Economics
Topic: Service Industries
Table Of Content
- Definition Of Service Industry
- The Contributions Of Service Industry To Development
- Features Of Service Industry
Meaning Of Service Industries
What Is Service Industry?
This consists of activities where people exchange their knowledge and time to the people directly or indirectly to improve productivity, performance, potential and sustainability E.g Banking, teaching, entertainment, hair dressing, tailoring etc. The basic characteristics of this sector is to provide services i.e intangible goods.
The service industries formally termed ‘the tertiary of industry’ involve the provision of service to other business as well as final consumer, service providers participants in any economy without the restriction of carrying investory (stock) or the need to concern themselves with bulky raw materials.
On the other hand, their investment on expertise requires consistent services marketing and upgrading in the face of competition which has equally few physical restrictions included in this sub sector are tourism, transportation, banking, insurance, warehousing, advertising, entertainment, hospital, industry etc.
In the industrial countries like the United States, Australia, Japan and The United Kingdom, there has been a substantial shift from the primary and secondary sector to the tertiary sector, over the years a phenomenon termed ‘tertiarisation’. The service sector from their largest sector and also the largest growing sector.
This is mainly due to high degree of mechanisation, robotization etc which allows a smaller workforce to produce more tangible goods making the service functions of distribution, management, finance recreation etc becomes relatively more important. Also growth in the service sector from a large increase in government employment.
In Nigeria, as most developing countries, the tertiary sector is still in it’s infancy as emphasis is still on primary sector of agriculture and mining. The service industry include:
1. Tourism
2. Transport
3. Banking
4. Insurance
5. Warehousing
6. Advertising
The Contributions Of Service Industry To Development
Service industry has a lot of contributions to development which includes:
1. Service industry helps to generate income to both the government and private operators which is used to finance or develop the economy.
2. Service industry is an important source of foreign exchange to a country which could be channeled to the development of infrastructure, education etc.
3. It generates employment.
4. It creates opportunity for economic and educational growth with the introduction and development of tourism. Local people are given/allows opportunity for economic and educational growth that would not otherwise be available.
5. It enhances the living standard of people (Banking).
Features Of Service Industry
1. Intangibility
Services are intangible and insubstantial. They cannot be touched, gripped, handled, looked at, smelled, perceive or taste. As such, there is neither potential nor need for transport storage or stocking of service.
2. Non-Transferability
Services can be sold but it cannot be turned over from the service provider to the service consumer. Rather, the service provider can generate and render the service at the district request of an authorised service consumer.
3. Perishability
The relevant resources, processes and systems are assigned for service delivery during a definite period of time. If the designated scheduled service consumers does not request and use the service, It perishes (E.g) An empty seat on a plane can never be utilized and charged after departure.
4. Simultaneity
Services are rendered and consumed during the same period of time. As soon as the service consumer has requested the services, the particular service must be generated delay and friction and the service consumer instantaneously consume the rendered benefit for executing his coming activity or task.
5. Heterogeneity/Variability
Each service is unique, it is one time generated, rendered and consumed and can never be exactly repeated at the point in time, location, circumstances are different for the next delivery, even if the same service consumer requests the same service.
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