Business Studies · Ch 4 — Business Services
Summary
Summary
- Nature of services — Services are separately identifiable, essentially intangible activities that satisfy wants and are not necessarily linked to the sale of a product. Their five basic features, the five Is, are Intangibility, Inconsistency, Inseparability, Inventory (less) and Involvement.
- Services vs. goods — Goods are produced; services are performed. A service is an act that cannot be taken home — only its effect can — and because services are sold at the point of consumption, there are no inventories.
- Types of services — Business services, social services and personal services.
- Business services — To stay competitive, enterprises depend on specialists: banks for funds, insurers for cover, transporters for goods, and telecom/postal services to stay in touch.
- Banking — A banking company accepts deposits from the public for lending and investment, repayable and withdrawable by cheque, draft or order.
- Types of banks — Commercial, cooperative, specialised and central banks.
- Functions of commercial banks — Acceptance of deposits, lending of funds, cheque facility, remittance of funds and allied services.
- e-Banking — Internet/virtual banking that lets a customer transact over the internet via PC, mobile or handheld device (ATM/PoS, EDI, credit cards, digital cash, EFT via NEFT and RTGS).
- Insurance — A device spreading the loss from an uncertain event over many exposed persons, through a contract for consideration in which the insured has a pecuniary interest.
- Fundamental principle of insurance — Spending a definitely known sum (premium) in place of a possible huge, indefinite loss; a form of risk management against potential financial loss.
- Functions of insurance — Providing certainty, protection, risk sharing and assisting capital formation.
- Principles of insurance — Utmost good faith, insurable interest, indemnity, proximate cause, subrogation, contribution and mitigation.
- Types of insurance — Life insurance (protection plus investment; not a contract of indemnity), fire insurance (strict indemnity; insurable interest at both effecting and loss), and marine insurance (indemnity; covers ship/hull, cargo and freight).
- Types of life insurance policies — Insurers offer different products to meet people's family, children's, old-age and special needs: Whole Life Assurance, Endowment type plans, a combination of Whole Life and Endowment type plans, Children's Assurance plans and Annuity plans. …