Maharashtra Board Class 12 Organization of Commerce and Management Chapter 4 Business Services PDF Download

Business Services

4.1 Introduction

Services are intangible in nature. They are neither manufactured, transported nor stocked. Services cannot be stored for a future use. So they are produced and consumed at the same time.

Business services are those services which help in successful running of business. They are intangible in nature, heterogeneous, inseparable, inconsistent, perishable in nature and require consumer participation.

Teacher's Note

Services are things you cannot touch. Like when a barber cuts your hair, that service happens right then. Just like a doctor's visit is a service that happens at that moment.

Exam Trick

Remember: Services are intangible = You cannot touch them. Just like air, you cannot see it or hold it, but it is there. Services work the same way.

Points to Remember

Services cannot be stored or kept for later use.
Services are produced and used at the same time.
You cannot hold or touch a service.
Business services help companies work better.
Services need the customer to be present when they are given.

4.2 Meaning

Sometimes services are difficult to identify because they are closely associated with goods. No transfer of possession or ownership takes place when services are sold. Services cannot be stored or transported. Services are instantly perishable. They come into existence at the time they are bought and consumed.

4.3 Definitions

Following are some of the important definitions.

"A service is an act of performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product." - Philip Kotler

"Activities, benefits, or satisfactions which are offered for sale, or provided in connection with the sale of goods." - American Marketing Association

Features Of Services

1) Intangibility

A service is not a physical product that can be touched or seen. A service can be experienced by the buyer or the receiver. Services lack material form. Therefore they are intangible. Due to intangibility, services cannot be demonstrated like goods. Service providers must create good impact on the customers by delivering quality services on time.

Teacher's Note

Intangible means you cannot touch it. Like when you get a haircut, you cannot pick up the haircut and take it home. The service is done and that is it.

Exam Trick

Remember: Intangible = Cannot touch. Like electricity - you use it but cannot hold it in your hand.

Points to Remember

Services cannot be seen or touched by your hands.
You can only feel or experience a service.
Services do not have a physical shape.
It is hard to show a service to someone before they buy it.
Service providers must give good quality work to make customers happy.

2) Inseparability

Unique characteristic of services is that the service and the service provider cannot be separated. The presence of service provider is there at the time of delivering services to customers. In case of services production and consumption take place at the same time.

3) Inconsistency

Services are heterogeneous. There can be no perfect standardization of services. Even if the service provider remains the same, the quality of the service may differ from time to time. For example, same restaurant can give different experience to two different customers.

4) Perishability

The production and consumption of services are inseparable because storage of services is not possible. Being an intangible transaction there can never be an inventory of services. Unlike goods, they cannot be stored for future sale. For example, the vacant seats of morning flight of an airline cannot be utilized in afternoon flight of the same airline.

5) Non-transferability

Unlike goods, all services are non-transferable in nature. The ownership of services cannot be transferred from service provider to customer. For example, a customer can book hotel room but the ownership of room remains with the hotelier.

6) Consumer Participation

For services, participation of consumer is equally important. Without the participation of consumer, services cannot be offered. The seller cannot offer service without the presence of customer. Vice-versa customer cannot accept service, unless the seller is present to offer a service.

Teacher's Note

For a service to happen, both the person giving the service and the person getting the service must be present. Like in a school, the teacher and student must both be there for teaching to happen.

Exam Trick

Remember: Both buyer and seller must be present for service. Just like playing a game needs two players, a service needs both the giver and the taker.

Points to Remember

Both the service provider and customer must be present.
A barber needs the customer to sit in the chair.
A teacher needs students in the classroom.
Without the customer, there is no service.
The service ends when either person leaves.

4.4 Business Services

Business cannot be operated in an isolated manner. It requires some activities which facilitate business to grow rapidly. Business services are those services which help business to grow and help business to function seamlessly.

Types Of Business Services

There are various types of services depending upon their nature and purpose. Some of the important services are as follows.

Communication
Banking
Warehousing
Insurance
Transport

Teacher's Note

Business services are like helpers for a shop. Banking helps a shop keep money safe. Transport helps deliver goods to customers. Insurance protects the shop from loss.

Exam Trick

Remember the five main business services: Banking, Insurance, Transport, Warehousing, Communication. Think of them as the five pillars that hold up any business.

Points to Remember

Banking helps to keep money and give loans to business.
Insurance protects business from loss and damage.
Transport moves goods from one place to another.
Warehousing stores goods safely until they are needed.
Communication helps send messages and stay in touch with customers.

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