Service Economy, The


Service Economy, The
Economic activity has traditionally been divided into extractive, constructive, manufacturing, and service sectors. With the decline of heavy engineering and the rise of the knowledge-based economy, the service industries make up an ever-increasing proportion of the national income in nearly all developed countries. Essentially, services can be classified into three categories:
• Services to trade include banking, insurance, transport, etc.
• Professional services encompass the advice and skill of accountants, lawyers, doctors, architects, business consultants, etc.
• Consumer services include those given by caterers, cleaners, mechanics, plumbers, etc. Service providers need to define exactly what service they are providing, who they are competing with, and where their markets are. For example, does the Channel Tunnel provide a fast link to Paris for business people in competition with the airlines, or a holiday route to France in competition with the ferries?Crucially, they also need to be aware of those characteristics of services that make their management different from the production of goods. These can be summarized as:
• Intangibility - the exact nature of a service is often difficult to define, the product cannot be handled, and ownership of an object is not transferred. The service is experiential rather than concrete and thus quality is difficult to define and measure.
• Customer participation - normally the customer is directly involved in the delivery of the service; e. g. hospital treatment cannot be given if the patient is absent.
• Simultaneity - production and consumption of a service are usually simultaneous and therefore not storable.
• Perishability - because a service is perishable, stocks cannot be built up; e. g. a seat on the 9 a. m. London to Glasgow train is gone forever as soon as the train departs.
• Heterogeneity - because the interaction between the customer and the provider is a unique experience, the same service can be perceived differently by different customers and by the same customer on different occasions. Other customers can affect the experience of a service, e. g. a quiet weekend at a small hotel can be ruined if two rival football teams are also staying in the hotel.
• Indivisibility of operations and marketing - frequently the same people do the selling and the delivery of the service. This has implications for training and the efficiency of the operation. Process design needs to ensure a smooth flow from one stage to the next.
• Geographical dispersion - most services need to be reasonably near to the customer. However, use of telecommunications and information technology is increasingly allowing major service organizations to centralize large parts of their process, while retaining an interface with the customer; e. g. the use of national (or international) call centres and the provision by banks of automated teller machines and home banking facilities.

Big dictionary of business and management. 2014.

Look at other dictionaries:

  • Service economy — can refer to one or both of two recent economic developments. One is the increased importance of the service sector in industrialized economies. Services account for a higher percentage of US GDP than 20 years ago. The current list of Fortune 500 …   Wikipedia

  • service economy — ➔ economy1 * * * service economy UK US noun [C] ECONOMICS ► an economy based on providing services rather than manufacturing or producing goods: »The UK is a major service economy. »Many of the new jobs were in the service economy, behind cash… …   Financial and business terms

  • Public service of the Republic of Ireland — The public service of Ireland consists of agencies, which while not formally part of a Department of State, provide services on behalf of the government. Their functions range from regulating sectors of the economy, to defending and policing the… …   Wikipedia

  • Minister for Small Business, Independent Contractors and the Service Economy (Australia) — The Australian Minister for Small Business, Independent Contractors and the Service Economy is Craig Emerson, appointed on 3 December 2007. The Minister administers his portfolio through the Department of Innovation, Industry, Science and… …   Wikipedia

  • Civil service of the People's Republic of China — People s Republic of China This article is part of the series: Politics and government of the People s Republic of China …   Wikipedia

  • National service in the United States of America — has a long tradition, extending to the founding of the country. National service takes multiple forms in the U.S.A., including community service, military service, and other forms. Contents 1 Military national service 1.1 The creation of the… …   Wikipedia

  • Federal Security Service of the Russian Federation — Infobox Law enforcement agency agencyname = Federal Security Service of the Russian Federation nativename = nativenamea = Федеральная служба безопасности nativenamer = commonname = Federal Security Service abbreviation = FSB patch = patchcaption …   Wikipedia

  • self-service economy — An economy in which a large and increasing proportion of household expenditure is invested in durable goods (such as tools and machinery) which allow consumers to produce services for themselves (rather than buying the services as in a service… …   Dictionary of sociology

  • economy — ▪ I. economy e‧con‧o‧my 1 [ɪˈkɒnəmi ǁ ɪˈkɑː ] noun economies PLURALFORM 1. [countable] ECONOMICS the system by which a country s goods and services are produced and used, or a country considered in this way: • the transformation from a centrally… …   Financial and business terms

  • Economy of Morocco — 100 Moroccan dirham Rank 54th Currency Moroccan Dirham (MAD) …   Wikipedia