Service Industry Sector by Better Trades

Also known as the tertiary sector of economy, the Service Industry is one of three economic sectors, the others being the secondary and the primary sectors. The Service Industry is defined as the production of intangible goods.

The Service sector is involved with providing services to businesses, as well as to the final customer. These may include the distribution and sale of goods from a producer to a customer as in the form of retail sales or wholesaling. Other services may include the transferring of goods through a service, such as the restaurant and hospitality industry.

With nearly 300 million consumers, who have purchased more than $6 trillion worth of goods and services over the past year, the Service industry has seen an infusion of more than $1 trillion in investments within numerous industries for the means of production. The Service sector employs the greatest amount of workers and is the most common of workplaces.

So many other facets make up the Service industry, which include what is known as the “soft” part of the economy, that being tourism, banking, government, insurance, education and social services. The term soft-sector refers to those people employed within the industries that use time for their means of production.

Another term in relation to the Service industry is “service economy,” which refers to a company’s business activity as being considered a service. Although countless businesses produce consumer products, the majority of revenues generated by the company comes from services provided to ensure the quality of their products, such as service technicians and warranties.

With services accounting for more of the U.S.’s GDP now than 20 years ago, the current list of Fortune 500 companies is now a majority of service companies, rather than manufacturing ones. In 2005, the U.S. was the largest producer of services, which accounted for 78.5% of the economy. A sharp contrast to the 20% it represented back in 1947.

As mentioned above, the Service sector is comprised of numerous industries within the sector, such as restaurants, personal services and so on. The sector also includes other industries such as Printing & Publishing, Real Estate, Schools, Security Systems & Services and Waste Management Services.

There are, however, pitfalls that the Service industry faces. The biggest one is that service providers are selling a service that those who sell physical goods rarely see, which appears to be less tangible. It makes it harder on the potential customer to actually see and understand the services that they will receive and be able to place to the true value on that service.

With the quality of service relying heavily on the quality of the individual providing the service, there is a certain level of value of people related to the sector. Unlike a manufacturing sector, that relies on technology and equipment to produce a product at a relatively controlled cost, the Service sector most often encounters a variable cost in providing services as the human cost element often fluctuates.

In the end, the duality between physical goods and services remains on either end of the spectrum. The mass majority of commodities produced and sold fall within these two extremes. By being able to generate and maintain appropriate levels of skill, ingenuity and experience to customers, service providers participate and benefit in an economy in which they carry little inventory and have minimal raw material needs.

Sectornomics Articles by Better Trades