3. Service operations

Services are different from goods in many ways. Therefore, managing service operations requires a different focus than managing manufacturing operations. The service industry often uses the service-profit chain as a model for building a successful business.

Use your knowledge of the service-profit chain to select the three labels missing from the following diagram.

A.	High Value Service
B.	Profit and Growth
C.	Service Capability

(those three are the options for each)

Sources: R. Hallowell, L.A. Schlesigner, and J. Zornitsky, Internal Service Quality, Customer and Job Satisfaction: Linkages and Implications for Management, Human Resource Planning 19 (1996) 2031; J.L. Heskett, T.O. Jones, G.W. Loveman, W.E. Sasser Jr., and L.A. Schlesinger, Putting the Service-Profit Chain to Work, Harvard Business Review (MarchApril 1994): 164174.

Which of the following is a key concept behind the service-profit chain?

1. The better employees are treated by managers, the better quality service they will provide to customers.
2. Greater profit comes from focusing on customers more than on a companys own employees.
3. Employees will provide quality service even if they feel poorly treated by their employer.