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Business Services — Business Studies STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceBusiness StudiesBusiness Services6 Marks
Question
What are services? Explain their distinct characteristics.
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Answer

Services are essentially intangible activities which are separately identifiable and provide satisfaction of wants. Their purchase does not result in the ownership of anything physical. Services involve an interaction to be realized between the service provider and the consumer. There are five distinct characteristics of services as discussed below:
  1. Intangibility Services are intangible, i.e., they cannot be touched. They can only be experienced and hence the quality of the service cannot be determined before consumption. Therefore, the service providers consciously work on creating a desired service so that the customer has a favorable experience, e.g., service in a restaurant should be a favorable experience for customer to visit again.
  2. Inconsistency Services have to be performed exclusively each time according to different consumer demands as there is no standard tangible product on offer. Hence inconsistency is an important characteristic of services. Service providers need to modify their offer to closely meet the requirements of the customers, e.g., services provided by nationalized banks are quite different from the banking services provided by private banks.
  3. Inseparability Activities of production and consumption are performed simultaneously in case of services which makes the production and consumption of services seem to be inseparable as services have to be consumed as and when they are produced, e.g., we cannot separate the medical services provided by a doctor.
  4. Absence of Inventory Services are intangible and perishable and hence cannot be stored for future use. This implies that the supply needs to be managed according to demand as the service has to be performed as and when the customer asks for it. e.g., a medicine, can be stored but the medical care will be experienced only when the doctor provides it.
  5. Involvement Participation of the customer in the service delivery process is an important characteristic of services as the customer has the opportunity to get the services modified according to his/ her specific requirements, e.g., cinema halls are providing services to watch movie but the customer has to visit to the hall to experience the movie in cinema hall.

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