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C HAPTER 4 B USINESS S ERVICES LEARNING OBJECTIVES After studying this chapter, you should be able to: state the characteristics of services; distinguish services from goods; classify different types of business services; explain the concept of e-banking; identify and classify different types of insurance policies; and describe different types of warehouses.
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78 BUSINESS SERVICES 4.1 I NTRODUCTION You must all have, at some time or the other experienced the effect of business activities on your lives. Let us examine few examples of business activity i.e., purchasing ice cream from a store and eating ice cream in a restaurant, watching a movie in a cinema hall or purchasing a video cassette/CD, purchasing a school bus and leasing it from a transporter. If you analyse all these activities, you will observe that there is a difference between purchasing and eating, purchasing and watching and purchasing and leasing. What is common in all of them is that one is purchasing an item and the other is experiencing a service. But there is definitely a difference between the item or good and the service performed. For a layperson, services are essentially intangibles. Their purchase does not result in the ownership of anything physical. For example, you can only seek advice from the doctor, you cannot purchase him. Services are all those economic activities that are intangible and imply an interaction to be realised between the service provider and the consumer. Services are those separately identifiable, essentially intangible activities that provides satisfaction of wants, and are not necessarily linked to the sale of a product or another service. All of us have seen a petrol pump. Have your ever thought how a petrol pump owner does his business in a village? How he gets the petrol and diesel to the villages in the interior? How he gets the money to purchase large quantities of petrol and diesel? How he communicates to petrol depots for requirement and also to customers? How he safeguards himself from various risks associated with this business? The answer to all the above questions lies in the understanding of business services. The transportation of petrol and diesel from oil refineries to petrol pumps is carried out by train and tankers (transport services). They are then stored at various depots of oil companies situated in all major towns across India (warehousing services). Petrol pump owners use postal, mail and telephone facilities to be in touch with customers, banks and the depots for the availability of their requirements on regular basis (communication services). As oil companies always sell the petrol and diesel on advance payment, the owners have to take loans and advances from banks to fund their purchases (banking services). Petrol and diesel being highly risky products, the owners have to safeguard themselves from various risks by getting the business, the products, the life of people working there, etc., insure (insurance services). Thus, we see that a single business of providing petrol
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This note was uploaded on 01/19/2012 for the course BUSINESS 3BU taught by Professor Andrewclarke during the Fall '09 term at Central European University.

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