Service Management and Strategic Implementation

Service has an important component to provide within the national economy. Such services enhance the quality of life for many individuals and make their day more effective. The post industrial society is based upon the ability of people to afford and able to use such services effectively. As society progresses from self-sustenance to shared sustenance the complexity of infrastructure and specialized services combine to create an inter-wrapping of networks and structure. 

The development of society and the development of services are on the same trajectory of growth. Society moved from providing extractive services such as agriculture and mining to secondary services such as manufacturing and processing. We are also now offering tertiary services such as restaurants and hotels and have grasped a higher level of governmental, financial and retailing structure. It is possible that we are moving into the quinary age of health, education, research, arts and recreation (Fitzsimons, & Fitzsimons, 2011). 

The appropriate development and delivery of services requires a strategy to make it effective. There should be alignment of the service system delivery, operating strategy, service concept, and target market segments (Sasser & Schlesinger, 1997). Each of these elements creates a function that when working in tandem provides the highest level of value for the customer and the potential highest level of income to the organization. Providing customer value and earning revenue are one in the same.

One of the ways to determine whether or not an organization is in proper alignment with its environment is to conduct a SWOT analysis. The SWOT analysis includes the concepts of Strengths, Weaknesses, Opportunities and Threats. Each organization has its own strengths that are unique to that company, has weaknesses that can be improved, opportunities for expansion into the market and threats that can damage its future sustainability. 

Strategy is the ability to take the information from the SWOT analysis, or other form of market scanning, and implement it within the organization. This is the most difficult task of any executive that desires to make an impact. They must make sense out of the information, honestly review their organizations capabilities, and then implement a strategy that impacts the entire chain of functioning throughout the organization. In the end this change should come to an appropriate output which raises sales, reduces expenses and improves revenue.

Fitzsimmons, J. & Fitzsimmons, M. (2011). Service Management: Operations, Strategy, Information Technology (Seventh Edition). NY: McGraw-Hill. 

Sasser, H. & Schlesinger, L. (1997). The service profit chain. NY: The Free Press.

Key West-Fun in the Sun and Night's Delights

Beech

Key West is a resort Island that hosts a whole range of fun activities for both individuals and families. Recently, I visited the island during an academic conference focused on international Academic works. Despite being busy preparing and presenting my own research there were a few hours where I could find some time to explore the local scene. If you think of Key West you should also think of Cuban culture and life. Its orientation is very much Spanish with American spicing.

The day attraction rests on sandy white beaches that draw thousands of visitors every year. The beaches are located not far from the airport and near the string of local resorts. The beaches are dotted with people of all ages trying to obtain a quick sun tan before heading back to wherever they are from. The beaches are well groomed and clean. At Smather’s Beach you can parasail, rent hobie cates, windsurf, kayak and paddle boards. It’s a fun time!

Duval Street

The night life on Key West is equally full of fun and excitement. The majority of the party is on Duval Street and a few blocks thereof. Everything is within walking distance. This includes bars, restaurants, night clubs, street vendors and stores. The streets are crowded even on a Monday and Tuesday evening as vacation travelers and locals head to the area for some entertainment. Be careful because one could easily overdue it in this area. 

The island also hosts glass bottom tours, parks, shopping, fishing escapades, and historical sites. There are plenty of things to do from small children to senior citizens. This may be why it is attractive as a tourist destination.  It would be wise to note that due to the Spanish culture just about everything from the local vendors have a stated and a negotiated price. Don’t be afraid to ask for a price reduction, a volume discount, or any other type of strategic haggle. The islands history is of the Spanish economic mindset.

Cigar Industry

Key West was originally inhabited by the Calusa people. They arrived in the area around 12,000 years ago and lived primarily with the diet of fish. Their society was stratified with a few leaders such as the chief, the priest, and the military leader running the daily order of society.  Their daily existence was well structured and some earthen mounds were used within their villages. Fishing nets were developed to maintain and grow their expanding empire. 

The island was discovered by Juan Ponce de León in 1521. After that time it made its way into the Spanish kingdom. Land disputes occurred when the Spanish Governor of Cuba deeded the island to the artillery officer Juan Pablo Salas. Salas was so excited to get rid of the island he sold it twice to an American business owner and also through a sloop trader to the former governor of South Carolina. The dispute ended when a naval ship put the American flag on the Island claiming it for the government and giving it the name Key West.

Marriot Resort

It is amazing to look at the power of history within islands like this. The way people perceive their existence on the island, the historical Spanish past, the fishing history of the natives, and the cigar manufacturing of Cuba all have something to do with the unique attraction of the area. It is a place of difference that many Americans are not familiar with. Whether one is walking on the beach or walking from bar to bar it is possible to see the underpinnings of its past everywhere.

Services versus Goods – Which brings your company more money?

A fundamental shift from good-demand logic to service-demand logic is occurring within the service management field. Service-demand logic looks at the economic value of the services associated with the product versus the actual cost of the product itself. Changing this scope of understanding helps decision-makers to view the value of the product as one of many types of possible revenue generating sources. These others sources may include servicing, insurance, technical support, upgrades, etc…

One of the reasons why a company would desire to move from a good-demand mentality to a service-demand mentality is because the latter affords many more opportunities to gain wealth. A secondary reason is because in today’s world of low price Asian manufacturers it is hard for American companies to compete on product price alone. Selling a total package raises the overall value of the product to the consumer.

It is important to understand the differences between products and services to understand how the mental shift impacts business operations. According to Vargo and Lusch (2004) there are four fundamental differences:

1.)    Intangibility: Services are intangible and products are tangible.

2.)    Heterogeneity: Goods are standardized while services are not.

3.)    Inseparability: The services are inseparable from the customer while goods are produced separate from the customer.

4.)    Perishability: Services are perishable while most good are not.

Through these four concepts it is possible to understand that services are connected deeply to the needs of the customer. They create a relationship and expectation on the customer through which long-term relationships and additional purchases can be sought. Thinking of a product with services raises the overall market value of the entire package allowing for higher levels of customer satisfaction and sales.

Service-demand logic is based on the culmination of many different marketing , organizational, and service theories. Lusch and Vargo (2006) reviewed 50 top marketing scholars from around the world and found much support and some criticism of service-demand logic. Eventually the field was integrated by Gummesson (2008) with marketing and customer relationship management to create multi-party networks through mass marketing.

Even though this is an emerging concept it stands to logic and reason that the service economy requires a new way of thinking about products. The product is sold into a relationship with the customer. It is this relationship that can either foster over many years or be a simple one-time sale. Through the proper management and development of appropriate service offerings organizations can create higher revenue streams that further their sustainability interests.

Gummesson, E. (2008), Total Relationship Marketing, revised 3rd ed., Butterworth-Heinemann, Oxford.

Vargo, S. and Lusch, R. (2004b), The four service marketing myths: remnants of a goods-based, manufacturing model. Journal of Service Research, 6 (4).

Vargo, S.. and Lusch, R. (2006), Service-dominant logic: what it is, what it is not, what it might be, in Lusch, R.F. and Vargo, S.L. (Eds), The Service-dominant Logic of Marketing: Dialog, Debate, and Directions, M.E. Sharpe, Armonk, NY, pp. 43-56.

Organizational Configuration and Operational Efficiency

Organizations seek to create market advantages and higher levels performance. While executives try and make a market impact it is the investors who desire to obtain stock value increases. Spending fewer resources while creating efficiencies raises the value of both the organization and its stock price. Improvements in organizational efficiency can be found through the proper implementation of strategy and the alignment of all the parts. Synergy is created through both management and employee participation.  

Configuration theory posits that each company has certain characteristics based upon their strategic objectives and that through configuration of these characteristic elements a higher yield of performance can be found (Van de Ven and Drazin, 1985). Efficiency is found through aligning various departments, specialties and resources in order to create less transactional waste and additional focus on objectives. Unfortunately, organizations often fail to create this synergy because they cannot adequately implement their strategies and ensure all departments and people follow suit.

Efficiency is often difficult for people to materialize for concrete conceptual understandings or the ability to effectively utilize such understandings for higher levels of performance. Effectiveness can be seen as a ratio of the amount of organizational resource used to achieve outcomes (Bonama and Clark, 1988). In essence, organizations that can impact their environment using fewer resources than their competitors are more efficient. They spend less money and used fewer resources not only in their daily operations but also in their strategic successes.

Not all organizations are the same when it comes to their ability to produce positive results. For effectiveness, the configuration of structural processes and individual tasks must be aligned to develop effective implementation of business strategy that leads to superior marketing effectiveness (Day, 1997). In other words, each individual activity either contributes to or takes away for market competitiveness. 

Strong executives should understand all the pieces to that are parts of the strategic implementation. Analyzing each of these parts for their contributory impact is beneficial. Parts that are either too expensive or do not contribute effectively should be removed or adjusted when appropriate. A total cost analysis can be completed to determine the overall efficiency of the operation. 

Workers can also be part of the solution. Even though they may not have a great understanding of the strategic outlay they have higher levels of in-depth knowledge with their individual jobs. This means that they can perceive small adjustments to create innovation and efficiency. Management must only be able to listen, encourage, and analyze the suggestions. Many small adjustments can add up to compounded savings over time. 

The end result is a stronger organization that efficiently meets the needs of customers and thereby creates higher levels of customer loyalty. According to Srivastava, Fahey, & Christenson (2011), “these relational assets are based on factors such as trust and reputation, the potential exists for any organization to develop intimate relations with customers to the point that they may be relatively rare and difficult for rivals to replicate” (p. 779). It is through this alignment that unique business practices can contribute to organization successes. 

Author: Murad Abel

Bonoma, T., & Clark, B. (1988). Marketing Performance Assessment.Cambridge. MA: Harvard Business School Press.

Day. (1997). Aligning the Organization to the Market. In Reflections on the Futures Marketing, R. Donald, L. Lehmann, & E. Katherine, (Eds.), Massachusetts: Marketing Science Institute.

Srivastava, R., Fahey, L., & Christensen, H.K. (2001). The resource based view and marketing: The role of Market based assets in gaining competitive advantage. Journal of Management, 27, (6).

Van de Ven, A. & Drazin, R. (1985). The Concept of Fit in Contingency Theory: Research in Organizational Behavior, 7(1).