Business Model and Ser vices
Chapter 1, 2, 4
Strategy is a holistic approach that involves A Service concept is a shared and articulated
defining objectives, assessing how those understanding of the nature of the service provided and
received.
objectives will be achieved through the allocation
of resources, selecting the best competitive
options within a market, and providing a clear
plan to ensure the organization’s long-term
success and development.
● Service operations managers
• Are responsible for a large proportion of the organisation’s
• Assets are responsible for delivering service to the organisation’s
customers
• Have a significant impact on the success of an organisation.
Service operations management can be defined ● Good service operations management, resulting in good services
as the process of transforming inputs (such as and experiences, will deliver the ‘triple bottom line’, i.e.
• Better for the customer
labor, materials, technology, and information)
• Better for the staff
into outputs (products, services, or customer • Better for the organisation.
experiences) through a structured set of ● At a macro level services are a critical part of most economies,
accounting for a significant proportion of GDP and employment
activities.
It involves overseeing, designing, and
controlling the process to ensure that services
are delivered efficiently and effectively,
meeting customer needs while maximizing the
use of resources.
Understanding the customer perspectives
Made by Aja El Baghdadi
↑
, IHIP (Service Characteristics)
1. Intangibility:
• Unlike physical products, services cannot be
seen, touched, or tested before they are
purchased. This makes it harder for
customers to evaluate a service’s quality
before committing to it.
2. Heterogeneity:
Servitization: Manufacturing companies expand their
offerings by incorporating services along with their
• Services can vary greatly from one instance
traditional products.
to another because they are often provided
Example of Servitization:
by humans, and customer behavior or
Rolls-Royce is a well-known example. Originally a
expectations can differ. This makes
manufacturer of aircraft engines, the company now
standardizing services challenging.
offers a service called “Power by the Hour.” Instead
3. Inseparability:
of just selling engines, Rolls-Royce provides engine
maintenance services where airlines pay for the • Services are typically produced and
actual time the engine is in operation, ensuring consumed simultaneously. Unlike products,
ongoing maintenance and performance while creating where manufacturing and usage are
long-term value for customers. separate, services require the presence of
This shift demonstrates how manufacturing firms can both the service provider and the customer
enhance their business models by focusing not only at the time of delivery.
on the product itself but also on the associated 4. Perishability:
services that meet the evolving needs of their
• Services cannot be stored for later use.
customers.
Once they are provided, they cannot be
saved or kept in inventory, which means that
services are “perishable.” For example, a
doctor’s consultation or an airline seat can’t
be resold after the scheduled time has
passed.
“There is only one boss – the customer. Customers can fire everybody in the company from the
chairman on down simply by spending their money somewhere else.”
– Sam Walton, Walmart
Made by Aja El Baghdadi
, 4 Main Types of Service Processes
Customer Participation and Co-production:
Customers are not passive recipients; they often
take an active role in creating the service (e.g.,
self-checkout in stores). This means service
providers must carefully manage customer
involvement to ensure positive outcomes. The
concept of “co-production” is vital—managers
must understand that customers are part of the
service delivery process. Service operations
need to balance customer participation with
operational efficiency.
Service Promise and Alignment: The service concept
encompasses the “service promise” or proposition, Key Elements of a Service Concept:
which defines what the customer should expect from
• Core Service: The fundamental service
the service. Misalignment between what customers
provided (e.g., transportation by an airline).
expect and what the business can deliver leads to
dissatisfaction (e.g., promises of luxury in budget • Supplementary Services: Additional services
airlines may frustrate customers if not met). that enhance the core service (e.g., in-flight
entertainment, meals).
• Application for Managers: Managers use the
service concept to guide decision-making and • Customer Interaction: The role customers play
ensure operational alignment with customer in service delivery (e.g., self-check-in for
expectations. This ensures consistency in service flights).
quality and helps innovate new services that meet
• Experience Management: How customers feel
evolving customer needs.
during and after the service interaction (e.g.,
• Most Important Point: The service concept is the friendly staff, ease of use).
backbone of effective service management. It
allows for a clear understanding between what
the business can deliver and what customers
expect. Ensuring alignment between these two
factors is critical for customer satisfaction and
long-term business success.
Made by Aja El Baghdadi
Chapter 1, 2, 4
Strategy is a holistic approach that involves A Service concept is a shared and articulated
defining objectives, assessing how those understanding of the nature of the service provided and
received.
objectives will be achieved through the allocation
of resources, selecting the best competitive
options within a market, and providing a clear
plan to ensure the organization’s long-term
success and development.
● Service operations managers
• Are responsible for a large proportion of the organisation’s
• Assets are responsible for delivering service to the organisation’s
customers
• Have a significant impact on the success of an organisation.
Service operations management can be defined ● Good service operations management, resulting in good services
as the process of transforming inputs (such as and experiences, will deliver the ‘triple bottom line’, i.e.
• Better for the customer
labor, materials, technology, and information)
• Better for the staff
into outputs (products, services, or customer • Better for the organisation.
experiences) through a structured set of ● At a macro level services are a critical part of most economies,
accounting for a significant proportion of GDP and employment
activities.
It involves overseeing, designing, and
controlling the process to ensure that services
are delivered efficiently and effectively,
meeting customer needs while maximizing the
use of resources.
Understanding the customer perspectives
Made by Aja El Baghdadi
↑
, IHIP (Service Characteristics)
1. Intangibility:
• Unlike physical products, services cannot be
seen, touched, or tested before they are
purchased. This makes it harder for
customers to evaluate a service’s quality
before committing to it.
2. Heterogeneity:
Servitization: Manufacturing companies expand their
offerings by incorporating services along with their
• Services can vary greatly from one instance
traditional products.
to another because they are often provided
Example of Servitization:
by humans, and customer behavior or
Rolls-Royce is a well-known example. Originally a
expectations can differ. This makes
manufacturer of aircraft engines, the company now
standardizing services challenging.
offers a service called “Power by the Hour.” Instead
3. Inseparability:
of just selling engines, Rolls-Royce provides engine
maintenance services where airlines pay for the • Services are typically produced and
actual time the engine is in operation, ensuring consumed simultaneously. Unlike products,
ongoing maintenance and performance while creating where manufacturing and usage are
long-term value for customers. separate, services require the presence of
This shift demonstrates how manufacturing firms can both the service provider and the customer
enhance their business models by focusing not only at the time of delivery.
on the product itself but also on the associated 4. Perishability:
services that meet the evolving needs of their
• Services cannot be stored for later use.
customers.
Once they are provided, they cannot be
saved or kept in inventory, which means that
services are “perishable.” For example, a
doctor’s consultation or an airline seat can’t
be resold after the scheduled time has
passed.
“There is only one boss – the customer. Customers can fire everybody in the company from the
chairman on down simply by spending their money somewhere else.”
– Sam Walton, Walmart
Made by Aja El Baghdadi
, 4 Main Types of Service Processes
Customer Participation and Co-production:
Customers are not passive recipients; they often
take an active role in creating the service (e.g.,
self-checkout in stores). This means service
providers must carefully manage customer
involvement to ensure positive outcomes. The
concept of “co-production” is vital—managers
must understand that customers are part of the
service delivery process. Service operations
need to balance customer participation with
operational efficiency.
Service Promise and Alignment: The service concept
encompasses the “service promise” or proposition, Key Elements of a Service Concept:
which defines what the customer should expect from
• Core Service: The fundamental service
the service. Misalignment between what customers
provided (e.g., transportation by an airline).
expect and what the business can deliver leads to
dissatisfaction (e.g., promises of luxury in budget • Supplementary Services: Additional services
airlines may frustrate customers if not met). that enhance the core service (e.g., in-flight
entertainment, meals).
• Application for Managers: Managers use the
service concept to guide decision-making and • Customer Interaction: The role customers play
ensure operational alignment with customer in service delivery (e.g., self-check-in for
expectations. This ensures consistency in service flights).
quality and helps innovate new services that meet
• Experience Management: How customers feel
evolving customer needs.
during and after the service interaction (e.g.,
• Most Important Point: The service concept is the friendly staff, ease of use).
backbone of effective service management. It
allows for a clear understanding between what
the business can deliver and what customers
expect. Ensuring alignment between these two
factors is critical for customer satisfaction and
long-term business success.
Made by Aja El Baghdadi
