CIMA E1 Syllabus E1. Operations management - Service Provision - Notes ^{9 / 21}

Service businesses are faced with different considerations to a product driven business, this can present challenges to the finance function.

Maintaining quality with services is more difficult when comparing maintaining quality with products.

Customer feedback is relied up to determine whether quality is being maintained with services.

Difference between a service business and a product business

1. Intangibility - a service cannot be touched

2. Inseparability - a service cannot be created and consumed later

3. Perishability - a service cannot be used multiple times, once provided it is completely consumed and cannot be saved.

4. Variability - a service will not be the same for all those who use it

5. Flexibility - a service cannot be used in any place

Interaction with the finance function:

The input of the finance function is crucial in the following areas of a service business:

1. Charge out rates for staff

2. Estimating costs to provide the service

3. Measuring benefits of service