Business services are activities that benefit businesses without producing tangible products. Some examples include advertising, marketing and consulting. Others are logistics, staffing, travel and facilities management. These services are vital for most companies to keep up with work demands. A company that specializes in providing these services can improve its clients’ productivity and cost efficiency.
Service companies are the backbone of the economy, and the world’s largest business sector. Business services encompass a wide range of activities that support other sectors, including manufacturing and retailing. The term reflects the increasing importance of the service industry as a percentage of total economic activity and a way to compete in an increasingly global marketplace.
The concept of business services is based on the difference between a product-oriented approach and a service-oriented one to strategic management. Products provide a concrete basis on which to build a description of the business; however, services are more abstract and therefore less easily described. For example, it is difficult to describe the business of management consulting to someone who has never been a client.
Because of the abstract nature of business services, it is much more difficult to develop a model that captures the essential characteristics of the type of business. Most business theorists see a continuum with pure service on one end and pure commodity goods at the other. Most companies fall somewhere in between these extremes. For example, a restaurant provides food and also offers ambiance and setting.
In a service business, it is much more important to improve quality than it is to improve production. This is because quality is difficult to measure and because the process of service delivery involves multiple people. Moreover, the customer can make or break the experience. For example, if a customer dithers at the counter in a fast-food restaurant, it will affect everyone else who follows him.
As a result, the most effective strategy for service companies is to focus on developing and delivering a consistent experience that is characterized by reliable, responsive and flexible operations. Successful service companies recognize this challenge and develop a framework for managing their operations, based on four critical elements.
Unlike manufacturing companies that must improve worker productivity, service businesses must improve the quality of services provided to their customers and other stakeholders. This is often done by outsourcing the services of experts, who can improve performance at a lower cost than employees could achieve in-house.
In addition, business services providers can reduce the amount of time that employees spend on unproductive or non-value added tasks. They can also help a company manage its inventory and warehouse, which will reduce costs associated with the purchase, storage and shipment of physical goods. In addition, these providers can improve a company’s efficiency by providing services in locations that are convenient for customers or other stakeholders. For example, a company may contract with an outside firm to handle the warehousing and fulfillment of online orders.