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Stages in Service Firm Competitiveness

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  • Category: Service

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Service firms must constantly improve themselves about quality and productivity in order to compete with rivals. Chase & Hayes created a table to describe the role of operations in the strategic development of service firms. This is an illustration of productivity and quality development. This table categorizes service firms into 4 stages of development according to their competitiveness. This table does not mean that services have to start at stage 1. A firm may start at stage 3 but may return to stage 1 out of neglect. (TCDD in the past & nowadays) 1- Available for service

Some service firms and often government services are in this group. Because they think they should operate at a minimum cost. Customers have no alternatives, so they do not need to seek for improvements in quality with their little motivation. There is minimal investment in training, so workers have limited skills and poor performance, so they need direct supervision. They do not invest for new technology until it is necessary for survival. In case of competition they cannot exist. 2-Journeyman

When a service firm in stage 1 with a sheltered existence may face a competition, so firm has to reevaluate its system. To avoid loss of market share managers need to adopt industry practices to compete with rivals. If all successful coach lines used the same buses, then a newcomer firm will buy the same buses, because they purchase the buses from the same supplier. So, they will all look like each other. If firms don not compete on operations effectiveness, they compete in other dimensions. Such as product line, peripheral services, advertisement. Service providers follow standard procedures without taking any initiative. F or example “Rahat hat” or express services of bus firms. 3-Distinctive competence achieved

Managers of the firms in this stage know what creates value for the customer. For example SAS (Scandinavian Airlines) was in trouble because of competition. Its CEO Jan Carlzon knowing that passengers suffer from delays, found out that to recapture the firm, on-time departure will work. Operations managers are defenders of improvement and they lead in instituting service guarantees, worker empowerment and service enhancing technologies. Firms in this stage apply management strategies and differentiate themselves. Ex: Turcell- Avea 4-World class service delivery

World class firms provide services above the expectations of the customers, so rivals find it difficult to compete with them. Purpose of these firms is higher standards and identifying new business opportunity by listening to customers. New technology is not used only to reduce the costs; it is also considered as a tool to have a competitive advantage. Ex: Yurtiçi Kargo uses a system which customers can check the location of their package via internet or sms. Working at a world- class firm is something special and employees are encouraged to identify with the firm and its mission. Ex: Service providers of Ritz Carlton have a motto, they say: We are ladies and gentlemen- serving ladies and gentlemen or gardeners at Club Med are considered to be a cast member who helps the visitors to enjoy the experience. The major challenge is sustaining superior performance. To meet with success, a world class competitor duplicates the service at multiple sites and even overseas. Ex: Ritz Carlton

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