Research On Modeling And Application Of Service Proift Chain Based On Systematic Dynamics

The service industry booms under the age of service economic since1990s, but the fastgrowth is accompanied with crucial problems of low quality and high homogeneity. To solvethese problems, the service profit chain theory developed by James Heskett and his colleaguescould be an essential and practical guidance. The theory, explaining the decisive elements ofachieving profit and illustrating the interactions between each element, reveals the key to thesuccess of service business and provides systematic methods of problem-solving andcompany development. Thus the modeling and application of service profit chain will be ofsignificant importance, both theoretically and practically, in facilitating to form the cycle ofservice-profit chain inside service businesses.The research consists of three parts:(1) building a system dynamic model of serviceprofit chain with the methods of system dynamics. The process is as followed: define amodeling idea, create a block diagram that follows the idea, apply the block diagram to acertain company of telecommunication, and then develop a system flow diagram according tothe specific situation of the company.(2) Giving a detailed explanation of the data source thatis required for the simulation and a description of its outcomes. The major simulationformations are listed, and the validity of the simulation is tested.(3) Performing a tendencysimulation of the model while doing strategy simulation by controlling variables. The resultsof those two simulations are compared and analyzed, and thus suggestions of forming thecycle of service profit chain and enhancing enterprise performance.The results are as follows: every element--employee satisfaction, customer satisfactionand enterprise performance--shows a growing tendency within the simulation period. As theresult, the satisfying function of the service-profit chain is proved, the performances of thecompany significantly improved in the areas mentioned above, and the cycle of service-profitchain is forming into shape. Employee satisfaction will largely improve if internal service quality is increased by providing pay rise, training opportunities, work support and strongeremphasis on company culture. With the rise of employee satisfaction and their loyalty to thecompany, employees will provide service of high-quality to customers with good attitude. Theimprovement in both service and products will significantly raise customer satisfaction, andthus leads to better enterprise performance in the end. To conclude, by adopting service profitchain, service enterprises are able to improve enterprise performance through enhancinginternal service quality to improve employee satisfaction that leads to the rise of customersatisfaction.