Business services are a broad industry that provides non-financial services to businesses. The industry offers a wide range of products and services, including marketing, advertising, consulting, transportation, security, facilities management, waste handling, and staffing to name a few.
A service is an action that results in value for the customer without delivering a tangible good or product. These actions are often referred to as economic services because they are concerned with the building of systems that deliver value to customers.
Some of these actions are a part of the production process, but most are not. Many services, especially those that have no direct transfer of a tangible good, cannot be delivered in a single place at one time and can therefore be decentralized across a network of local operations.
For example, a business-to-business shipping firm can produce a variety of goods but must also provide warehousing and transport services in order to efficiently handle these deliveries. This requires a complete solution in which the warehousing and logistics functions are integrated with each other, allowing the company to deliver the goods in a timely manner while reducing costs and increasing efficiency.
Consequently, business services present a unique set of strategic challenges for top managers. Aside from the traditional concerns of product business managers–soundness of offering and management of people–these companies must also confront issues involving their customers’ roles in influencing the cost and quality of the service.
Some of these issues can be addressed through standard strategic tools, while others require a new approach. This article presents a framework that can help top managers think through these challenges.