This lesson will seek to define the concept of the service industry. In doing so, it will focus on consumer, business, and public services while also defining division of labor, automation, and urbanization.
Every five weeks, like clockwork, my husband walks into our local salon and gets his haircut. And every five weeks, like clockwork, he hands his stylist $24 dollars. However, when he walks out, he isn't carrying any products to show for his $24. On the contrary, it could be argued that he's paying her to take something away from him.
Obviously, we all know how haircuts work and the idea that she is taking something from him is a bit ludicrous. However, the fact that he really leaves with nothing, with no tangible products being bought or sold, is a great example of what we call the service industry, the topic of today's lesson.
For starters, a service industry is generally defined as a business that does work for a customer but is not involved in manufacturing. Putting this definition into example, a contractor is part of the service industry. Yes, he may come to your house and use wood to frame out a new room but he did not manufacture the wood, nails, or drywall. He's just providing the service of crafting these materials into a finished room.
When speaking of the service industry, it is usually broken down into three categories. They are consumer services, business services, and public services. For the remainder of today's lesson, we'll take a closer look at these three.
We'll kick it off with consumer services. Again speaking rather generally, consumer services are the variety of services provided to consumers of a product by the field that creates, markets, or provides the product. A great example of this is the automotive industry. For instance, first we purchase a car from a dealership, then many of us routinely take the car back to the dealership for scheduled maintenance. No, we aren't buying a new car every time; instead, we're paying for help to maintain the vehicle we've already bought. Another great example of a consumer service occurs every time we spend hours on the phone waiting for technical support to help us resurrect our dead Internet signal.
Being very linked to the modern era, consumer services began to boom when division of labor became commonplace. Being the assigning of different parts of a manufacturing procedure or tasks to different people in order to improve efficiency and productivity, the division of labor limited the breadth of people's knowledge, which in turn caused the need for services.
For instance, an early 19th century subsistence farmer usually built his own house, dug his own well, and maybe even fashioned his own wagon wheels. Therefore, when one of these things began to act up, he knew how to fix the problem. However, this is not the case today as most people are only knowledgeable in certain fields. For instance, my dad was a businessman. If you needed to know what to invest in, he was your guy. However, when our cars broke down, he was definitely not the guy, so off our vehicles went to the local mechanic, a provider of a consumer service.
Moving on, and leaving my poor dad alone, we now come to business services. A business service again is a general term that describes work that offers support to a business but does not produce a tangible product. It supports the actual manufacturing of tangible products. For this one, I'll use my husband.
Being part of the technical field of aerospace, one of my husband's jobs is to go into manufacturing facilities and reconfigure their manufacturing process in order to make it more efficient. No, he never built an actual helicopter or an airplane but he did help the manufacturers of these airborne transporters get them in the air much faster and a bit cheaper.
Another great example of business services is found in the IT industry with the information technologists who are called in to solve computer issues that occur in the manufacturing process. Speaking of IT issues, many would assert that business services began to thrive as the automation of industry took hold. Stated very simply, automation is the usage of mostly automatic equipment in a system of manufacturing or production. As automation took hold, the people running the machines became more and more detached from how to actually fix the machines, thus the need for business services grew.
Again using the idea of our farmer, he most likely knew how to fix his own plow; however, I'm pretty sure my very intelligent husband has no clue how to roll up his sleeves and fix most of the computer automated machines he consults about. For that, he relies on IT guys who provide support through business services.
We now move onto public services. Differing from a consumer or a business service, a public service is loosely defined as a service provided by a government to its people. Great examples of public services are the supplying of drinkable city water, connection to gas lines, and even police forces that provide public safety.
Yes, these things are usually funded through tax dollars but the government provides the service. For instance, when we bought our home, we didn't need to dig up our ground and connect to the water table. Our local government had already taken care of this for us.
According to many, the need for public services arose as urbanization began. Speaking very simply, urbanization occurred when population shifted from rural, agricultural areas to cities.
Using our farmer guy one last time, he wasn't usually in dire need of public services. He dug his own well, and he chopped up wood as a source of heat. However, when his son left the family farm for the lights of the big city, he raised children and then grandchildren who had no clue how to dig a well or even chop wood. Instead, they relied on the fact that when they turned a faucet, water would come out, and when they clicked a thermostat, they'd get heat. In other words, they became very accustomed to the government providing public services.
The service industry is generally defined as a business that does work for a customer but is not involved in manufacturing. Within the service industry, there are usually three sub-categories.
First, consumer services are the variety of services provided to consumers of a product by the field that creates, markets, or provides the product. Consumer services began to boom when division of labor, the assigning of different parts of a manufacturing procedure or tasks to different people in order to improve efficiency and productivity, became the norm.
Second, are business services. A business service is again a general term that describes work that offers support to a business but does not produce a tangible product. Many would assert that business services began to thrive with the onset of automation, which is the usage of mostly automatic equipment in a system of manufacturing or production.
Third, there are public services, or services provided by a government to its people, things like access to drinkable water and a police force. Many would assert that the need for public services grew from the process of urbanization in which populations shifted from rural, agricultural areas to cities.
After you've completed this lesson, you should be able to:
- Define service industry
- Describe the three sub-categories within the service industry
- Identify the primary reason each of these sub-categories came into existence
- Provide examples of each type of service industry