seldom have the variety found in urban areas.
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What is the inherent conflict in a franchising arrangement?
A franchiser is interested in delivering a consistent offering across all units in order to establish a brand that attract travelling customer. However franchising attracts either entrepreneurial owner-operator or large firm operating several franchises. In the case of the owner-operators that is a desire to personalize the establishment and cattle to the local customer base. Large firm with multiple units under management have the power and economy self-incentives to challenges the franchiser in particular with respect to any binding agreement (example: supplies and materials).
Given the atypical nature of the franchise contract – two business entities bound together in a contract seeking mutual and separate profitability’, it is unsurprisingly susceptible to disputation.
Conflicts can be categories five groups, relating to: values; relationships; data; structures; and interests.
Causes of franchising conflict: financial issues can cause franchisees to seek either release or re-negotiation of their agreement; disputes with third parties; operational disputes with potential to impact on others involved in the same franchise scheme; financial issues interconnected with family and personal issues.
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