Chapter 2 The Service Sector: Supersectors and Ethical Considerations.

Chapter 2The Service Sector: Supersectors and Ethical Considerations

Chapter Objectives

• Describe the nine supersectors that comprise the service economy.

• Identify the trends and concerns pertaining to the growth of the service economy.

• Understand the reasons consumes are particularly vulnerable to ethical misconduct within the service sector.

• Appreciate the types of ethical issues that often arise in the business sector.

• Discuss the consequences of ethical misconduct.

• Explain strategies that attempt to facilitate positive ethical behavior. 2

©2011 Cengage Learning. All rights reserved.

Opening Vignette: Vail Resorts

• Vail Resorts has recognized its responsibility to its guests and aggressively promotes skier safety.

• Developed “Your Responsibility Code”: hopes its guests follow the code and share the responsibility of safety

3©2011 Cengage Learning. All rights reserved.

What is the Service Economy?

Education and Health Services Education and Health Services

Other ServicesOther Services

TransportationAnd Utilities

TransportationAnd Utilities

Financial ActivitiesFinancial Activities

GovernmentGovernment

InformationInformation

Service Economy

Leisure andHospitality

Leisure andHospitality

Professional andBusiness servicesProfessional andBusiness services

Wholesale andRetail trade

Wholesale andRetail trade


Education and Health Services

• Education subsector

– Second largest employment industry

– 13.3 million jobs in

• Schools• Colleges • Universities and

training centers.

• Health Care and Social Assistance subsector– Health services is

the largest employment industry in private

– 14 million jobs in• Hospitals• Nursing care

facilities• Physician’s offices• Home health care

services 5©2011 Cengage Learning. All rights reserved.

Financial Activities

Banking and Insurancee.g. Commercial banking

Savings institutions,Credit Unions, andInsurance Carriers

Banking and Insurancee.g. Commercial banking

Savings institutions,Credit Unions, andInsurance Carriers

Securities, Commodities, and other investmentsmanage the issuance,purchase, and sale offinancial instruments.

Securities, Commodities, and other investmentsmanage the issuance,purchase, and sale offinancial instruments.


The Government

• Publicly-owned establishments of federal, state, and local agencies that administer, oversee, and manage public programs

• Includes public schools and public hospitals

1. Not-for-profit sector• Advocacy• Grantmaking• Civic Organizations

2. Federal Government3. State and local

government


Information Subsector

• Consist of establishments that produce and distribute information and cultural products, provide the means to distribute or transmit these products, and/or process data.

– Publishing industries– Motion picture and sound recording industries– Broadcasting industries– Telecommunication industries– Internet service providers and web search portals– Data procession industries and information

services industries. • Represents 2.6% of all employment


Leisure and Hospitality

• Arts, entertainment, and recreation subsector– More than 40% of

the workforce has no formal education beyond high school

• Hotels and other accommodation and food services subsector– 22% of employees

are between the ages of 16 to 19

– 2 out of 5 employees work part time

– Jobs are plentiful


Professional and Business

Includes a multitude of activities – Advertising and PR services– Legal advice and representation– Accounting and bookkeeping– Engineering and research services– Office administration and clerical services– Security and surveillance services– Cleaning and waste disposal services

©2011 Cengage Learning. All rights reserved.10

Transportation &Warehousing and Utilities

Transportation andWarehousing

e.g. Transportation of passengers and cargo,

warehousing and storage, sightseeing transportation

Transportation andWarehousing

e.g. Transportation of passengers and cargo,

warehousing and storage, sightseeing transportation

Utilitiese.g. electricity, natural gas,

steam, water, and sewage removal

Utilitiese.g. electricity, natural gas,

steam, water, and sewage removal


Wholesale and Retail Trade

• Wholesale Trade subsector– Establishments

that wholesale merchandise and provide services related to the sell of merchandise

– 2/3 work in the office and administrative support roles

• Retail Trade subsector– Establishments

that retail merchandise and provide services related to the sell of merchandise

– 84% consist of sales and administrative support positions


Other Services

• “Catch-all”• A myriad of establishments that are in

engaged in a variety of activities including

– Equipment and machinery repair– Promoting or administering religious

activities– Grantmaking– Advocacy– Drycleaning and laundry service– Personal care, death care, pet care– Photofinishing, temporary parking services,

and dating services13

©2011 Cengage Learning. All rights reserved.

Service Sector Concerns

• Materialismo Snobbery– Belief that without manufacturing

there will be less for people to service and so more people available to do less work

• Dichotomization of Wealth– The rich get richer and the poor get

poor

• Wages associated with service employment


1. Consumer vulnerability in services marketing

2. Issues that create ethical conflict3. Factors influencing ethical

decision making4. The effects of ethical misconduct5. Strategies for controlling ethical

behavior

Ethical Considerations for Services Marketers


What are Ethics?

• A branch of philosophy dealing with what is good and bad and with moral duty and obligation.

• The principles of moral conduct that guide behavior in the business world.


• Intangibility complicates the consumer’s ability to objectively evaluate the quality of service provided

• Heterogeneity reflects the difficulty in standardization and quality control

• Inseparability reflects the human element involved in the service delivery process

The Opportunity for Ethical Misconduct in Services


• Few search attributes

• Technical and specialized

services

• Time lapse between

performance and evaluation

• Sold without guarantees and

warranties

Factors Contributing to Consumer Vulnerability


• Performed by boundary-spanning personnel

• Accepted variability in performance

• Outcome-based reward systems

• Consumer participation in production


Factors Contributing to Consumer Vulnerability

• Conflict of Interest• Organizational Relationships• Honesty• Fairness• Communication

Issues that Create Ethical Conflict


• Personal Effects– Job-related tension– Frustration– Anxiety– Ineffective

performance– Turnover

intentions– Lower job

satisfaction

The Effects of Ethical Misconduct

• Organizational Effects– Customer

dissatisfaction– Unfavorable word-

of-mouth publicity– Negative image for

firm and industry


• Employee socialization• Standards of conduct• Corrective control• Leadership training• Service/product knowledge• Monitoring employee

performance• Stress long-term customer

relationships

Controlling Ethical Decision Making


All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic,

mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

Copyright © 2011 Cengage Learning.


Chapter 2 The Service Sector: Supersectors and Ethical Considerations.

Documents

Transcript of Chapter 2 The Service Sector: Supersectors and Ethical Considerations.