Contrasting services with manufacturing - The importance of services
3 important questions on Contrasting services with manufacturing - The importance of services
How do economies mature?
Economic studies show that as economies mature, the proportions of the GDP that are generated by the agriculture, industry and services change significantly.
Developing countries are dependent on agriculture and it typically generates in the order of 20% of GDP. As countries develop, they first industrialize, as the demand for food is satisfied and demand for industrialized goods rises. Later, post-industrialization sees a shift, as the demand for tangible products saturates and people start to focus on services, such as healthcare, education and entertainment.
Developing countries are dependent on agriculture and it typically generates in the order of 20% of GDP. As countries develop, they first industrialize, as the demand for food is satisfied and demand for industrialized goods rises. Later, post-industrialization sees a shift, as the demand for tangible products saturates and people start to focus on services, such as healthcare, education and entertainment.
How do services and R&D relate?
There is a high level of investment by the large telecommunication companies.
In the service sector, it should be noted that the revenues invested in R&D (termed R&D intensity) are not always easy to identify, as formal R&D departments with separate budgets seldom exist in the service sector.
R&D in the service sector is more difficult to manage than in manufacturing because few companies know how to apply technology effectively to services and due to the lack of personnel who understand both technology and business opportunities in the service environment.
In the service sector, it should be noted that the revenues invested in R&D (termed R&D intensity) are not always easy to identify, as formal R&D departments with separate budgets seldom exist in the service sector.
R&D in the service sector is more difficult to manage than in manufacturing because few companies know how to apply technology effectively to services and due to the lack of personnel who understand both technology and business opportunities in the service environment.
Why do manufacturers need services?
Few manufacturers sell only a product. Most must offer services to support the use of their products. Services that help the customer derive maximum value from their purchase are normally referred to as after-sales service, whereas services to support sales are called customer service. Service has a major impact on customer satisfaction and can also make a significant contribution to revenue.
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