Distinguishing features of service organisations Essay Example

Business 3

Service organisations have distinguishing features from other kinds of organisations such as manufacturing businesses. Alan and Kah (2008) puts it that the difference between service and manufacturing firms is that since services are intangible their outputs are also heterogeneous. Services are also consumed the same way they are produced unlike in manufacturing businesses. Services can not be stored as in manufacturing businesses and are produced outside the service sector unlike manufacturing businesses which provide a service component to their products. Services may also be produced through upstream and downstream segments of the value chain.

According to Langfield-Smith et al. (2009) in upstream activities, large firms have R&D activities while in downstream segment, support is received from marketing and customers. In service organisations, production and delivery may occur simultaneously as well as sales and distribution. There is domination of direct labour since what is necessary is marketing activities, delivery and support from customers. There are different types of service organisations which include professional service firms, retail and mass service (Alan and Kah, 2008). 

The professional service businesses include medical, legal, accounting and consulting businesses. These firms comprise of staff members who provide various services to customers. Langfield-Smith et al. (2009) describes that the firm involves more people than equipment and what is important is how the service is delivered rather than what is delivered. In mass service firms, many customers are involved and each requires limited time and customisation from the staff for example in bus and airline companies, telecommunication companies, post offices and many others. Retail involves both mass service and professional for example in hotels, banks, repair workshops etc.


Langfield-Smith, K., Thorne, H. & Hilton, R. (2009). Management Accounting: Information
for Managing and Creating Value (5th Edition)
. McGraw-Hill: Australia.

Alan, P. & Kah, H. (2008). Research themes, concepts and relationships: International Journal of Service Industry Management, 19(1), 83-110.