Strategic Management for Business Services

Business services

Business services are a type of activity that benefit businesses without supplying tangible goods. They help companies with marketing, production, safety and cost–especially larger firms that need to keep up with work demands.

Service companies face a number of strategic management challenges, and their management methods are often more complex than those for product businesses. Unlike a product company, which usually sells an entire line of products to a variety of customers, a service business has to focus on an attractive group of customers and deliver a product that will meet their needs and expectations.

The basic strategic management questions for service-business managers are: What is the value of the service, what is the price of the service, how does the service differentiate itself from competitors’ offerings, and what kind of location decision makes the service successful?

Aside from these issues, the service business also faces some of the same problems as product businesses. As with product businesses, the success or failure of a service depends on its design and the quality of its management.

For example, many services are not branded as such, and they have no name identification in the market place. A few, such as airlines, banks, computer service bureaus, law firms, and plumbing repair companies, are able to achieve a brand identity that distinguishes them from their competition.

Generally, the more complex the service, the more difficult it is to develop a unique brand. But in many cases, customers will have a positive view of the service, even if it has not been named or differentiated from competing offerings.

The price of a service is generally determined by what the customer will pay and to some extent by competition, but in many cases, it is based on value rather than cost. In addition, the price of a service is influenced by its own performance as well as the customer’s desire to save money or get more out of the service than it costs.

In addition to these issues, the service business also faces some other problems, such as the need to build economies of scale that aren’t available to a product company. For example, a car rental company with multiple locations in different markets must build efficiencies of scale to ensure that its operations are efficient and competitive.