The paper "Importance of Service Industry in Building Economic Growth " is s great example of business coursework. In the current decade, the world has seen increased opening up of service industries in different parts of the world. This has mainly been led by an increased rate of globalization which has opened up countries’ boundaries through removing tariffs and even liberalization of markets (Ettlie, 2011, p. 290). Services industries mainly involve the provision of human value-added such as labour, advice, managerial skills etc. Service industry lacks formalization as they vary from each other.
As a result, starting up a service industry is simpler than starting a manufacturing industry. The total revenue that is obtained from the service sector has been a major pillar in sustaining and supporting the economy of many countries in the world (Kallenberg, 2003, p. 162). Manufacturing industries have faced a lot of competition with an increased level of competition. As a result, many companies have lost a lot of their resources as they are unable to keep up with high competition levels in the market. In order to curb this, companies need to diversify their sources of revenue to venture in a lucrative business of offering services.
The reason behind diversifying these operations is because it is impossible to brand services. This provides a neutral ground where the companies can compete without differentiating their own products. This means that the competitive tool will be on how the services are offered and how the employees relate with the customers. This plays a crucial role in creating customer loyalty towards the services offered (Nissan, Galindo, & Mendez, 2011, p. 65) With increased uncertainties that are facing the manufacturing industries, there is an increased need to start service offering as a way of reducing risks and uncertainties that mainly affect the manufacturing and processing industries.
One of the driving forces is the changing technology which requires the industries to keep on updating their machinery in order to keep up with increased levels of competition. On the other hand, many of the services offered cannot be inventories and must be consumed at some point of production e. g. attending a concert. This is in contrast with manufactured products which have a tangible character that enables them to be stored, distributed to different parts or even consumed without necessarily interacting with the entity that produced the products. Economic growth cannot be realized if policies are not put in place to ensure that service industry grows.
Manufacturing industry depends largely on the existence of service industry. Services such as transportation, medical attention of the employees, financial services and distribution services determine the success of the manufacturing industry. If these basic services are not well developed the whole economy will be highly affected.
Service industry, therefore, plays a role of intermediary between the manufacturing industry and the consumers (Riedl, 2010). With an increased level of competition in the manufacturing companies, it is important for the companies to close any loopholes that have been reducing the overall organization's revenues. Much of the organization's revenues have been wasted in the distribution sector that mainly involves transportation and storing of the produce. This has increased the need for organizations to take up these distribution and storage services in order to maximize their profits (Riedl, 2010).
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Ettlie, J. E. (2011). Service versus Manufcturing Innovation. J PRODINNOV MANAG, 28, 285-299.
Kallenberg, R. (2003). Managing the transition from Products to Services. International Journal of service Industry Management, 14(2), 160-172.
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Nissan, E., Galindo, M., & Mendez, M. T. (2011). The Future of Services in a Globalized Economy. The Servive Industries Journal, 31(1), 59-78.
Riedl, A. (2010). Loaction Factors of FDI and the growing services economy. Economics of transition, 18(4), 742-761.
Ronald, T., & Huang, M. (2012). Optimizing Service Productivity. Journal of marketing, 76, 47-66.
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