Services industries are important in building economic growth.

Posted: October 17th, 2013

Services industries are important in building economic growth.

Name:

ID No:

Unit Code and name:

Lecturer name:

Assignment:

Due date:

Services industries are important in building economic growth.

Every industry strives to provide the best services to its clients. This is important as it determines the success and/or failure of the business in question. Different industries are primarily dependent on the work force at the company and the relationship between that company and its clients. Neither can perform of function without the other and are in a sense symbiotic. There are differing factors that contribute to the rate of growth in the service industries, and their impact on the general economic growth of a country is therefore crucial.

Services industries cannot be considered as unimportant in economic growth as they directly influence the economy in various avenues. Growth in the economy of any country is made possible by all the industries present in that country. Every industry affects how the other performs and that collective participation is what improves economies. Therefore, a discussion is made on what the service providing industries are doing to improve their performance, both from an individual company level, and as a collective unit in their respective economies.

There is a need for service industries in improving the economic growth of a nation. Different companies can be noted as offering various commodities that directly or indirectly affect the economy. This is either through direct interaction with their clientele, or by the indirect influence of market forces that eventually alter the economy, positively or negatively. This has brought out a differing factor on how different organizations handle their clientele and provide their services. Riedl (52) argues that the degree of industrial concentration within a country appears to be a significant location factor to the economic growth of that country.

On their part, Nissan et al (65) assert that service firms have to introduce innovation processes, to not only reduce their costs and supply a cheaper product, but also to supply new services to the firms. This is quite important as the introduction of new innovative process involves bringing fresh ideas into the market through the company’s products. This ensures that the organization ‘traps’ more customers and in turn earning its business and more so its revenue from sales.

According to Auguste et al (2006), to succeed in launching a new embedded service business, the executives of product companies must decide whether the primary focus of service units should be to support existing product businesses or to grow a new and independent platform. The reasons why a business would want to offer better services to its clients should be clear form the beginning. Businesses should never enter into new territories just because their competition is doing it. However, they should now whether they will make profits or losses in the venture. If it is a new idea that has not been tried before, such as a new product being launched into the market, test runs should be in order to ensure they have made the right decision.

Rust and Huang (48) explain that better service quality and higher customer satisfaction lead to an enhanced form of customer loyalty, better customer retention, and a stronger market performance. Businesses that offer better services to their customers are reported to have improved yields when compared to those with poor services. Customers will only want to stay loyal to the organization if they are getting what they need from the company through its products or services. This will also encourage them to refer the business to their friends and family, thus expanding the organization’s customer base. By getting more clients, the company’s performance in the market becomes very impressive thus increasing its hold on the competitive share of the economy.

Organizations are constantly trying to design and improve their services in order to attract new customers and retain existing ones. In the financial services sector, businesses are developing new and better loan systems to draw the attention of their clients. Infrastructure is also being improved to make it easier for customers to access service providers. Considering competition and profitability, software companies are designing new ways of providing market friendly prices to their customers. All these improvements come as welcome additions to the customers and primarily decrease the costs of obtaining services from the companies. The organizations, in turn, also benefit from the increased customer activity, and their profits increase in turn.

There are companies that offer free delivery services to their clients and they have tremendously improved their customer care services as they put the needs of the customer first. Technology has also played a major role in trying to enhance customer satisfaction. This is demonstrated as businesses are constantly switching and updating to new technologies to become effective and efficient service providers. McManus (17) adds that information and communication technology now enable people to participate in a growing number of service-related activities in real, or deferred time, without having to be physically present. The net effect is that of satisfied customers who increase their demand for the company’s products, thereby improving business further.

Many organizations are developing new ideas to stay ahead of the game and their competitors. These ideas help to retain customers, attract others and improve market performance. Through their research, Ettlie and Rosenthal (288) found that with respect to the service sector, radical innovations are in turn related to innovation management practices in these service industries. This suggests that service firms are more likely than manufacturers to break with tradition when developing new offerings. This was initially considered as uncharted waters, but with the changes in the markets today, every form of potentially beneficial innovation is welcome as a positive addition to the organization that embraces it.

G2 Finance is a financial establishment that seeks to provide the best services to its clients. It has applied well-developed lending strategies that address the client’s needs directly. In addition, it has trusted risk-managing systems, and their business is constituted to offer a firm platform for development in its finance markets. This guarantees that it can meet its customers’ borrowing needs without any disruption in the exchange of services that determines the normal operations of trade between the company and its clientele.

Hymans Asset Management is an auction company that provides affordable fees to their clients. They have 20 percent discounts on all their first time clients, which is a crucial innovation in attracting new business. They have excellent communication between them and their clients, given that their clients can access their bosses anytime during business hours. The company also has high-quality experience in a variety of industries, and it therefore attracts clients from different fields. In addition, they provide free after-sales services.

Comparing how the two organizations from the financial service sector operate, there is a clear distinction in how they build their service offerings. G2 has made lending easier for its customers. This means that their client base has increased because thanks to their new systems, more people have access to affordable loans. Hence, they are playing an important role in improving the lives of their customers. Their risk management team is well conversant with the risks involved in today’s financial business fields, so they have committed themselves to study the risks and come up with customer-friendly solutions to best suite their clients’ growing needs.

Hymans Asset Management Company also offers its services at levelheaded fees. Any company that offers its services at subsidized rates is bound to win more clients. Therefore, their pocket friendly rates have earned them more clients and helped them to build client trust. They operate an open-door policy with their customers whereby the clients are free to lodge any complaints they may have directly to the boss and directors of the company. This ensures for transparency and trust between them and their clients. Their services extend to other fields in the business world. This has provided them with more customers than any other asset finance company in Australia.

In conclusion, people have often perceived service industries as being less productive than manufacturing industries. This misunderstood notion is what almost led to the conclusion that services industries do not contribute to economic growth in today’s business world. In contrast, service offerings are what build an organization. It is therefore paramount that organizations develop better service providing skills. The designing and building of service offerings has greatly improved competition in businesses today.

In this context, most of them attempt to employ varying measures that they use to improve existing service provisions. They try to come up with never-before-seen innovations to beat their competition and possibly steal their clients. At the end of the day, all services industries play an equally important role in world economic growth. Concentration has to shift from manufacturing industries to service industries for fairness sake.

In this writer’s opinion, it is clear that the business world is constantly changing as the fight for clients and better market positions escalates. This is, however, advantageous to businesses that are client and profit focused than it is to those that only want to be noticed but for the wrong reasons. New ideas come with their risks depending on the methods of execution used to achieve the intended objectives. It is therefore important to hold with great importance services industries in the same light as all other industries in the market.

Work Cited

Riedl, ‘location factors of FDI and the growing services economy’, Economic of Transitions, Vol 18, No. 4, pp 742-786

Auguste et al, ‘The right service strategies for product companies’, McKinsey Quarterly, 2006, No. 1.

Nissan et al, ‘the future of services in a globalized economy’, The Service Industries Journal, Vol. 31, No. 1, pp. 59-78

Rust and Huang, ‘Optimizing Service Productivity’, Journal of Marketing, Vol. 76, pp 47-66

Ettlie and Rosenthal, ‘Service versus Manufacturing Innovation’, J PROD INNOV MANAG, Vol. 28, PP 285-299

Dr. John McManus, ‘The Service Economy’, Management Services, 2009, pp 16-20.