Service Sector Business, Chapter Notes, Class 11, Business Studies PDF Download

Chapter - 4 

Business Services 

Introduction

The chapter Business Services gives you a brief introduction to the  characteristics of  business services, the difference between services and goods, classification on types of  business services, the concept of e-banking, identification and classification of types of insurance policies and the description of different types of warehouses.  

Definition 

Auxiliaries to trade are also known as business services. Service sector includes commercial firms engaged in banking, communication,  transport,  insurance  and  warehousing. Business  cannot  be  even  imagined  in the  absence  of these services. All  these services collectively constitute the Service Sector. 

Nature/Features/Characteristics of services Difference between Services and goods Basis  Services Goods  Nature An activity or a process. e.g.,  watching a movie in a cinema  hall  A  physical  object.  e.g.,  a  video cassette of movie Type  Heterogeneous  Homogeneous Intangibility  Intangible  e.g.,  doctor treatment Tangible e.g., medicines Inconsistency Different  customers  having different  demands  e.g. mobile services Different  customers  getting  standardized  demands  fulfilled  Inseparability  Simultaneous production and consumption e.g., eating   an  ice-cream in a restaurant  Separation of production and  consumption e.g.,   

Types of banks  

• Commercial banks
• Co-operative banks
• specialized banks
• Central banks  
• Private Sector
• Public sector 
• Functions of Commercial Banks  

Transfer (EFT)  

Machine (ATM)  

banking 

I. E-BANKING:  E-banking means banking transactions carried out with the help of computer  systems (i.e., that is banking over the internet). 

1. Electronic Fund Transfer (EFT): Under this system, a bank transfers wages and salaries  directly from the company’s account to the accounts of employees of the company.
2. Automatic Teller Machine (ATM):  It refers to an electronic terminal that allows people  with plastic card to perform simple banking transactions like withdrawal of cash 24x7 without any help of human teller. 
3. Debit Card: It refers to  a plastic  card that  allows the bank to take money from the customer’s account and transfer it to a seller’s account. 
4. Credit Card: It refers to a plastic card that allows the customer to buy now and payback  the loaned amount to bank at a future date.
5. Online Banking: Under this system, when the customer gives instruction on his computer,  the bank computer transfers money from/ to customer’s account to biller’s account.  

• Insurance: It is a contract where by in exchange of fixed consideration one party promises to pay a fixed  amount either at happening of an event or at the expiry of certain period.   
• Functions of Insurance 
• Fundamental Principles of insurance:    

Principle of utmost faith: refers that no material or important facts should be concealed by both the parties of insurance contract. Principle  of  Insurable  Interest:  There must  be some  pecuniary  interest  in the subject matter of the insurance contract. Principle of Indemnity:  Refers that the  insured  can  get  only the  compensation against  actual loss and he cannot make profit out of the insurance. Principle of proximate cause: It refers to the direct cause and not the remote cause. Principle of mitigation of loss: states that it is the duty of the insured to take reasonable steps to minimize the loss/damage to the insured property. 

Types of Insurance 

Life Insurance      General Insurance  

Fire                 Marine               Miscellaneous 

Life Insurance:  It is a  contract under which the insurer, in  consideration of a premium,  undertakes to pay a fixed sum of money on the death of the insured or on the expiry of a  specified period of time, which ever is earlier. Fire insurance:  it  is  a  contract whereby the  insurer undertakes to make  good  any  loss/ damage caused by fire during a specified period. Marine Insurance:  A marine insurance is an agreement where by the insurer undertakes to  indemnify the insured loss against perils of the sea. 

• Difference between life, fire and marine insurance  

1. Subject matter  Human life  Assets Ship,  cargo  or  freights
2. Element  Both protection and  Protection only Protection only investment
3. Insurable interest  Must  be  present  at the time of effecting  the policy Must  be  present  both at the time of  effecting  the  policy  as well as when the  claim falls due  Must be present at  the  time  when  claim falls due  
4. Duration   Usually  exceeds  a  year  Does  not  exceed  a  year  Period  or  voyage   or mixed 
5. Indemnity  Not  based  on  principle  of  indemnity  Is  a  contract  of  indemnity  Is  a  contract  of  indemnity   
6. Surrender value  Has  a  surrender  value   Does  not  have  any  surrender value  Does  not  have  any  surrender value 

Types of Life Insurance Policies (Insurance Products)     

Communication services:  

These are helpful to business for establishing links with outside world. The main service is postal and telecommunication.    

• Transportation: It refers to the physical movement of goods from one place to another.  Modes of transport 
• Warehousing: It refers to that activity under which goods are kept safely and systematically at a particular  place. 
• Warehouse: It refers to the specially built building where the raw materials and finished goods are kept safely till their owner does need them. 

Functions of warehousing: 

Consolidation  Breaking the bulk     Stock piling      Price stabilization     Financing 

Types of Warehouses: 

Very Short Answer type Questions 

1. Give two examples of e-banking. 
2. Who can get an overdraft from a bank? 
3. Give full form of ATM. 
4. In which type of insurance, insurable interest must exist only at the time of insurance? 
5. Name two companies that offer DTH services in our country. 
6. List two main functions of warehousing. 
7. Name the oldest mode of transportation. ​

SA (3/4 m)  

1. Distinguish between goods and services. 
2. Explain any two kinds of life insurance policies. 
3. State any two benefits of transportation. 
4. Explain any three types of warehouses. 

LA (5/6m)

1. Explain the functions of commercial banks. 
2. Distinguish between life insurance and fire insurance. 
3. Explain the various functions of warehouses. 
4. Explain the main modes of transport. 

 HOTS (High Order Thinking Skill) 

1. Name  the  type  of  banking  under  which  ATM,  Credit  card  and  EFT  facilities  are available. 
2. Mala obtained a life insurance policy of her husband. After 3 years, Mala divorced her husband. After one year of divorce, her husband died in a car accident. Can Mala claim the amount of policy from the insurance company? 
3. Ships carrying oil are called _________.
4. Cellular companies offer satellite based media service. The service can be viewed on  ________. ​

Gist of the Lesson: 

1. Auxiliaries to trade are also known as business services.
2. Service sector  include  commercial firms  engaged  in  banking, communication, transportation, insurance and warehousing. 
3. Business can’t be even imagined in the absence of these services. 
4. All the services collectively constitute the service sector.