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What Is a Service-Oriented Business?

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  • Written By: Alan Rankin
  • Edited By: A. Joseph
  • Last Modified Date: 30 August 2014
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A service-oriented business is one that provides a service to its clients or customers. Businesses and other enterprises generally are classified by whether they provide goods or services. Those that provide goods include farms, mines and manufacturers. Banks, retail stores and communications media are all examples of service-oriented businesses. Such businesses form the service industry, which represents a major sector of the economy in developed nations.

Most analysts classify economic, or money-generating, systems by how they operate. Systems based on natural resources, such as agriculture, logging and mining, are called the primary sector, used in phrases such as “primary sector jobs.” Manufacturing businesses such as factories are considered the secondary sector, and the service industry is sometimes called the tertiary sector. A simpler division is the commonly heard phrase “goods and services.” In this analysis, the first two economic sectors represent “goods,” and everything else is a service.

By any reckoning, service-oriented businesses contribute to a major portion of the global economy. By some estimates, nearly one-third of all jobs are part of the service industry. Income generated by these businesses create as much as three-fifths of the world’s wealth in any given year. In developed nations such as the United States, Japan and most of Europe, service-oriented businesses compose the majority of business enterprises. In developing nations, primary- and secondary-sector businesses generally are more prevalent.

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The definition of a service-oriented business is very broad. Service-oriented businesses include restaurants and groceries, as well as retail stores of every type. The transportation, travel and hospitality industries also are vital services that allow people and cargo to go anywhere in the world. Healthcare is a service-oriented business, as are the industries that maintain buildings and other public infrastructure. Information services, including software companies and Internet-based businesses, have become such an important part of the service industry that they sometimes are considered their own economic sector.

Some parts of the service industry do not qualify as a “business,” such as public services — police, firefighters or even government, for example. Other industries, such as healthcare or prisons, vary by country. In some countries, these are managed by government agencies, and in other countries, they form part of the service-oriented business community. In the 21st century, the question of which services should be publicly or privately funded has become the subject of lively debate. When public services are reduced by financially struggling governments, they sometimes are taken over by for-profit businesses, a change that is controversial to many people.

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healthy4life
Post 4

Healthcare is the most valuable service-oriented business, in my opinion. We could do without restaurants, salons, and hotels, but when we are sick with pneumonia and need antibiotics, we might just die without the help of a doctor.

There have been times when I've had life-threatening illnesses that my doctor stopped in their tracks. Common sicknesses like strep throat can turn deadly if they are allowed to progress to something worse.

Perdido
Post 3

I've always thought of service-oriented businesses as companies that offer you an experience rather than something you can touch. This isn't always the case, but it is with some places, like travel agencies and hotels.

Travel agencies offer you a good time and the chance to make memories. Hotels offer you a place to sleep and eat, as well as a pool to swim in and a hot tub for relaxation.

The more you are willing to pay for things like this, the more luxurious your experience will be. You are paying for the quality of the service.

StarJo
Post 2

@OeKc05 – I know that waiters are motivated to keep customers happy because their base pay is so low. Tips can make up for this.

However, some restaurants force the waiters and waitresses to split the tips at the end of the night. I think that this is a bad decision for any service-oriented business.

OeKc05
Post 1

My friend is a cosmetologist, and she is definitely in the service-oriented business sector. She does her customers hair and/or makeup in exchange for a fee, and she also gets tips.

I think that any business that expects customers to tip the workers is probably in this sector. The tips are based on how well the worker provides the service, so often, the base pay isn't very much. I think this motivates people to do their best at the job.

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