Service industry and the Global economy
The service industry is very important in the development of a global economy. Services play a vital role in inter-regional development through enhancement of trade and other activities, which improve the ground on which business is conducted. The service industry can be said to anchor other industries. Services such as utilities and energy are essential services that the product industry cannot function without. The services industry in the modern world has grown tremendously, and has led to globalization of businesses. It can therefore be argued that the globalization phenomenon has been brought about largely by enhancing the service industry. This means that the service industry is an industry that cannot to be ignored (Rust & Huang 2012).
The product industry is supported largely by the service industry. This means that enriching the service industry will also enhance the product industry, which will in turn enhance trade. OECD countries are good examples of countries that have realized high growth as a result of enhancing their service sector (McManus 2009). These countries have invested heavily on the industry in order to achieve great heights in development. OECD member countries such as France, Japan, United States, Germany and the UK have attained high growth as a result of increasingly enhancing the service industry. This is evidence that service industry is just as important as the product industry (Rust & Huang 2012).
There are underlying reasons why the service industry should be developed. It is however important to note the areas that the service industry encompasses. The need for a service is triggered by the state of the environment. The environment might miss some important aspect. The need to fill the gap with the missing need gives rise to provision of various services. State of the artifacts provided by the secondary sector is also a factor that gives rise to a need for services (Albalate 2012). This is where services such as transport, repair and maintenance as well as building services are provided.
The state of people is also an area that gives rise to need for services. This is whereby services such as healthcare may arise. People will always fall sick and the need for medical services arises. Medical services enhance health of individuals. Healthy people are able to work, thus able to produce other goods and services. To enhance health service provision, education is required (Riedl 2010), to train doctors and other healthcare providers. Also expertise in the product industry is gained through specialized training, thus the need to train and improve the quality of their output. This means that the service industry is essentially at the core of growth of any economy (OHara 2012).
The modern world is based on information. This means that people must be provided with adequate information concerning the general issues that are occurring in the world. The need to harmonize the world gives rise to a need for information. Information is required in order to transmit a particular innovation to the rest of the world easily. Information is required to do almost everything from training, enhancing operations of a business, politics and to all activities that take place in the world. Information is the key component of the service industry (Riedl 2010). It helps to faster spread inventions, facilitating faster development of global economies (Rust & Huang 2012).
To achieve high and increasing growth, there must be high levels of entrepreneurship. Information Technology is one of the areas of the service industry that is experiencing tremendous changes. This area has a high potential for innovations. Entrepreneurs have used information technology to enhance the operations of their businesses. They are able to track the activities and inventions from across the globe, and enhance their businesses. Such activities are able to enhance businesses around the world, thereby creating global economies through interdependence (Claudia 2008).
Communication is also another sector in service industry which has great impacts on global economies. It has brought people together by enabling interactions between individuals from both local and international geographical regions. There have been constant innovations of innovations in communication industry. The largest one being communication through social networks. Social media networks have helped individuals from all regions of the world to connect together. Since communication is one of the aids to trade, global economy is improved. There have also been innovations in televisions. There are global channels such as DSTV which is able to reach all parts of the world. Businesses are using such media channels to reach global market hence correcting their countries balance of payments (Claudia 2008).
Organizations and individuals have extensively using social media such as Facebook and Twitter to reach a large number of global customers. They have opened their page where all visitors of the sites can retrieve their information. This has enabled companies to operate on global scale irrespective of their size. Social media have helped many small businesses to achieve high growth since making Ads through these sites is cheap, unlike using television which can only be afforded by large companies since the advertising costs are large. Businesses also use international television channels to promote the services they offer (OHara 2012). Through the channels, they can be able to reach a wide range of customers from the global market.
Websites are also commonly used by organizations to reach large number of global customers. Advertising on the web is also cheaper compared to other channels of advertising. Companies make information available to all visitors of the website and hence they reach clients from all over the world. Companies have also opened their websites where individuals can get all the information they need. This makes it easier for the company to reach the global market without incurring heavy costs. There are also websites where individuals can access services online (OHara 2012).
Policy making has contributed to increased global economies. Through the desire for integration, countries have reviewed their policies in order to fit in the modern global world. They have reduced barriers to trade and formed trading blocks, with few restrictions. This has enhanced services provision through high mobility of expertise in different countries hence increasing production through enhanced production methods. Financial services have also been enhanced to enable flow of capital from one country to another. People and corporates in different parts of the world are able to trade together. Research has shown that if financial services were restricted, business opportunities would reduce, thereby reducing global economic growth (Albalate 2012).
Barclays is a financial services provider. This is a banking institution found all over the world. The bank has attained high growth and expansion as a result of offering services and laying down strategies that have led to the banks success. Barclays Bank is one of the largest banks in the world. The bank can be said to be a global bank since it offers its financial services to many countries of the world. The bank has played a major role in developing global economies (Albalate 2012). It has managed this by employing best practices that lead to success of service businesses. The bank has made use of information technology, a major opportunity of businesses in service industry. Technology has helped the bank to offer quality services and has helped to monitor operations of various services of the bank. It has also aided communication in all branches of the bank. This makes innovations to be adopted fast in all the branches. The bank has achieved growth through its continuous innovation in financial sector and through research and development. Innovations in the bank have been able to retain existing customers and attracting more into the business hence achieving high growth (Johnson 2012).
Standard chartered is also an international financial institution that offers banking services. The bank is also among the most recognized banking brands in the world. It has achieved its success through offering quality services and creating value to its customers. The bank has also embraced information technology which has enabled it to operate profitably on a global scale. It has also invested in innovations (Johnson 2012). The bank has constantly made innovations that have increased efficiency in service delivery of the bank.
There are similarities between operations of the two banking institutions. Both target the global market. Their global distribution means that they target customers in diverse geographical regions. They have also embraced technology which has helped the institutions to increase their growth through enhanced communication throughout all their branches worldwide (Antony 2004).
Although the banks are similar in terms of their services, there are some differences that can be noted. One of the differences between the two institutions in terms of service provision is their target market. Standard chartered has targeted the affluent members of the society while Barclays has been more general in their target market. Barclays has built its service industry by improving its services and widening the scope of its target market (Antony 2004).
In conclusion, not only has the service industry played an important role in the global economy to date, but it continues to be an important and integral part of activities aimed at economic growth. The paper highlights various ways in which not only does the sector contribute towards the economy, but ways in which the product industry also depends on it.
It is the writers opinion that the service industry is not only as important as the product industry, but it is perhaps more important. This is more so considering how the service industry plays an important role in shaping the product industry and the global economy. It is no coincidence that OECD countries that have focused on the service industry have realized rapid growth, a clear pointer of its economic importance.
Albalate, D 2012, Social Preferences and Policy Centralization: The Case of US Speed Limits, Journal of Economic and Social Policy: Vol. 15: no 1, pp.79-111.
Antony, J 2004, Six Sigma in the UK service organizations: results from a pilot survey, Managerial Auditing Journal, Vol. 19 no 8, pp.1006 1013.
Claudia, S 2008, Examining the role of service climate in health care: An empirical study of emergency departments, International Journal of Service Industry Management, Vol. 19 no 2, pp.188 209.
Johnson, J 2012, Book Review: Centeno. M. A. and Cohen. J. N. (2010), Global Capitalism: A Sociological Perspective, Journal of Economic and Social Policy: Vol. 15: no 1, pp. 19-39.
McManus, J 2009, The Services Economy, Management Services, pp1-20.
OHara, PA 2012, Principles of Political Economy Applied to Policy and Governance: Disembedded Economy, Contradictions, Circular Cumulation and Uneven Development Journal of Economic and Social Policy: Vol. 15: no 1, pp. 10-33.
Rust, RT & Huang, M 2012, Optimizing Service Productivity, Journal of Marketing, Vol 76: 1. pp. 47-66
Riedl, A 2010, Location of FDI and The Growing Services Economy, Economics of Transition, pp741-761.