Understanding Service Business: Some Reflections

Abstract

Although definition of service still eludes the researchers, we have tried to capture the essence of service business by developing a Value Added model that separates all services needed to produce a product or service. The model shows the ability of the service business to stand on its own and develop services that spearheads growth in manufacturing as well as in service sector. Unlike manufacturing which is capital intensive, service business is human resource intensive. It is basically a knowledge business. As knowledge is scarce and not evenly distributed, a firm possessing superior human resource may charge rent. But so much dependence on human resources also makes the business risky. Service business can be classified between pure service business and service oriented product business. It is necessary to know their characteristics for planning appropriate business strategy at different economic times.

Keywords: Manufacturing, Value added, Innovations, Human resources, Pure services, Superspecialisation