New Economy and the Service Sector - Term Paper Example

Service Management Introduction Various economies of different countries in the world have experienced a transition from industrial based economies and agricultural based economies to service-based economies. This transition to this form of economy, fundamentally driven by services, defines the New Economy. However, this is not the specific definition of New Economy but it is a fundamental characteristic of this type of economy. On the other hand, it is common knowledge that the service sector’s fundamental concern is provision of intangible goods, which are services. It is important to note that, countries that fundamentally rely on the service-based economy have advanced economies than those whose economy is not service-based. Nevertheless, the new economy has had an enormous effect on the service sector. In effect, while considering the new economy, this expose is an investigation of the changing scenario in the service sector. In addition, the expose will elucidate on the cardinal principles of service quality. Furthermore, there will be an analysis on how the management of quality can create a much better service offering in organization. New Economy and the Service Sector According to Henwood, the New Economy has its origin between 1996 and 2003. In this regard, Henwood that the finance sector led politicians, businesspersons, economists, journalists, and people to believe that there was an economic change resulting from positive benefits experienced in an extended period. In this case, the developments included advancements in technological development, a more focus on work, and enormous global expansions of corporate. In addition, these developments would also include the productivity impact of the technological advancements with an added effect on quality of life (Henwood). Globalization of business and the revolution of the information technology field are the major features of the New Economy (Shepard). In this regard, the New Economy marked the introduction of free trade, market forces, and widespread deregulation in most countries of the world. These countries included former communist countries that disregarded free markets and market forces in their economies. In addition, globalization has led to economic unions growing and becoming more powerful as evidenced by the European Union (EU) and North America's free-trade agreement (Shepard). Nevertheless, the advancements in information technology have led to this revolution. Advancements in technology have become part of our daily lives. From the internet to the faxing machine, cellular phones to computers, these tools have become more than a necessity in human beings life. In this regard, this has led to the digital era in which opening and creation of new industries has become the norm. In this regard, the New Economy emphasizes the need for integrating information technology in businesses in the service sector. As a result, rapid technological changes enhance the capability of businesses in the service sector to get rid of layers of management (Shepard). Consequently, using this technology in the service industries enhances restructuring of industries in the service sector. In effect, this restructuring is crucial to bring efficiency to the service sector due to integration of information technology, which is a feature of the New Economy. Hartley noted that workers in the New Economy engaged in “knowledge-intensive work and use new information and communication technology to connect to customers and clients around the globe” (qtd. in Pupo and Thomas). In effect, this has ensured that the workplace in the service sector has become more flexible. Consequently, flexibility is crucial towards the creation of an enabling environment for enhancing capacity building for more productivity and elimination of hierarchy in the service sector that defined the wages on labor. As a result, Rubin noted that the elimination of this hierarchy has been crucial in the creation of more creativity and ensuring more room for providing input in the service sector (qtd. in Pupo and Thomas). Therefore, the New Economy in the service sector boosts efficiency and economic performance by using advanced technology in the information and communication. In addition, using new business practices in the service sector enabled capacity for creativity and more innovation, which is a feature of the New Economy. One characteristic feature of the New Economy is the concept of mobility (Pupo and Thomas). In this regard, the movement of people and work has become a common occurrence in today’s service sector industries. Furthermore, these movements have taken various forms whereby experts raise questions regarding the regulatory practices; impacts on local communities; rights and employee protection; security issues; and health concerns (Pupo and Thomas). In effect, the service sector has witnessed movement of work around the globe in search of the ideal employee who does not ask many of these issues raised. In effect, a global phenomenon known as outsourcing has become a common feature in the changing scenario of the service sector. Quality in Services Organization should realize that while image and price of their goods mattered, the quality of services defined the position of the organization in the market for its goods (Zeithalm). In this regard, quality service is one competitive area that organizations consider in order to gain the competitive edge in the market. Effectively, delivery of services in an effective and efficient manner becomes paramount for organizations. In effect, Zemke noted that the cardinal principles of service quality as listening to customers; reliability; exemplary execution of basic services; paying attention to design of service; effective performance of service recovery; surprising customers; promoting teamwork; practicing fair play; and noting that internal service generated external services. From the foregoing, these cardinal principles of service quality guide organizations to perform efficiently and effectively during delivery of services. However, while they appear to be common sense and easily applicable to any organization, managing quality becomes crucial towards ensuring that the services provided enhanced better offering of services in organizations. It is also crucial to point out that the business world is increasingly becoming competitive. As a result, customers are increasingly demanding better services with the levels of quality service improving daily (Fredrick). In effect, organizations whose objective is to remain relevant and have enormous market share should ensure that they effectively managed quality in order to offer better and quality services to their customers. On the other hand, organizations need to create customer allegiance and loyalty. In effect, creation of these two important elements in business is crucial in the growing global competitive business environment (Zeithalm). In order to ensure the creation of these two fundamental aspects, organizations should realize the need to manage quality effectively and efficiently. In effect, managing quality ensures that a business offers better services. Thus, the creation of these two elements becomes crucial to managing quality for better and quality services. Conclusion Based on the foregoing, it is evident that the world is experiencing a transition from agriculture and industrial based economy to the service based economy. In effect, this defines the New Economy. In addition, one fundamental feature of this economy is the advancement of technology. As a result, new ways of transacting business in the service sector are emerging due to the advancements in technology. In addition, efficiency due to use of advanced technology is a key feature in the changing scenario of the service sector. Furthermore, the elimination of hierarchy enhances creativity, which is a key ingredient of innovation, and creation of more room for input from all employees. On the other hand, managing service quality based on the cardinal principles for managing quality is becoming critical in the ever-increasing competitive world. In this regard, the need for creating customer allegiance and loyalty and ensuring a competitive edge ensures that organizations work hard towards ensuring proper management of quality. Works Cited Fredrick, Susan. Consumer power: A digital revolution. Greenville: Synergetic, Inc., 2001. Print. Henwood, Doug. After the New Economy. New York: The New Press, 2003. Print. Shepard, Stephen B. The New Economy: What It Really Means. Business Week. 17 Nov. 1997. Web. 5 Feb. 2012. . Pupo, Norene, and Mark P. Thomas. Interrogating the New Economy: Restructuring Work in the 21st Century. Toronto: University of Toronto Press, 2009. Print. Zeithmal, Valarie A. Consumer Percetions of Price, Quality, and Value: A Means-End Model and Synthesis of Evidence. The Journal of Marketing 52.1 (1988): 2-22. Print. Zemke, Ron. Delivering Knock Your Socks Off Service (Knock Your Socks Off Series). 3rd ed. West Babylon: AMACOM, 2002. Print. Read More