Business Services

Nature of Services

Services are those separately identifiable, essentially
intangible activities that provide satisfaction of wants, and are not necessarily
linked to the sale of a product or another service. There are five basic features
of services. These features also distinguish them from goods and are known as
the five Is of services i.e., Intangibility, Inconsistency, Inseparability, Inventory
(less), Involvement

Difference between services and goods:

While goods are produced, services
are performed. A service is an act which cannot be taken home. What we can
take home is the effect of the services. And as the services are sold at the
consumption point, there are no inventories.

Types of services:

Business Services, Social Services, Personal Services.

Business services:

In order to be competitive, business enterprises are
becoming more and more dependent on specialised business services.
Business enterprises look towards banks for availability of funds; insurance
companies for getting their plant, machinery, goods, etc., insured; transport companies for transporting raw material and finished goods; and telecom and postal services for being in touch with their vendors, suppliers and customers.

Banking:

A banking company in India is one which transacts the business of
banking which means accepting, for the purpose of lending and investment
of deposits of money from the public, repayable on demand or otherwise and
withdrawable by cheques, draft, order or otherwise.

Type of banks:

Banks can be classified into the following i.e., commercial
banks, cooperative banks, specialised banks, central bank.

Functions of commercial bank

Some of them are the basic or primary
functions of a bank while others are agency services or general utility services
in nature. Acceptance of deposits, lending of funds, cheque facility, remittance
of funds, allied services.

e-Banking:

The latest wave in information technology is internet banking.
It is a part of virtual banking and another delivery channel for customers.
e-banking is electronic banking or banking using the electronic media. Thus,
e-banking is a service provided by many banks, that allows a customer to
conduct banking transactions, such as managing savings, checking accounts,
applying for loans or paying bills over the internet using a personal computer,
mobile telephone or handheld computer (personal digital assistant)

Insurance:

: Insurance is thus a device by which the loss likely to be caused
by an uncertain event is spread over a number of persons who are exposed
to it and who are prepared to insure themselves against such an event. It
is a contract or agreement under which one party agrees in return for a
consideration to pay an agreed amount of money to another party to make
good a loss, damage or injury to something of value in which the insured has
a pecuniary interest as a result of some uncertain event.

Functions of insurance:

Providing certainty, Protection, Risk sharing, Assist
in capital formation

Principles of Insurance

Utmost good faith: A contract of insurance is a contract of uberrimae fidei
i.e., a contract found on utmost good faith. Both the insurer and the insured
display good faith towards each other in regard to the contract.
Insurable interest: The insured must have an insurable interest in the subject
matter of insurance.
Insurable interest means some pecuniary interest in the subject matter of the
insurance contract.
Indemnity: According to it, the insurer undertakes to put the insured, in the
event of loss, in the same position that he occupied immediately before the
happening of the event insured against.
Proximate cause: When the loss is the result of two or more causes, the
proximate cause means the direct, the most dominant and most effective
cause of which the loss is a natural consequence.
Subrogation: It refers to the right of the insurer to stand in the place of the
insured, after settlement of a claim, as far as the right of the insured in respect
of recovery from an alternative source is involved.
Contribution: As per this principle it is the right of an insurer who has paid
claim under an insurance, to call upon other liable insurers to contribute for
the loss payment.
Mitigation: This principles states that it is the duty of the insured to take
reasonable steps to minimise the loss or damage to the insured property.

Life Insurance

Life insurance may be defined as a contract in which the
insurer, in consideration of a certain premium, either in a lump sum or by
other periodical payments, agrees to pay to the assured, or to the person for
whose benefit the policy is taken, the assured sum of money, on the happening
of a specified event contingent on the human life or at the expiry of a certain
period.
This insurance provides protection to the family at premature death of an
individual or gives adequate amount at an old age when earning capacities
are reduced. The insurance is not only a protection but is a sort of investment
because a certain sum is returnable to the insured at the time of death or at the
expiry of a certain period.

Types of life insurance policies:

People have different requirements and
therefore they would like a policy to fulfill all their needs. The needs of people for life insurance can be family needs, children’s needs, old age and special
needs. To meet the needs of people the insurer’s have developed different
types of products such as Whole Life Assurance, Endowment type plans,
combination of Whole Life and Endowment type plans, Children’s Assurance
plans and Annuity plans.

Fire insurance

Fire insurance is a contract whereby the insurer, in
consideration of the premium paid, undertakes to make good any loss or
damage caused by a fire during a specified period upto the amount specified in
the policy.

Marine insurance

A marine insurance contract is an agreement whereby the
insurer undertakes to indemnify the insured in the manner and to the extent
thereby agreed against marine losses. Marine insurance provides protection
against loss by marine perils or perils of the sea. Marine insurance is slightly
different from other types. There are three things involved i.e., ship or hull,
cargo or goods and freight.

Communication services

Communication services are helpful to business
for establishing links with the outside world viz., suppliers, customers,
competitors etc. The main services which help business can be classified into
postal and telecom.

Postal services:

Various facilities provided by postal department are broadly
categorised into financial facilities, mail facilities.

Telecom services

The various types of telecom services are of the following
types: Cellular Mobile Services, Radio Paging Services, Fixed line services, Cable
Services, VSAT Services, DTH services

Transportation

Transportation comprises freight services together with
supporting and auxiliary services by all modes of transportation i.e., rail,
road, air and sea for the movement of goods and international carriage of
passengers.

Warehousing:

The warehouse was initially viewed as a static unit for keeping
and storing goods in a scientific and systematic manner so as to maintain
their original quality, value and usefulness. Today’s warehouses have ceased to be mere storage service providers and have
really become logistical service providers in a cost efficient manner.

Types of warehouses

private warehouses, public warehouses,bonded
warehouses, government warehouses, cooperative warehouses.

Functions of warehousing:

The functions of warehousing are normally
discussed as follows : consolidation, break the bulk, stock piling, value added
services, price stablisation, financing.