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Intangible output. Production and consumption takes place simultaneously. Labour-and-knowledge-intensive, customer interaction generally high, human element very important, quality is perceived and difficult to measure, rapid response time is usually necessary, site of facility is extremely important. i.e. Airlines, Hotels, Consultants, Health care, law firms. Service industries tend to be well-suited for an organic approach.
Defined as the behaviour that occurs among organizational groups when participants identify with one group and perceive that other groups may block their group's goal achievement or expectations. Requires 3 ingredients: group identification, observable group differences, and frustration. Occurs horizontally across departments or vertically between different levels of the organization.