Importance of Service Industry in Building Economic Growth - Coursework Example

Importance of service industry in building economic growth Name: ID no. Unit code: Lecturer name: Assignment: Date of submission: In the current decade, the world has seen increased opening up of service industries in different parts of the world. This has mainly been led by increased rate of globalization which has opened up countries’ boundaries through removing tariffs and even liberalization of markets (Ettlie, 2011, p. 290). Services industries mainly involve provision of human value added such as labour, advice, managerial skills etc. Service industry lacks formalization as they vary from each other. As a result, starting up a service industry is simpler than starting a manufacturing industry. The total revenue that is obtained from the service sector has been a major pillar in sustaining and supporting the economy of many countries in the world (Kallenberg, 2003, p.162). Manufacturing industries have faced a lot of competition with increased level of competition. As a result, many companies have lost a lot of their resources as they are unable to keep up with high competition levels in the market. In order to curb this, companies need to diversify their sources of revenue to venture in a lucrative business of offering services. The reason behind diversifying these operations is because it is impossible to brand services. This provides a neutral ground where the companies can compete without differentiating their own products. This means that the competitive tool will be on how the services are offered and how the employees relate with the customers. This plays a crucial role in creating customer loyalty towards the services offered (Nissan, Galindo, & Mendez, 2011, p.65) With increased uncertainties that are facing the manufacturing industries, there is increased need to start service offering as a way of reducing risks and uncertainties that mainly affect the manufacturing and processing industries. One of the driving forces is the changing technology which requires the industries to keep on updating their machineries in order to keep up with increased levels of competition. On the other hand, many of the services offered cannot be inventories and must be consumed at some point of production e.g. attending a concert. This is in contrast with manufactured products which have a tangible character that enables them to be stored, distributed to different parts or even consumed without necessarily interacting with the entity that produced the products. Economic growth cannot be realized if policies are not put in place to ensure that service industry grows. Manufacturing industry depends largely on the existence of service industry. Services such as transportation, medical attention of the employees, financial services and distribution services determines the success of manufacturing industry. If these basic services are not well developed the whole economy will be highly affected. Service industry therefore, plays a role of intermediary between manufacturing industry and the consumers (Riedl, 2010). With increased level of competition in the manufacturing companies it is important for the companies to close any loopholes that have been reducing the overall organizations revenues. Much of the organizations revenues have been wasted in the distribution sector that mainly involves transportation and storing of the produce. This has increased the need for the organizations to take up these distribution and storage services in order to maximize their profits (Riedl, 2010). Service design is a holistic integrative field that aims in improving the services in order to make them more useful and desirable for the target customers as well as improving the efficiency of the organization. Designing services requires special consideration as they are not tangible, cannot even be owned or stored. Design therefore addresses any unique challenge that the organization might be facing (Riedl, 2010). It also helps in designing complex processes and even systems. Designing requires special processes, tools and even methods in order to ensure that effectiveness is achieved. Different levels of designs are used to attract customers towards the organizations. These include, designs of features e.g. product, service or even space, designing of the experience of the client designing the organizations processes and systems and designing the strategy, ideology philosophy and also policies (Lin, Hughes, Katica, Dining-Zuber, & Plsek, 2011, p. 75) In designing the service, the designer involves the client in order to ensure that the new design integrates all the requirements of the target customers i.e. the design is user centred. Second the designers prepare the employees of the organization psychologically in order to enable them to fit in the new features and processes. This also enables them to follow new policies that might be set to streamline the operations in the organization (Ronald, & Huang, 2012). After the design has been implemented, employees are trained on how to handle new operations in order to ensure that customer satisfaction is given a priority. Organizations use participatory design method in coming with the appropriate design for the customers. In this case the all stakeholders are involved in coming up with appropriate design for the organization. Some of the stakeholders involved include employees, customers, society and management. This ensures that the service designed incorporates all the interests of all organization’s stakeholders. In addition, interaction design is used in cases where designs involve websites and software. The interaction is through the interface (Moritz, 2011, p.51). Service design has very many benefits that increase the organizations competitiveness in the market. One of the benefits is increasing the understanding of the market needs. This is because the organization is able to closely monitor any behavioural changes in the market. This prevents the organization from being outshined by the competitors due to being misinformed. Second the new designs enable the organization to connect with the clients. In addition the organization is able to differentiate its products with those of the competitors an aspect that improves customer loyalty towards its products (Moritz, 2011, p.57). One of the organizations that have been trying to build its service offerings is the Australia and New Zealand bank limited. Despite the bank being one of the best performing organization in the country, it faces stiff competition from other financial institution such as commonwealth bank of Australia, national Australian bank etc. One of the methods that the bank is using to design its services is through interaction. Interactive design involves interacting with customers and society through the country in order to know their interests. This design has been through undertaking different corporate social responsibilities an aspect that has improved customers loyalty towards the services offered. Second form of design that Australia and New Zealand bank limited is implementing is strategy design. For any organization, strategy is an elaborate and even systematic plan that plays a crucial role in specifying some certain goals that the organization must achieve. As a result, the organization has been setting up strategies that are aimed at ensuring that it improves customers’ relation. One of the strategies is through open office strategy where the company is opening its offices for the customers who might be having some enquiry to the top management (ANZ, 2011). Third, the organization has been spending much of its time trying to design on how to change their philosophy, policies and even ideology in order for them to be customer oriented. In the previous decades, major organization were mainly profit minded and little effort was being put in place in order to look at the interests of the customers. Increased competition has led banks such as Australia and New Zealand bank to emphasize on changing this culture in order to integrate customer service delivery as their main goal for being in business (ANZ, 2011). Fourth, ANZ bank has put a lot of effort in process management. This is aimed at improving effectiveness, security together with efficiency. This design is mainly involving planning and administering all activities that are necessary processes in order to help in identifying opportunities and maximizing the benefits accrued from the existing opportunities. One of the examples that Australia and New Zealand bank has been using in service design is blueprinting design and implements processes (ANZ, 2011, p.8) Nevertheless, there have been various challenges that have been facing this new design. One of them is to come up with appropriate designers who will be able to draft policies that will steer the organization to greater heights enabling it to create more revenues (ANZ, 2011, p. 9). On the other hand, Westpac group has also been designing their service in order to remain competitive in the market. One of the designs that the group is using is the interior design. This is through creating an atmosphere that is in line with the image and quality of the services that are being offered. In addition to the image and quality, the group is ensuring that the new design will make the services more desirable for the client and efficient and effective for the organization (Westpac Group, 2011). Second, just like ANZ bank, the group have invested heavily on the interaction design where it has interrelated with surrounding society through sponsoring different corporate social responsibilities measures. This is playing a great role in creating a positive image of the group which faces stiff competition from ANZ and other financial institutions (ANZ, 2011). Both financial institutions’ designs are aimed at improving the overall image of the organizations. In addition the designs also aim at improving customer relations an aspect that is mainly aimed at creating customer loyalty towards the services that are offered (Westpac Group, 2011). References ANZ. 2011. ANZ Annual report 2010. Retrieved from http://media.corporate-ir.net/media_files/irol/96/96910/agm2010/2101%20Annual%20Report.pdf Ettlie, J. E. (2011). Service versus Manufcturing Innovation. J PRODINNOV MANAG, 28, 285-299. Kallenberg, R. (2003). Managing the transition from Products to Services. International Journal of service Industry Management, 14(2), 160-172. Lin, M., Hughes, B., Katica, M., Dining-Zuber, C., & Plsek, P. (2011). Service design and change of systems: Human-centered approaches to implementing and spreading service design. International Journal of Design, 5(2), 73-86. Moritz, S. (2011). Service Design. Retrieved from http://stefan-moritz.com/welcome/Service_Design_files/Practical%20Access%20to%20Service%20Design.pdf Nissan, E., Galindo, M., & Mendez, M. T. (2011). The Future of Services in a Globalized Economy. The Servive Industries Journal, 31(1), 59-78. Riedl, A. (2010). Loaction Factors of FDI and the growing services economy. Economics of transition, 18(4), 742-761. Ronald, T., & Huang, M. (2012). Optimizing Service Productivity. Journal of marketing, 76, 47-66. Westpac Group (2011). Westpac Group Annual review and sustainability report. Retrieved from http://www.westpac.com.au/docs/pdf/aw/WestpacGroup_2011_Annual_Review.pdf Read More