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CHAPTER 10CHAPTER 10SERVICE STRATEGYSERVICE STRATEGY
SERVICE STRATEGY
• Characteristics of Services
• Capacity Management
• Concentrated Service Niches
• Major Services
CHARACTERISTICS OF SERVICES
• Produced and consumed at the same time
• More variability in quality control
• Intangible
• No inventory with services
CAPACITY MANAGEMENT
Examples
• Hotel weekend specials
• Travel in Europe in low season
• Ski resorts in March
Matching supply and demand for services
INCOME TAX
Preparation by CPA’S
April 10 $500
Feb 10 $400
CONCENTRATED SERVICE NICHES
• USAA Military Market • Lending Tree Online lending
• Hotels Last minute reservations
HYATT PRICING
Monday-Thursday $200
Friday-Sunday $100
LENDING TREE
State Law – Cannot take out equity except by a Texas lending company
MAJOR SERVICES
• Professional Services
• Health Services
• Financial Services
• Educational Services
PROFESSIONAL SERVICES
• Lawyers
• CPAs
• Real Estate
SIMPLE LEGAL SERVICES
• Simple wills
• Simple tax filing
• Uncontested divorces
MAJOR CPA SERVICES
• Auditing
• Taxes
• Consulting
MAJOR ACCOUNTING FIRMSBig Four 2009 Big Eight 1989Price Waterhouse Price Waterhouse CoopersCoopers & Lybrand
Deloitte Touche Deloitte Haskins & SellsTohmatsu Touche & Ross
Ernst & Young Arthur YoungErnst & Whinney
KPMG Peat Marwick & MitchellArthur Anderson
PROFESSIONAL SERVICES CHANGES
• Lawyers Price Fixing
• CPA’s Soliciting Competitors’ Business & Advertising
HEALTH SERVICES
• Doctors and nurses
• Hospitals and clinics
• Medical insurance
DOCTORS AND NURSES
• General Doctors
• Specialist Doctors
• Role of Nurses
% OF U.S. MEDICAL SCHOOL DOCTORS AS GENERAL PRACTIONERS
1970 40%
2013 15%
HOSPITALS AND CLINICS
• Large hospitals
• Emergency centers
• Minor health clinics
USE OF HOSPICE CARE
2000 22%
2009 42%
MEDICAL INSURANCE
• Medicare
• Medicaid
• Insurance providers
HOSPITAL PRICING
City Hospital Procedure Hospital Cost#1 #2
Dallas Lower Joint Replacement $162k $43k
New Jersey Respiratory Ailment $100k $7k
Alabama Pneumonia $150k $14k
FINANCIAL SERVICES
• Banking
• Insurance
• Stock Brokers
DISCOUNT STOCK BROKERS
• Fidelity
• Vanguard
• Schwab
EDUCATION SERVICES
• High Schools
• Community Colleges
• Universities
HIGH SCHOOL CHOICES
• Public schools
• Private schools
• Charter schools
• Home schooling
COMMUNITY COLLEGES IN HOUSTON AREA
• Houston Community College
• San Jacinto College
• Lone Star College
UNIVERSITIES
• State Public Universities
• State Private Universities
DIFFICULTY OF CHANGE IN EDUCATION
Reforming and changing a curriculum is about as difficult as moving a cemetery