CHAPTER 12SERVICES

Christina & Kishore

WHAT IS A SERVICE?It’s any activity that fulfills a human want or need and returns money to those who provide for it.

WHAT ARE THE THREE TYPES AND THERE PURPOSES? Consumer Services – purpose to provide

services to individual consumers who desire them and can afford to pay them.

Business Services – purpose is to facilitate other businesses.

Public Services – purpose is to provide security and protection for citizens and businesses

DISTRIBUTION OF JOBS IN THE US

44%

24%

17%

15%Consumer ServicesBusiness ServicesPublic ServicesOther

EXAMPLESConsumer Services Business Services

Retail & Wholesale Services: Department Stores, grocery markets, and clothing stores.

Education Services: Tutoring (Kumon).

Health Services: Health care, certain hospitals and nursing homes.

Leisure & Hospitality Services: Restaurants, bars, hotels, theatres and other entertainment.

Financial Services: “Fire” F- Financial (banks) I – Insurance R & E – Real Estate

Professional Service: Technical Services – law,

accounting, architecture, engineering, design, consulting

Support Services – clerical, secretarial, custodial

Transportation & Info Services: Trucking, publishing, broadcasting and utility work such as water and electricity.

EXAMPLESPublic Services

All Federal, State, and Local Government jobs such as Public Schools, Firefighters, and Police Officers.

Consumer ServicesBusiness Services

Public Services

EARLY URBAN SETTLEMENTS Earliest ones included services in Ancient Cities like Ur and

Uruk in Mesopotamia. Later ones include Ancient Athens (1st Mediterranean

Settlement) which encompasses Knossos, Troy and Mycenae. They were trading centers for thousands of islands which were organized into city-states. Athens was the largest city-state. Provided both consumer services and cultural activity.

Another later one included Ancient Rome, urban settlement expanded during Roman Empire. These settlements were center of administrative, military, public services and retail and consumer services. Trade = Transportation. Rome fell = urban settlements fell = trade fell.

Urban life revived in Europe about the 11th century. Feudal Lords created urban settlements through feudalism. Trade on the uprising around 14th century. In Feudalism the most important services were in the town

square, things like church and palaces.

CONTEMPORARY RURAL SETTLEMENTS Archeological Studies show that

settlements built first for consumer and public services; later business services came into play.

FROM 1927 TO 2009 Primary and Secondary Jobs declined and

employment in the service sector grew. Consumer Services – increased in health care,

nursing homes, and home – health care and some large increases in Education, Entertainment and recreation.

Business Services – Expanded in professional services very rapidly (engineering, management, law) and also expanded in finance and transportation services due to improved efficiency.

Public Services – overall have just declined in that last two decades.

EARLY SERVICES…

Consumer

- Early permanent settlement established maybe cause of this…example: Burial of the

dead.-Settlements were

places to house families.

- Settled people needed tools, clothing, shelter, fuel, etc so there was a

lot of Manufacturing here.

- Consumer services began to expand as

people began to specialize.

Public

- Usually followed religious activities in

early permanent settlements.

- Good base to defend nearby food against competition so the

vulnerability to attack created soldiers.

- Wall around for added protection.

- Some citadels (military centers)

Business

- People needed food which was initially obtained through

hunting and gathering. - Extra food led to

storage.

- In settlements people now had goods and services to trade.

- This led to record keeping, currency

system, and setting fair prices.

CONTEMPORARY SETTLEMENTS

Rural

Urban

Services are generally

clustered in settlements.

CONTEMPORARY SETTLEMENTS

Rural Settlements Urban Settlements

These settlements are centers for agriculture and generally provide a small amount of service.

These settlements are centers for consumer and business services.

RURAL SETTLEMENTS Clustered –

place where a number of people live in close proximity to one another.

Includes homes, barns, tool sheds, churches, schools, shops, and some business services.

Often called a village or a hamlet. Disadvantages…

Lot of time moving around between fields Needed more roads to connect smaller lots Restricted in what to plant

Circular – Consists of a central open space

surrounded by structures. Kraal villages – enclosures for livestock in

center and houses surrounded them. German Gewanforf – core of houses, barns

and churches encircled by different agricultural activities.

Linear - Comprised of buildings clustered along a

road, river or dike to facilitate communications.

Behind the building you’d have the field and it would be long and narrow

French long-lot system Houses were along the river This formal allowed access of everyone to the

river.

Colonial American – New England built

Centered around a “common” – open area Homes and building grouped around them.

Settlers also had 1-5 acres land of barn, garden or enclosures of livestock feeding.

Favored… Settlers traveled together, wanted to live

close together so they could protect against attacks together.

Some remnants of old clustered rural settlements.

Dispersed – place where farmers living on

individual farms are isolated from neighbors.

Common in American colonies. Middle colonies had a very heterogeneous

settlement = land bought individually. Later spread to Mid-West and New England and was successful b/c of larger population and the people were less interested in religious and cultural values.

Great Britain converted into this to improve production which led to enclosure movement which coincided with the Industrial Revolution. Brought together one large farm and

increased productivity at the cost of village life.

RURAL VS. URBAN SETTLEMENTS Rural settlements

were always exceeded urban settlements till 2008.

Louis Wirth defined cities by three characteristics and argued these three characteristics; size, density, social heterogeneity. These produced different social behavior between the residents.

Rural

Small

Low Population

Density

Smaller Diversity of People

UrbanLarge

High Population

Density

Larger Diversity of People

URBANIZATION Definition – process by which the population of

urban settlements grows. The number of people living in the cities can

increase and there can also be an increase in the percent of people living in the city. (living in the urban area vs. the rural area)

The higher the percent of people living in a city the higher the country’s level of development. MDC’s have a higher percentage of urban people but

LDC’s have larger urban settlements. 8/10 of the most populous cities are in LDC’s

Buenos Aires, Delhi, Dhaka, Calcutta, Mexico City, Mumbai, Sao Paolo, and Shanghai.

More people move to the urban area usually because of economic opportunities.

CENTRAL PLACE THEORY & MARKET AREA The most important factor in the

profitability of a consumer service is picking the right location and the CPT helps by identifying that location.

It was first invented by Walter Christaller and worked well in regions that weren’t majorly industrialized and/or interrupted by physical barriers. Concept was further developed in

the U.S.A. Central Place – market center for

the exchange of goods and services by people attracted from the surrounding area. You want to locate centrally to

maximize ability from surrounding area.

Central places create competition by competing against each other to serve as the market for that surrounding area.

Portrayed with hexagons.

Market Area – the area surrounding a service from which customers are attracted to. Also called hinterland Like a Nodal Region – core is

where the characteristic is most intense.

Establish market area by simply drawing a circle around a node of service on a map.

People prefer to get services from nearest locations so customers near the center of the circle obtain services from local establishments.

U.S. can be divided into Market Areas, and about 171 functional regions exist called “daily urban systems”

MARKET AREA SIZE Varies with service…

Range and Threshold Determine Extent of Market Area Range – maximum distance people are willing to

travel for use of a service Expressed in travel time then in distance. People are usually willing to go a shorter range for certain

services compared to others. (Food vs. Rock Concert) Threshold – minimum number of people needed to

support the service. All businesses need at least a certain amount of

audience/customers to yield a profit. After a provider calculates Range, he then needs to

find the potential customers and count them and see if he has enough. Census data usually helpful.

MARKET AREA ANALYSIS Determines whether a good or service is

going to be profitable in that location. Now you need to determine the area to

maximize profits. Best location in a linear settlement -

Gravity model – predicts more people more profit and farther the people the less profit.

Customer patterns – the more people the more possible customers.

Best location in a non-linear settlement – Apply gravity model but instead compare multiple

potential sites by calculating the average distance people are from that place and there density, and the site with the highest density is the most profitable.

HIERARCHY AND NESTINGSmall settlements are only able to support services that have small thresholds as they don’t have enough population to support many of the larger services. Making larger settlements contain a diverse selection of services.

MDC’s have many settlements with small ranges, and thresholds and few with large ranges and thresholds.

Nesting – overlapping hexagons of CPT. 4 levels of market area

Hamlet Village Town City

RANK-SIZE AND PERIODIC MARKETS Rank-size distribution –

MDC’s, ranking settlements by size produce a regular pattern.

Rank Size Rule… Country’s nth-largest settlement

is 1/n the population of the largest settlement…i.e. 2nd largest is ½ the size of the largest.

Nation that follows this rule tends to be a society that is sufficiently wealthy to justify the provision of goods and services to consumers.

Primate City Rule… Largest settlement has more

than twice the second largest. Largest city = primate

LDC’s

Periodic Markets – Collection of individual

vendors who come together on a specific day to offer goods and services.

Services at the lower end of the Central Place Hierarchy

Used to provide goods to LDC’s or rural areas of MDC’s.

Usually on the streets, outside, mobile, and carrying small quantity.

WORLD CITIES Services…

World cities are most closely integrated into the global economic system and these business services concentrate in the disproportionately large numbers in them.

New technological advances in transportation and communication were suppose to disperse and stop the clustering of world cities.

Business Services… Industrial Revolution has

caused the modern world cities business services to cluster. Headquarters, shares of

major corporations, lawyers, accountants, and advertising agencies and all others cluster in world cities.

Consumer Services… Large size (population)

have large and diverse services and goods available.

Many liesure services cluster in world cities because of the large size and money.

WORLD CITIES

Public Services… World cities have

national and international power (capitals, etc) Contain: palaces,

mansions, national legislative structure, court, and government offices.

Government affiliated jobs

There are some exceptions like NYC.

Business Services are further broken down: Dominant…i.e. London, NYC Major…i.e. Chicago, LA Secondary…i.e. Houston,

Sydney Command and Control

Centers – contains headquarters of big corporations: Regional and sub regional

Specialized Producer-services Centers – highly specialized services: Management group and

centers of gov’t and education group

Dependent Centers – relatively unskilled jobs

LDC’S BUSINESS SERVICES AND THE GLOBAL ECONOMY Offshore Financial

Services Taxes

Income, profits and capital gains = almost nothing

Offshoring centers has tax-free exemption

US alone loses about $70 billion each year just in taxes because of offshored corporations.

Privacy Secrecy laws Assets protected from

malpractice suits Hide illegal activities

Back-office functions BPO or Business-

processing outsourcing Includes processing

insurance claims, payroll management, transcription work and so-on.

Attractive in LDC’s b/c of cheaper labor compared to MDC’s.

ECONOMIC BASE Basic Industry

Export outside of settlement

Settlements distinctive economic structure is derived from their basic industry.

% of workers in different businesses vs. % of workers in an industry and if that % is higher it is a basic industry

Non-basic Industry Customers live in the

same community

Specialization of cities in different services Certain cities have

basic activities that that city is spatially known for.

Distribution of talent Not even Some cities have

higher percent of talented individuals

Unique collection of basic industries