Business services include a broad range of non-financial activities that enable companies to operate their businesses. These activities are not part of the production process for tangible goods and may include consulting, administration, transportation, waste management, staffing, banking, insurance, and other similar activities. These activities are critical to the functioning of an economy and are essential for many businesses to thrive. In fact, the service sector is often a large component of a country’s GDP.
In some cases, a single company may provide all of the business services required by another organization. This type of arrangement is called a shared-service center (SSC). In other cases, a company will offer one or more specific business services on an outsourcing basis. For example, an IT company may be hired to provide information technology support for a medical practice. A computer manufacturer may also have a separate division that provides customer service and technical support for its products.
The success of a service business depends on the ability to consistently meet customer needs and expectations. This requires a different approach to planning and managing than that used for product businesses. The challenge is to develop and implement strategies that will enable a service business to compete successfully with competing product and non-product businesses.
Service businesses need to focus their efforts on providing high-quality services to clients, and on creating a strong brand image that distinguishes them from competitors. In addition, they need to establish systems that will allow them to quickly respond to customer needs. For example, an IT company that receives a call from a client with a software problem must have a system in place for receiving and responding to customer feedback within 24 hours.
Another important aspect of successful service business is effective leadership. The leader of a business service team must be able to balance the competitive autonomy of the individual service models with the overall value of the group. This requires a strong leadership style that includes the ability to influence and even overrule revenue-generating line managers when necessary.
The emergence of new communication technologies has transformed business services. For example, a company that once relied solely on face-to-face meetings now can provide much of its business services through web platforms and systems. In addition, companies are using business-to-business (B2B) outsourcing to reduce expenses and focus on their core operations.
The success of a service business depends on many factors, but the key to its viability is understanding the role that customers play in operational processes. For instance, a customer who dithers at a fast-food counter affects the speed and quality of service for everyone behind him. Similarly, an architectural firm’s client who is slow to explain the purpose of a building project can make the design process inefficient for all other clients. As a result, service businesses need to incorporate customer perspectives and experiences into all aspects of the operational process. This approach is known as service design.