Business services are non-financial goods or activities that companies rely on for marketing, production, safety and cost purposes. They can range from advertising, marketing and consultation to logistics (including travel and facilities), waste handling, staffing, shipping, administration, and security services.
They also provide a service to their customers by helping them achieve an objective that they would not accomplish independently. Examples include a fast-food restaurant that delivers food to its customers or an architectural firm that helps clients build new facilities.
Most products fall between the extremes of pure service and pure commodity good. For example, a restaurant provides the food but also offers ambience and setting that enhances the experience of eating.
These distinctions are particularly important in the European economy. A number of EU Internal Market legislation and policy actions aim to improve the competitiveness of the business services sector by removing legal barriers that inhibit growth in the sector.
The business services industry is one of the largest sectors in Europe and contributes 11% to GDP. As a result, it plays an essential role in the ‘servitisation’ of the EU economy by enhancing the value of a variety of goods and by enabling new combinations of goods and services.
To create a successful service business, managers need to make an important shift in perspective. They need to understand the unique differences between product businesses and service businesses and how they affect management practice. To do this, they need to learn about the four critical elements of service design: Defining and Determining a Service’s Value Proposition; Balancing the Service components; Managing the Service’s Health, Availability and Risk; and Re-Designing and Replenishment.