Business services It is not a physical product which can be transferred.

d. Services are those economic activities that are intangible and imply an interaction to be realised between the service provider and the consumer

2.Nature of services Intangibility

1. Services cannot be touched 2. One can only experience 3. A desired service undergoes favorable experience 4. Ex. Doctors treatment should to favourable Inconsistency

1. No standard like tangible product 2. Performed each time 3. Different customers have different demand and expectations 4. Service cannot be the same to all customers 5. Change the offer according to the requirements of the consumer Inseparability:

1. Production and consumption of services cannot be separated 2. A doctor and his treatment, a teacher and her teaching cannot be separated. 3. they can be replaced by substituting another person. 4. Customer s presence is required when service is provided. Inventory

1. Cannot be stored 2. If a saloon is closed for a week. He will lose his job for that period,he cannot store it . 3. Service is to be provided when the customer wants. 4. They cannot be performed earlier or later.

Involvement

1.The participation of the customer in the service delivery process 2. Services can be modified according to the specific requirement 3. A Tailor can change the pattern according to the need. Types of services Business services:

1. Used by business enterprises to conduct their activities 2. Ex. Banking, insurance, transporting Social services

1. Provided voluntarily to achieve certain social goal. 2. To improve educational services, health care, help needy children, improve the std of living of the weaker society 3. Provided by NGO s and govt. agencies Personal services

1. Which are experienced different by different persons 2. Not consistent 3. They depend on customer s preference and demand 4. Ex. Restaurants, tourism, recreational services. Business services

1. Banking 2. Insurance 3. Communication services 4. Transportation 5. Warehousing Banking Institution for providing institutional credit to its customers

Stimulates economic activity in the market by dealing in money Mobilises savings of people and makes funds available to business financing and revenue expenditure. Provides financial services for a price eg. Interest, discount, commission. Types of banks

Commercial banks Co-operative banks Specialised banks Central bank Commercial banks

Governed by Indian Banking regulation Act 1949 They accept deposits from public for the purpose of lending. Two types

1. Public sector banks: owned by govt. to achieve social objectives on profit .eg. SBI, IOB, PNB etc. 2. Private sector banks: managed and owned by private promoters, they are free to operate.eg. ICICI, HDFC, Kotak Mahindra Co-operative banks Under co-operative societies Act Provide cheap credit to its members, rural credit. Agricultural financing of india Specialised banks Foreign exchange , industrial banks, development banks, export-import banks Provide finance to heavy projects, industries, foreign trade Central bank RBI of India Supervises, controls, regulates the activities of all commercial banks.

Government banker Controls and co-ordinates currencies Credit policies of any country.

e-banking Meaning Internet banking means any user with a PC and a browser can get connected to the banks website to perform any of the virtual banking functions and the avail of any of the bank s services. The bank has a centralized data base that is web enabled. Banks and financial institutions providing services over the internet is called as e-banking. Lowers the transaction cost, adds value to the banking relationship. E-banking allows a customer service such as managing saving, checking accounts, applying loans or paying bills over the internet Services Automated teller machines(ATM) Electronic Funds Transfer(EFT) Point of sales(Pos) Electronic data interchange(EDI) Digital cash or Credit cards electronic cash

Benefits 24 hours and 365 days of service Customers can make transactions from home, office or while travelling Inculcates a sense of discipline Greater customer satisfaction. Less risk and greater security to the customer as they can avoid travelling with cash

Benefits to bank E banking provides competitive advantage to the bank

Any PC connected to internet and phone can provide cash withdrawal needs to the customer Unlimited network to the bank Load of branches are reduced due to centralised database system.

Insurance To reduce the impact of uncertainties there is a need for insurance. Insurance is a device in which the loss caused by an uncertain event is spread over a number of persons who are exposed to it. There is an agreement one party agrees to pay an agreed amount to another party to make a loss, damage or injury to something of value in which the insured has a pecuniary interest The agreement is put in writing is known as policy. The person whose risk is insured is called insured The firm which insures the risk of loss is call insurer/assurance underwriter The risks may be of death, disability for human life, fire, burglary, loss in shipment of goods Fundamental principle of insurance Individual has to choose the sum in place of huge amount involved in future loss Substitution of a small periodic payment (premium) for a risk of large possible loss. Loss is spread by large number of policy holders. The premium paid is pooled out of which the loss sustained by any policy holder is compensated. Insurance is the equitable transfer of the risk of a potential loss from one to another. Insurance company is an association that pay all legitimate claims that may arise in exchange for a fee known as premium. Functions of insurance 1. Providing certainty: there are uncertainties of happening of time and amount of loss. Insurance removes these uncertainties and assured receives payment of loss.

2. protection:

Protects from probable chances of loss Compensate the losses arising out of the event

3. Risk sharing: Loss is shared by all persons exposed to it. The share is obtained from every insured member by way of premiums. 4. Assist in capital formation: The accumulated funds received by premium are invested in various income generating schemes. Principles of insurance Rules of action or conduct adopted by the stakeholders involved in the insurance business 1. Insurable interest It is the pecuniary(financial) interest in the subject matter of the insurance contract. The insured must have an interest in the preservation of the things or life. So that he will on the happening of the event. It is not necessary that one should be the owner of the property, even a trustee has an insurable interest. 2.Utmost good faith Both insurer and insured have good faith towards each other. It is the duty of insured to disclose all facts and material to the risk It is the duty of the insurer to clear all terms and conditions in the insurance contract. Failure to disclose any fact by the insured makes the contract void at the discretion of insurer 3. Indemnity All insurance contract of fire or marine are of indemnity(guarantee). The insurer undertakes to compensate the insured for the loss caused to him due to damage or destruction of property insured. The compensation payable and the loss suffered are to be measurable in terms of money. This is not applicable for life insurance 4. Proximate cause

The proximate means direct or immediate or most dominant and most effective cause. If the loss takes place due to two or more causes most proximate cause would be taken into consideration. 5. Subrogation

After the insured is compensated for the loss with money, the right of ownership of such property passes on to the insurer. Insured is not allowed to sell the property after the damage is recovered. 6. Contribution

In case of double insurance, the insurer are to share the losses in proportion to the amount insured by each of them. When there is more than one policy on the same property, the insured will not have right to recover more than the full amount of his actual loss. If full payment is received from one insurer obtain payment from other insurer is ceased.

7. Mitigation It is the duty of the insured to take reasonable steps to minimize the loss or damage to the insured property . If there is fire it is the owner duty to minimise the damage. He should not be careless because there is an insurance cover.

Life insurance Life insurance is to protect against the uncertainity of life Various types are Disability insurance, health/medical insurance, annuity insurance and life insurance Insurance company undertakes to insure the life of a person in exchange of a sum of money called premium The premium can be paid in one lump sum or monthly, quarterly, half yearly or yearly. Certain sum of money will be paid on death or on his attaining certain age or at the expiry of certain date His dependants will get the sum in event of death.

It is a sort of investment or savings.

Fire insurance Undertakes to make good any loss or damage caused by fire during a specific period The fire insurance policy is for a period of one year after which it is to be renewed from time to time. A claim must satisfy

1. There must be a actual loss 2. Fire must to accidental and not intentional Loss resulting from fire should be the proximate cause of the loss. Main elements of a fire insurance 1. Insurable interest Insured must have insurable interest. It should be available at the time of contract and at the time of loss. Eg. Person having interest on his property.

2. Insured should be honest and give true information to the insurance company. He should disclose all facts regarding the nature of property and risks attached to it. 3. Indemnity : In the event of loss recover the actual amount of loss from the insurer. Eg. If the person has insured for 5,00,000 , the insurance company will pay the actual loss after deducting the depreciation within the limit of Rs.5,00,000. 4. The insurer is liable to compensate only when fire is the proximate cause of damage or loss. Marine insurance The insurer undertakes the contract to indemnify to the extent of marine loss. Protects against marine perils(collision of ship with rock or ship attacked by the enemies etc. Perils cause damage to the ship or cargo. Marine insurance undertakes to compensate the owner of a ship or cargo for complete or partial loss at sea.

The insurer here is underwriter because he guarantees to make good the losses due to damage to the ship. Three types of marine insurance

1. Ship or hull insurance: policy indemnify the damage caused to the ship 2. Cargo insurance: risk of theft, lost of goods or loss of goods on voyage. Policy cover risks to cargo 3. Freight insurance: cargo does not reach destination due to damage or loss in transit. It pays the loss of freight to the shipping company. Not the freight charges Elements of marine insurance 1. Contract of indemnity: recover the actual loss to the extent agreed. He cannot make profit out of the marine insurance. 2. Utmost good faith:disclose all facts including the nature of shipment and the risk of damage 3. Insurable interest must exist at the time of loss. 4. If the loss is caused by several reasons then nearest cause of loss will be considered. Learn from text book Learn differences between life, marine and fire insurance Other insurances like cattle insurance, crop insurance, sports insurance etc.

Communication services Help to the business for estabilishing links with the outside world: suppliers, customers, competitors. Two types are postal services and telecom services Postal services Whole country is divided into 22 whole country. Indian post and telegraph department provides various postal services across India. They have various head post offices, sub post offices and branch post offices. Postal services are catogerised:

1. Financial facilities: provide saving schemes such as public provident fund, kisan vikas patra, national saving certificates in addition to retail banking functions, recurring deposits, savings accounts, time deposits and money order facility. 2. Mail facilities: parcel facilities to transfer articles from one place to another, registration facilities to provide security of the transmitted articles and insurance facility to cover risk while transmission by post. 3. Allied facilities 1. Greeting post: greeting card for occasion 2. Media post: An innovative vehicle to advertise their brand through post cards, envelopes, aerograms, telegrams etc. 3. Direct post for direct advertising 4. International money transfer through western union to various countries from India 5. Passport facilities : partnership with ministry of affairs. 6. Speed post: 1000 destinations with 97 major countries. 7. e-bill: collecting the bill payment for BSNL and Bharti Airtel. Telecom services This framework the govt. intends to provide both universal services to all uncovered areas and high level services for meeting the needs of the country s economy Types of telecom services

1.Cellular mobile services: provide voice and non-voice messaging data services and PCO services utilising any type of network Types of warehouses Private warehouses Operated , owned or leased by a company. Handling their own goods For material handling and product movement. Benefit: flexibility, control and improved dealer relations Public warehouses

The owner of the warehouse stands as an agent Govt. issues licencing for them to private parties. Can be used by traders, manf, any member of the public after the payment of storage fee . Full safety of goods. Benefits: flexibility, no. of locations, no fixed cost, VAS like packaging and labeling. Bonded warehouses

The goods which are imported are not permitted to remove from the docks till duty is paid. These goods are in bond. Licensed by govt. to accept imported goods. Goods can be removed part by part by paying duty in instalments. These warehouse also help in packaging, grading, labelling etc. Co-operative warehouses

warehouse for members Agriculture/marketing cooperative societies have warehouse for its members. Government warehouses Fully owned and managed by govt. Eg. Food corporation of India, State trading corporation, central warehousing corporation It is a public sector.

Functions of warehousing 1. consolidation: consolidates materials from different plants and dispatches the same to a particular customer on single transport 2. Break the bulk: bulk goods are divided into smaller quantities and then transported in smaller quantities to the clients. 3. Stock pulling: goods which are not required immed. are stored in warehouses. Goods are made available depending on demand. Eg. Rice and other agri products 4. Value added services: bulk package are removed and repacked with small quantities, graded and labeled.

5. Price stabilization: warehouse performs the function of stabilising the prices, when demand is increasing and demand is slag. 6. financing: warehouse owners market and supply goods on credit to customers.