3.3 manufacturing and service businesses

Question 1

what is a manufacturing business

Answer 1

A manufacturing business focuses on the production of a tangible physical good
provided to a customer for payment

Question 2

what is a service business

Answer 2

A service business focuses on providing labour or expertise in return for
payment and the service provided is intangible (not a physical good)

Question 3

Difference between Service and
Manufacturing businesses

Answer 3

INPUTS:

A manufacturing business relies heavily on large volumes of raw materials for production
Whereas
a service business has less reliance on raw materials as a service business relies on the knowledge and skills of employees

PROCESSES:
A manufacturing business has a heavy reliance on automation and robotics in its production and its employees rarely have face to face contact with customers as they work in a factory or warehouse
Whereas
A service business has little reliance on automation and robotics but relies more on computers and a service businesses employees have face to face or direct contact with customers as they work in an
office or retail environment.

OUTPUTS:

A manufacturing business focuses on the production of a tangible physical good that can be handled and stored and is available for a customer to purchase
Whereas
a service business focuses on providing labour or expertise in return for payment which is intangible as it cannot be touched or stored.

Question 4

product of manufacturing business

Answer 4

Manufacturing involves the production of a tangible, physical good that can be given
to the customer

Question 5

Customer contact by employees in a manufacturing business

Answer 5

Manufacturing involves employees having
low direct customer contact between
employees and customers as goods are
made in a factory and distributed through
retailers

Question 5

product of service business

Answer 5

Service businesses provide intangible non-physical services that cannot be touched or physically handled but involve help or information provided to customers

Question 6

Customer contact by employees in a service business

Answer 6

Service businesses involve high direct contact between customers and employees as performance of service
occurs directly as the service is provided.

Question 7

employee content in a manufacturing business

Answer 7

Low employee input, high use of
technology
Capital intensive using machinery and
technology to replace human labour

Question 8

employee content in a service business

Answer 8

High employee input due to need for direct contact and the knowledge and expertise of employees
Labour intensive as the service delivery cannot be easily replaced by technology.

Question 9

stockholding in a manufacturing business

Answer 9

High level of inventory (stock of raw
materials/supplies) required to ensure
uninterrupted production and outputs need storage and delivery to customers.

Question 10

stockholding in a service business

Answer 10

Low inventory (stock of raw materials/supplies). Few material inputs needed and outputs cannot be held in
stock as it is a service.

Question 11

similarities between manufacturing and service business

Answer 11

One similarity is that both manufacturing and service businesses have materials provided by suppliers.
Another similarity is that both manufacturing and service businesses rely on human labour in order for the manufacturing of goods or provision of services to be completed.
Another similarity is that both manufacturing and service businesses can produce a uniform output that can maximise customer satisfaction and quality.

Question 12

differences between manufacturing and service business

Answer 12

A difference is the manufacturing business has larger volumes of
materials that may need secure storage, whereas a service business may have
stationery items that represent relatively low cost and probably don’t need
secure storage.
Another difference is that the manufacturing business relies less on human labour as large production lines, equipment or technology replaces the need for labour, whereas a service business relies more heavily on human labour to deliver the service to the customer.
Another difference is that service businesses need intensive training for their employees to deliver a standardised service, whereas manufacturing businesses achieve the uniform product using technology to perform accurate and repetitive actions.