ANSWERS
KEY TERMS
The answers to the statements (Key Terms) are placed below the statements:
1. A term used by Peter Senge in his book The Fifth Discipline to describe organizations
that value knowledge, education, and employee training.
Answer: learning organization
2. The process of righting a wrong or correcting something that has gone wrong
involving a product or service to a consumer; it is based on the management giving
employees authority to act without first asking for management intervention in order
to resolve customer issues.
Answer: service recovery
3. The method(s) used by an organization to provide services and products to its
customers. Answer: delivery systems
4. Those people outside the organization who purchase or lease products and services.
Answer: external customers
5. Includes an element of an organization that a customer encounters.
Answer: organizational culture
6. Products or services provided by an organization.
Answer: deliverables
7. Refers to the employees of an organization.
Answer: human resources
8. People within the organization who either require support and service or provide
information, products and services to service providers.
Answer: internal customers
9. The term applied to a programming error made in many software packages that would
cause a computer to fail at midnight December 31, 1999.
Answer: Y2K bug
10. The environment made up of and influenced by various elements of an organization.
Answer: customer service environment
11. United States governmental agency established to assist small business owners.
Answer: Small Business Administration (SBA)
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12. An entire spectrum of companies that market products and services on the Internet
and through other technology, and the process of accessing them by consumers.
Answer: e-commerce
13. A trade agreement entered into by the United States, Canada, and Mexico.
Answer: North American Free Trade Agreement (NAFTA)
14. A period of military, economic, and political tension and competition between the
United States and the former Soviet Union.
Answer: Cold War
15. The term applied to an ongoing trend of information, knowledge, and resource
sharing around the world.
Answer: globalization
16. Refers to a business-to-business customer service.
Answer: business-to-business (B2B)
17. Refers to the practice of contracting with third-party companies or vendors outside
the organization (usually in another country) to deliver products and services to
customers or produce products.
Answer: outsourcing
18. Occurs when governments remove legislature or regulatory guidelines that inhibit and
control an industry.
Answer: deregulation
19. Term applied to the situation in which employees are terminated.
Answer: downsizing
20. The term applied to the activity in which workers spend part of their day working
from home.
Answer: telecommuting
21. A term used to describe the trend in which businesses have shifted from a focus on
production and manufacturing to a greater focus on service delivery.
Answer: service economy
22. Refers to organizations and individuals involved in delivering service as a primary
product.
Answer: service sector
23. Term applied to the early days of customer service when many people started small
businesses in their homes or cottages.
Answer: cottage industries
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24. The ability of knowledgeable, capable, and enthusiastic employees to deliver products
and service to their internal and external customers in a manner that satisfies
identified and unidentified needs and ultimately results in positive word-of-mouth
publicity and return business.
Answer: customer service
25. A term used to describe businesses that are engaged primarily in service delivery.
Answer: service industry
26. Something produced or an output by an individual or organization.
Answer: product
27. A company that spends energy and effort on satisfying internal and external
customers by first identifying customer wants, then establishing policies, procedures,
and management and reward systems to support excellence in service delivery.
Answer: customer-focused organization
28. Concept of identifying customer needs: understanding and influencing customer
behavior through ongoing communication strategies in an effort to acquire, to retain
and to satisfy the customer.
Answer: Customer Relationship Management (CRM)
ASSESSMENT CHECK
Learning Objective 1
Define customer service.
1. Why may the definition of customer service vary?
Answer: Depending on an organization’s focus, such as retailing, medical,
manufacturers, or repair service, the goals of providing customer service may be
different.
2. How can an organization become a customer-focused organization?
Answer: A company that spends energy and effort on satisfying internal and external
customers by first identifying customer needs, then establishing policies, procedures
and management and reward systems to support excellence in service delivery
becomes a customer-focused organization.
3. Explain why the concept or practice of customer service is not new.
Answer: It has evolved from a meager beginning into a multimillion-dollar worldwide
endeavor. When people worked on farms, small artisans and business owners
provided customer service to their neighbors. For those living in rural areas, peddlers
made their way from one location to another. Many small towns had their own
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service-oriented establishments. Further, many made and sold or bartered products
from their homes in what became known as “cottage industries”.
Learning Objective 2
Describe factors that have impacted the growth of the service sector in the
United States.
1. How has employment changes affected the service sector?
Answer: The shift from goods-producing to service-producing employment has
affected employment demands in many occupations (see Figure 1.3 on page 9).
Employment in the goods-producing industries has been stagnant since the early
1980s. Overall, this sector is expected to decline. Technology has replaced many
production line workers and increasing numbers of service jobs have been created.
Technology-related service jobs are expected to continue to grow.
The economy has also affected jobs in the quantity of jobs being created (need has
increased for many new technical skills and at the same time skills performed by
employees have been transferred to automation). The distribution of jobs has
encountered two trends: the need for employees to have access to networks and to
engage in collaborative exchanges and the ease of transmission and exchange of
information. The quality of jobs has been affected; job security has also been
affected. It is likely that competition for jobs will continue to become more intense.
Networking (building relationships inside and outside the organization through
meetings, interactions and activities such as joining and becoming involved in
committees and boards) will be invaluable.
Shifts in the population and labor force and increased efficiency in technology have
all had an impact. So has globalization, with many companies focusing on businessto-business initiatives, as well as individual consumers.
Deregulation has caused competition to flourish but also has caused breakdowns in
service quality in many companies.
Agreements on trade with foreign countries have made it possible for US-based
companies to send jobs across borders. With increased ease of transportation,
companies cannot ignore international competition.
More people are finding themselves working at an office job or providing service on a
variety of work shifts. This trend has led to new occupations (e.g., clothes cleaning
services, house cleaning, care for children, personal shoppers, and the like).
More women have entered the workforce, which also has impacted the service
occupations just mentioned.
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Additionally, an increasing number of older workers are entering the workforce.
There has been an increase in small business growth, and the concept of e-commerce
has taken a firm grip on many companies’ growth patterns.
2. How have the forces that are shaping the world changing the economics of America
and many other countries?
Answer: Demographic shifts in population, technological changes, globalization,
deregulation, geopolitical changes, an increase in the number of white-collar workers,
socioeconomic program development, and more women entering the workplace are
some of the major shifts occurring in the U.S. and the world.
3. What opportunities has technology created in the services sector?
Answer: Technological advances in the computer and telecommunications industry
have created hundreds of service opportunities for people who monitor and run the
machines and automated services. Think back to the last time your computer or other
telecommunication device crashed and your gratitude for the service provided by the
person (or persons) who answered your questions and helped you get back online,
whether it was through a telephone call, an Internet chat, or in person.
Learning Objective 3
Identify the socioeconomic and demographic changes that have influenced customer
service.
1. How has the distribution of jobs impacted service occupations?
Answer: Employees need to have regular access to personal and professional
networks and to engage in collaborative exchanges. The access to technology has
changed the location of jobs from business to homes or satellite offices.
Telecommuting is practiced by 20.7 million persons who work from home. Workers
employed in professional and business services, in financial activities, and in
education and health services are among the most likely to work at home.
2. How has the quality of service jobs changed?
Answer: As social and workplace demographics continue to shift and people move
around in our mobile society, job security has been affected; competition for better
jobs will become more intense. Employees who will obtain and maintain better
customer service jobs that provide good working conditions, security and benefits
will be better educated, trained and prepared. What has caused the increase in
production and quality and what two side effects have resulted?
The development and increased sophistication of machines and computers have
caused an increase in production and quality. Two side effects have been an increased
need for service organizations to take care of the technology (service jobs were
created to maintain and run the machines and automated services) and a decrease in
manufacturing and blue-collar jobs.
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An increase in white-collar jobs has emerged as a result of work shifts and new types
of service occupations (e.g., cleaners, shopping services, child care services). They
have emerged to take care of those new service needs.
Learning Objective 4
Recognize the changes in consumer behavior that are impacting service.
1. How has the desire for better leisure time impacted service occupations?
Answer: People have more disposable income and may have achieved middle and
upper income status. They have, therefore, a heightened desire to relax and to enjoy
children and grandchildren, and they want to use their free time in more personally
satisfying ways. They now rely on service organizations for services such as personal
shopping, lawn care, car wash, dog walker, laundry pickup and delivery, and
executive book summaries.
2. What ramifications has consumer expectation of quality service caused?
Answer: Most customers expect a quality product or service. If not provided, they call
or visit a competing company. This has also created a need for better-trained and
better-educated customer service professionals. These professionals need up-to-date
product information and must understand organizational policies and procedures, the
competition, and the latest technique in customer service and satisfaction.
3. What affect has the educated consumer of today had on companies’ products and
services?
Answer: Consumers are more informed about what they should receive for their
money, making it difficult for less reputable businesses to prosper or survive. All
business owners find themselves continually proving the worth of their products and
services. They must provide customer satisfaction or lose customers to their
competition.
Learning Objective 5
List the six major components of a customer-focused environment.
1. What are the six components of a customer-focused environment?
Answer: The customer, organizational culture, human resources,
products/deliverables, delivery systems, and service are the components of a
customer-focused environment.
2. Who is the key component in a customer-focused environment?
Answer: The customer is the key component.
3. What are the two categories of customers?
Answer: The two categories of customers are internal and external customers.
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4. Who are external customers?
Answer: They may be current or potential customers or clients who actively seek out,
research, and buy, rent or lease products or services offered by an organization.
Learning Objective 6
Explain how some companies are addressing the changes impacting the service
sector.
1. What is a learning organization?
Answer: A learning organization is one that uses knowledge as a basis for competitive
advantage. It values knowledge, education and employee training.
2. Who coined the phrase learning organization?
Answer: Peter Senge in his book, The Fifth Discipline, made the term popular.
3. Explain how companies use a proactive approach of anticipating customer needs as a
common theme in today’s society.
Answer: To excel, organizations must train all employees to spot problems and deal
with them before the customer becomes aware that such problems exist. Every
employee must take personal responsibility for customer care.
4. Describe the concept of service recovery.
Answer: When employees are empowered to solve customer problems without having
to ask for management intervention first, this is called service recovery.
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CRITICAL THINKING QUESTIONS
Learning Objectives 2, 3, 4
1. How has the increase of white-collar workers and women in the workplace impacted
the advent of new service occupations?
Answer: Many workers now have disposable income and, therefore, more
opportunities to spend that increased income. Many are finding themselves in middle
and upper income brackets with wants and needs to go along with that increased
status. Because of this trend, new service businesses are developing to help people
enjoy more leisure time, to travel, to avoid doing home and yard chores (such as
cleaning services and lawn services), to have personal shoppers for grocery items,
gifts and clothing, to have gourmet chefs who come and prepare a week’s menu and
leave the items in the fridge, and so.
As women are becoming a large part of the workforce, they have seen their income
levels rise. The impact of this trend is that many service occupations take up the
chores that women used to do at home, as women have more disposable income to
spend on items such as cleaning services, lawn services, child care services, and the
like.
Learning Objective 6
2. How can increased global competition benefit the United States and its workers?
Answer: If the U.S. wants to continue to be competitive, it must focus on quality
products and excellent customer service. The US services face growing global
markets with high quality products at lowest prices possible. Many foreign companies
have also built plants and have begun operations in the U.S. This activity also benefits
the US economy and its workers, as employment is provided and supplies and
equipment are usually purchased in the U. S.
Learning Objectives 1, 5
3. If the Jones Company was to start providing inferior furniture manufactured by its
plant located in the U.S., what would be the effect on the fourth component of a
service environment?
Answer: There are two areas of customer satisfaction or dissatisfaction: quality and
quantity. If customers believe they are being sold an inferior product that does not
match their expectations, they will be dissatisfied and will likely take their business
elsewhere. Enough of this movement away from the company can seriously impact its
revenue and can lead to the failure of the business.
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Learning Objectives 4, 5
4. Francine believes that her coworkers are asking too much from her and she has been
heard to exclaim, “You are not my customer. My customers are out front in the
display area.” What can you expect from this type of attitude?
Answer: She is wrong. Anyone in the organization is her customer. They may not be
traditional customers who come in and buy from the displays, but they are customers
nevertheless. As Karl Albrecht and Ron Zemke say in their book, Service America,
“If you’re not serving the customer, you’d better be serving someone who is.” This is
true because if you aren’t providing stellar support and service to internal customers,
external customers usually suffer.
PRACTICE TEST ANSWERS
TrueFalse
1. T
2. F
3. T
4. T
5. F
6. F
7. T
8. F
9. F
10. F
11. T
12. F
13. F
14. F
15. T
Learning
Objectives
LO1
LO1
LO2
LO2
LO2
LO2
LO3
LO3
LO3
LO3
LO4
LO4
LO5
LO6
LO6
Page
6
7
8
9
11
12
14
15
15-16
15
20
21
23
26
26
MultipleChoice
1. C
2. D
3. D
4. B
5. C
6. C
7. C
8. C
9.
10.
11.
12.
13.
B
C
D
D
C
14. C
15. A
Learning
Page
Objectives
LO1
2
LO1
6
LO1
6
LO2
10
LO2
1112
LO2
11
LO2
12
LO3
1213,18
LO3
16
LO3
19
LO3
19
LO4
20
LO5
2122
LO5
2526
LO6
26
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