Business services is a broad industry consisting of companies that provide nonfinancial services to other businesses. These services can include marketing, advertising, consulting, facilities management, waste disposal, staffing, transportation and other related activities.
Business service-oriented industries differ from product-based operations in that they are primarily in business to offer their skills and knowledge. Any physical products they sell are incidental or secondary to the services they offer.
Service-oriented companies face several key challenges compared to product-based firms. Among these is the need to build a strong reputation in the market place for their services.
The industry also faces other challenges that can affect its viability, such as the need to differentiate their offering from that of competitors. This is largely due to the fact that most services do not develop a brand name identification, unlike products, which can easily be identified.
Similarly, they do not have the luxury of producing and delivering their services in a way that permits economies of scale to be developed over time. This is due to the fact that the production of services cannot be carried out by a single company and instead must be decentralized and delivered by a number of independent service providers.
For this reason, a service-oriented company must focus on building and maintaining the system for delivering its services and managing its people to ensure that they are providing value. This is a different set of skills than those required in a product-based company and requires a different tool kit.