BUSINESS SERVICES

A good is a physical product capable of being delivered to a purchaser and involves the transfer of
ownership from seller to customer.

A service is an economic activity that is intangible and imply an interaction to be realized between
the service provider and consumer.

NATURE OF SERVICES
Intangibility

 Services cannot be touched, only experienced

 Quality of the offer cannot be determined before consumption, hence, purchase
 Service providers must ensure the customer undergoes a favourable experience
 Example – doctor’s treatment

Inconsistency

 Services are to be performed exclusively each time as there’s no standard tangible product
 Different customers have different demands and expectations to be closely met by service
providers
 Example – mobile services

Inseparability

 There is simultaneous activity of production and consumption performed

 Substitute may be designed, but interaction with the customer remains a key feature
 Example – ATMs replace the banking clerk, but presence of customer is still required

Inventory

 Services have little or no tangible components, hence, cannot be store for future use
 Services can be performed only as and when the customer asks for it
 Associated goods may be stored but not the service itself

Involvement

 Participation of customer in service delivery process is essential

 Customer can get services modified according to specific requirements

TYPES OF SERVICES

Basis of
Business services Social services Personal services
difference

Used by business Services experienced

Provided voluntarily in
Definition enterprises for conduct differently by
pursuit of social goals
of their activities different customers

Banking, warehousing, NGOs and

Examples Tourism, restaurants
transportation government agencies
 BUSINESS SERVICES
Banking

 Commercial banks provide institutional credit to customers

 A bank accepts money on deposits, repayable on demand and earns a margin of profit by
lending
 Banks stimulate economic activity by dealing in money
 Banks mobilize savings and makes funds available to businesses

Types of banks

 Commercial banks – Institutions dealing in money, governed by Indian Banking

Regulation Act 1949. Public sector banks emphasize on social objectives than profit, govt
having major stake – SBI. Private sector banks are owned, managed, and controlled by
private promoters, operating as per market forces – ICICI.
 Cooperative banks – Banks governed by provisions of State Cooperative Societies Act,
meant to provide cheap credit to members
 Specialized banks – Banks catering to specific needs such as foreign investment,
industrial, export-import.
 Central bank – Bank supervising, controlling and regulating activities of all commercial
banks of the country. It also acts as a government banker, controlling and coordinating
currency and credit policies. Example – Reserve Bank of India

e-banking

 Connecting to the bank’s website to perform virtual banking functions and availing
banking services
 Lowers transaction cost, adds value to banking relationship and empowers customers
 Services include ATM, Electronic Data Interchange, Electronic Bank Transfer

Insurance

 Contract/agreement under which a party agrees to pay a certain amount of money to

another party to make good a loss, damage or injury to something of value in which the
insured has a pecuniary interest as a result of some uncertain event
 The agreement is known as policy
 Person whose risk is insured is called insured/assured and firm who insures the risk of loss is
known as insurer

Principles of Insurance
 Utmost good faith –
 Insurable interest –
 Indemnity –
 Proximate cause –
 Subrogation –
 Contribution –

Types of Insurance
 Life insurance
  Contract whereby insurer agrees to pay the assured or to the person for whose
benefit the policy is taken, the assured sum of money, on the happening of the
specified event contingent on the human life or at expiry of certain period
 Provides protection to family as well as acts as investment as sum is returnable
 Insurable interest must be present when insurance is affected
 It is not a contract of indemnity as human life cannot be compensated
 Fire insurance
 Contract whereby insurer undertakes to make good any loss or damage caused by
fire during a specific period up to amount specified in policy
 There must be actual loss and caused by an accidental fire to satisfy the claim
 Insurable interest must be present at the time of insurance and at time of loss
 Marine insurance
 Contract whereby insurer undertakes to indemnify insurer in the manner agreed
against marine losses
 Insurable interest must exist at time of loss but not necessarily when the policy was
taken
 Types include ship, cargo and freight insurance

Communication

Postal services
 Financial facilities – provided through savings schemes like Public Provident Fund, Kisan
Vikas Patra along with normal banking functions like savings account, recurring deposits,
money order facility
 Mail facilities – Transmission of articles from one place to another providing security and
insurance facilities
 Allied facilities – Greeting post, media post, direct post, International Money Transfer,
passport facilities, speed post, e-bill

Telecom services
 Cellular mobile services – Mobile telecom services like voice and non-voice messages,
data services, PCO services using network equipment within service area. They can
provide direct interconnectivity with any other type of telecom service provider
 Fixed line services – Fixed services like voice and non-voice messages, data services to
establish linkage for long distance traffic. They use any type of network equipment
connected through fibre optic cables.
 Cable services – Services to operate media services, essentially one-way entertainment
related services
 VSAT services – Very Small Aperture Terminal is satellite-based, offering flexible and
reliable communication in urban and rural areas
 DTH services – Direct to Home is satellite-based media service receiving them through a
dish antenna and set top box. It can be viewed on television without depending on cable
service provider