Chapter 4 Business Services

Services: Services are defined as all those economic activities which are intangible and imply an interaction to be realised between service provider and the consumer.
Goods: A goods is defined as the physical product capable of being delivered to a purchaser and that involves the transfer of ownership from seller to the customer. Goods also generally used to refer to commodities or items of all the types, excepting services, being involved in trade or commerce.

Recent world is of computers. Computers are affecting every walk of our life or our daily routine of an particular individual or an organisation. By the extensive network of computers which is connected through internet, the world is rendered into the global village. With the disclosure of Internet banking, banking scenario is also changing quickly. E- banking implies performing all the functions or duties of commercial banks to be conducted electronically. Advantages of e-banking are as follows:
1. Helps to manage savings and checking accounts, apply for loans quickly and easily round the clock.
2. Customers can see balances on line and find out whether cheques or deposits have cleared.
3. Customers can easily transfer their funds between the two accounts.
4. It gives demat services for the shares.
5. Customers can easily down load financial information (relating to their FDs, A/c, cheques, Bills etc.) into personal computer rapidly.

Different types of telecom services which are as follows:
1. Cellular Mobile Services : These services are all types of mobile telecom services which includes voice and non-voice messages, data services and PCO services that utilizes any type of network equipment within their area of service. They can also provide direct inter-connectivity relationship with any other type of telecom service provider.

2. Radio Paging Services : This Service is an affordable means of transmitting information to on person to another persons even when they are on mobile. It is a one- way information broadcasting solution, and has spread its reach on far and wide levels . Radio paging services are available that includes tone only, numeric only and alpha/numeric paging etc.

3. Fixed line Services : These are fixed services which includes voice and non-voice messages and data services to establish linkages for distantly located traffic. These uses any kind of network equipments that firstly connected through fibber optic cables laid across length and breadth of the country. They also gives inter connectivity with other types of telecom services too.

4. Cable Services: These are the linkages and switched services within a licensed area of operation to handle the media services which are one way and are entertainment related services. The two way communication includes voice, data and information services through cable network would collides significantly in the future. Services's offerings through the cable network would be identical to providing fixed services.

5. VSAT Services: (Very Small Aperture Terminal) refers as satellite-based communication services. It offers business and government agencies a highly flexible and reliable and uninterrupted service which is equal to or better than the land-based services. It can be used to provide pioneering the appellations like Tele-Medicine, Newspapers-on-line, Market rates, the teleeducation even in the most remote areas of our country.

6. DTH Services: DTH which means Direct to Home; is again a satellite based media services that is provided by the cellular companies. One can receive media services directly through the satellite with the help of a small dish antenna and a set top box. The service provider of DTH provides a bouquet or offer of multiple channels whcih can be seen on our television without being dependent on the services which is provided by the cable network services provider.

Principles of insurance are as follows:
(a) Utmost good faith: It is the principle of insurance that insured person should open or defined all the facts to the insurer. Non disclosure of these facts by the knowledgeable party could affect the validity of such types of contract; e.g. in a court case in England, the court decided that the insurance company could not be made to pay the claim, since it had come to know of the disease after the person has died.

(b) Indemnity: Indemnity's contract is one where the insured person is paid only the original amount of loss or the amount of the policy, whichever is low e.g. a person insured his house against fire and later he agreed to sell his house to another person. Before the completion of sale the house was damaged by fire. The seller received not only the compensation from the insurance company but also, the price of the house from the buyer as per the sale's contract. The court decided that the insurance company could recover the amount it had paid. But life insurance contracts are treated well.

(c) Insurable interest: It shows a legally recognisable relationship between the person insuring another person or thing, (b) the person or thing which is insured like that he will stand to gain in financial terms if the person or thing insured by him without being stop to exist, and he would suffer a financial loss if that person dies or that thing is destroyed. Thus, X cannot insure the life of Y if there will be no relationship between the two of them.

(d) Cause proxima: An insured person can overcome the loss only if it is caused by any of the risks insured. Such types of risk should be the closest, and not a distant or remote, because of the loss e.g. a ship carrying oranges has met with an accident as a conclusion of which there is some delay in unloading and the oranges were also spoilt. In this case, the loss is not due to the accident but because of the getting late in unloading. Hence, the shipper would not be much able to overcome the loss from the insurance company.

(e) Contribution: When we take advantage of insurance company, we have to pay the contribution. Its motif is to divide the actual amount of loss among the various different insurers who are liable for the same risk in respect of the same subject matter, under different policies. However, this does not apply to life insurance e.g. X insures his house against the fire for Rs. 20,000 with insurer Y and Rs. 40,000 with insurer Z. If the house catches the fire and the actual loss amounts to Rs. 24000 then Y will be responsible to pay Rs. 8,000 and Z Rs. 16000. If the whole amount of loss is paid by Y, he can recover Rs. 16000 from Z and if it is paid by Z, he can recover Rs. 8,000 from Y.

(f) Subrogation: The principle of subrogation appeals in the fire and marine insurance only. It is understood that one paying the amount of loss to the insured person, the insurance company will become entitled to all the signs that were available to the insured person to protect himself against the loss i.e. after paying full indemnity in respect of the loss to the assured, the insurer will come into the shoes of the assured and exercise all rights and remedies to which the assured was entitled against third parties and continue doing so until he has recouped the entire amount will be paid under the policy to the assured.

(g) Period of insurance: Life insurance's contract is a continuing contract subject to regular payments of premium. A contract of fire insurance is for a fixed duration. A contract of marine insurance may be for certain period of time or for a certain voyage.

Warehousing: It described as to preserving a quantity of goods for the use when it required. Functions of warehousing are as given below:

1. Consolidation: In this function the warehouse receives and consolidates, materials or goods from various different production plants and dispatches the same to particular customer on a single transportation shipment.

2. Break-Bulk: This function described as the shipment of bulk quantity of goods from the production plants to the various distribution warehouse and then reshipment in small amount of quantities to different customers.

3. Stock Piling: The another function of warehouse is the seasonal storage of goods to select business for e.g. Agriculture products are harvested at particu;ar times with subsequent consumption throughout the whole year.

4. Value-added Services : Certain value added services are also given by the ware houses like in the transit mixing, packaging and labelling etc.

Services: “Services are defined as those which separately identifiable, essential and intangible activities that provides and want satisfaction and are not necessarily tied to the sale of a useful product or another service. Characteristics of services are as follows:

1. Intangibility: The most determining feature of a service that it is intangible. It has no shape, size or other physical dimensions. Intangible nature of services has much implication like:
a) A service cannot be routed.
b) Precise standardization is not possible.
c) A service cannot be patented
d) There is no transfer of ownership.
e) There are no inventories.

2. Irreparability: In most of the cases, a service cannot be separated from the person who sells. For example, an electrician has to be physically present to provide the services which is required. Therefore, production and consumption of services are non- separable. This is in sharp contrast to the products that can be produced and stored for sale in future.

3. Perishability: Services cannot be produced before the sale and conserved for future demand. An empty seat in an aircraft, a spare birth in a train and an unsold seat in a cinema hall represent a service capacity which is least forever. Thus, service are not fully used which represents a total loss.

4. Heterogeneity: Since the human being element serves dominant in rendering services, it is almost impossible to standardize the quality of services. Two waiters in a restaurant or two clerks in a bank hardly provides the same quality of service. Even the same provider may not provide same service. The doctor who gave you complete satisfaction on your first visit may behave different on you next meeting. This is the fact that rules and procedures have been laid down to ensure the maximum efficiency.

5. Ownership: when you buy any product e.g. a shirt or a book you become its owner after buying. But when you buy a service e.g. a seat in an aircraft, you do not become its owner. In case of services, the payment is not for but only for the utility of the facilities. A service purchase is but purchased only for the use the benefit it provides.

The main functions of banks can be study under two broad categories that are as follows:                                                                                     (a) Primary functions.
 (b) Secondary functions or subsidiary functions.

Primary functions:

1. Acceptance of Deposits : Accepting of deposits from the public is the much important function of the bank by taking the savings and surplus of people. Banks provide a safe custody of the deposited cash of the people. Depositors can easily transfer their money and can make the payments through cheques too. Banks provide an attractive rate of interest offer on their deposits. There are several types of deposits which can be opened in the bank such as Fixed Deposit. Savings Deposit and Current Deposit.

2. Making Loans and Advances : It is another equally one of the important functions of bank. Banks accept surplus money of people and provide them loans and advances to the needy persons. It is through loans and advances, banks earn profit. Loans and advances are provided by the banks in the following forms :
(I)Loan, (ii) Overdraft, (iii) Cash credit, (iv) Discounting of bills and exchange.

(I) Loan: Loan is a lump sum advance made by a bank against the security. In this, specified amount is either paid to the customer in cash or is credited in his account. The borrower is required to pay a prefixed rate of interest to the bank on the amount of loan from the date of the sanction of the loan. The loan may be refunded in installment or in lump sum. Short and medium term loans are provided by the commercial banks.
(ii) Overdraft: Under this system a current account holder is allowed to overdraw his bank account i.e., he can make upto a fixed limit more than the balance in his account present and can do withdrawal at any time.
(iii) Cash-credit: In cash credit, customer is given credit upto fixed limit against surety bond or against other securities. The interest rate is charged on the amount overdrawn by the customer on the daily balance, not on the entire amount of the limit.

(iv) Discounting of Bills of Exchange: Bill of exchange is a negotiable instrument. It is drawn by the seller and is accepted by the buyer. The drawer has got a advantage to discount the bill of exchange before it got matured if money is required immediately. The bank discounts the bill and deducts some amount as discounting charges and pays the remaining money to the drawer.

Secondary functions or subsidiary functions: Secondary functions can be classified as follows:
(a) Agency functions (b) Utility functions.

(a) Agency functions: These are the functions which is performed by the banks as an agent of their customers.

1).Collection of cheques and bills: It collects local and outstation cheques, drafts, bills of exchange, and promissory notes of the customers and credit it to their account.

2). Collection of Interest and Dividend: It also collects interest and dividend on debentures and securities that is held by the customers.

3. Purchase and sale of securities: On the instructions from its customers, banks purchase or sell stock securities, debentures, bonds etc.

(b)Utility functions : Banks provide the following utility or miscellaneous functions which are described below:

1. Safe custody of customers’ valuable articles and securities: Some banks gives the facilities of lockers where on nominal customer can keep its valuable things like ornaments, jewellery etc.

2. Facility of Foreign Exchange: obtaining a license from the Reserve Bank India, commercial banks can deal in foreign exchange. The banks can exchange the several foreign currencies and can even do discount on the foreign bills of exchange.

The allied facilities provided by postal departments are as follows:

1. Greeting Post: Beautiful greeting cards.
2. Media Post: Effective media for indrain corporate to advertise their brand through the post cards, envelops, telegrams or on the social sites etc.
3. Direct post for direct advertising.
4. International money transfer through collaboration with Western Union finance services, USA that enables remittances of money from 185 countries to India.
5. Speed post: It has over 1000 destination in India and links with 97 major countries across the globe.
6. E-bill post is the latest invention of the department to collect bill payment across the counter for BSNL and Bharti Airtel.

Different types of insurance that are as follows:

1. Life Insurance: Life Insurance is a contract based under which one person, in consideration of a premium paid either in smaller amounts or by monthly, quarterly, yearly payments, undertakes to pay to the person for whose benefit the insurance is made, certain amount of money either on the death of a person whose life is insured or on the expiry of particular period of time.

2. Fire Insurance: Fire Insurance is a contract where the insurer, in consideration of the premium paid, undertakes to make good any loss or any harm caused by fire during a particular period of time. Normally, the fire Insurance policy is for a period of one year after which it has to be renewed from time to time.

3. Marine Insurance: Under marine insurance's contract, the insurer undertakes to indemnify the insured in the manner and to the extent thereby agreed against it. Marine insurance is defined as an agreement by which the insurer undertakes to compensate with the owner of a ship or cargo for complete or partial loss at the sea.

4. Other Insurance : Other Insurances are as given below :

(I) Health Insurance: Health Insurance is a safeguard against maximising the medical cost. A health insurance policy is a contract between an insurer and an individual or group in which the insurer agrees to provide the specific health insurance at an agreed price. Depending upon the policy, premium may be payable either in the smaller amounts or in installments. Health insurance usually supplies either direct payment or reimbursement for expenses which is associated with illness and injuries. The cost and range of protection which is provided by health insurance depends on the provider and the policy purchased.

(II) Motor Vehicle Insurance : In Motor Vehicle Insurance the owner’s liability is to compensate with the people who were killed or insured through the negligence of the motorists or drivers is passed over the insurance company. The rate of premium under motor insurance is standardized because of business's tariff.

(III) Burglary Insurance: Burglary insurance comes under the insurance of property's classification. In case of burglary policy, the loss of damages of household goods and properties and personal effects due to theft larceny, burglary, house-breaking and fact of such nature are covered. The actual loss is then compensated.

(IV) Cattle Insurance: Cattle insurance is a contract whereby an amount of money is secured to assured in the event of death of animals such as bulls, buffaloes, cows and heifers etc. It is a contract against death which happens from accident, disease, parturitions or pregnant condition as the case maybe.

(V) Crop Insurance: Crop insurance is a contract to give a measure of financial support to the farmers in the event of a crop failure happens due to drought or flood. This insurance covers adjacent all risks of loss or damages relating to the production of rice, wheat, millets, oil seeds and pulses etc.

(VI) Sport Insurance: This policy ensures a comprehensive cover that is available to amateur sportsmen covering their sporting equipment, personal effect, legal liability and personal accident risks. If required, the cover can also be made available in respect of the named member of insurer’s family residing with him. This cover is not available to the professional sportsmen. The cover is available in respect of any one or more the following sports such as Angling, badminton, cricket, golf, lawn tennis, squash, use of sporting guns.

(VII) Amartya Sen Siksha Yojana Insurance : This policy is offered by the General Insurance Company that secures the education of dependent children. If the insured parent/legal guardian shall sustain any bodily injury that occurs solely and directly from accident, or by external violent and visible means and if this type of injury shall within twelve calendar months of its occurrence be the sole and direct cause of his/ her death or permanent total disablement, the insurer shall compensate the insured student, in respect of all covered expenses to be incurred from the date of occurrence of such accident till the expiry date of policy or completion of the duration of covered course whichever occurs primarily and such compensate shall not exceed the sum that is insured as stated in the policy schedule.

(VIII) Rajeshwari Mahila Kalyan Bima Yojana : This policy has been planned to give relief to the family members of insured women in case of their death happens or disablement arising due to all kinds of accidents arising out of problems incidental to the women only.

Warehousing provides different services:
1. It eases the production in anticipation of demand: In the modern world, production of goods is undertaken in anticipation of demand rather than going against to the existing demand. Hence, warehousing gives services to store these goods properly till the demand for them is made.

2. Warehousing sustains the stock of seasonal production: Production of certain commodities takes place only during the specific season of the year whereas the demand for the same exists and has to be net throughout the year. Hence, warehousing helps in sustaining the equal supply of these goods throughout the whole year.

3. Warehousing provides basis both to the wholesalers and the retailers: Storage makes the basis of operation by the wholesalers and retailers. Retailers store the goods to be made available to the customers on their demand and wholesalers do so to maintain an uninterrupted supply-line to the retailers. Warehousing gives good opportunity to wholesalers and retailers to help in the economies of bulk buying as they often buy goods far in excess of their immediate demand which needs to be store.

4. Warehousing enables the producers to respond according to the production techniques: Sometimes the production processes may also required storage of partly manufactured goods for various periods to a time.

5. Price stability: Sometimes storage of goods may become very important in order to correct any distortions in the prices e.g. in case of seasonal goods, their plentiful supply in the season may create conditions of surplus or excess thus forcing the prices to fall or minimize. Warehousing enables producer to maintain stock of excess quantity during this period of time and thus, helps in establishing the prices.