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Karla Antonette R.

Operations Management


A manufacturing business is a type of business organization that converts or
transforms inputs (such as raw materials, labor and equipment) to its desired
outputs (finished goods). These certain outputs will be sold afterwards to its
customers in order to satisfy their needs. Examples of manufacturing businesses are
pottery, furniture making business, chemical and oil production and a lot more.
On the other hand, a service business is a type of business organization that
dominantly uses labor to create services for the benefit of its customers. It is
because human resource is often the most vital resource used in production of
services. This type of business basically earns a profit by charging a fee. Auditing,
security, janitorial and transportation services are some examples of this.
How a service business operates is quite different compared the operations of
a manufacturing business in many ways:
1. Goods Produced
- The primary difference between a service and a manufacturing
business is the tangibility of their output. In a traditional service
business, goods provided may be consultancy, training or maintenance
which is commonly unseen or intangible. Outputs in a manufacturing
business are physical goods which the customers can see or touch.
2. Customer Involvement
- Customers of a service business are more involved in obtaining what
they prefer rather than in a manufacturing business. In a service
business, their customers are capable of monitoring the service that is
being rendered to them and may be able to supervise the process.
These things cannot be done in a manufacturing business.
3. Customer Consumption
- Services that are provided are being consumed immediately by the
customers in a service business. They cannot store the services for
future use. For the goods being sold by a manufacturing business,
customers have the prerogative to store it for use at a later date or use
it immediately.
4. Markets Changing Needs
- When it comes to the markets changing needs, a service business has
an advantage to respond more quickly than a manufacturing business.
Even though a manufacturing business can also adapt to the abrupt

change of markets needs, a service business will need fewer resources

or processes to adapt making them quicker to respond.
Despite their differences, there are similarities when it comes to these two
types of business organization. Both manufacturing and service businesses are
concerned in meeting the needs of their customers. They are doing research and
development for the sake of their customers satisfaction.

Which is better, manufacturing or service?

Even though a service business is different from a manufacturing business,
both of them undergo the same activities in order to be successful. They both need
to plan, design, evaluate, improve and redesign their output to match customers
In my opinion, I think engaging in a service business is better than a
manufacturing business. Unlike manufacturing, the amount of capital inputs needed
in a service business is usually lesser. This is because human labor is more needed
in providing service rather than capital inputs. In addition, you dont have to track a
lot of inventories when you engage in this type of business. You dont have to
manufacture so there is no need for a production facility and you dont have to wait
for products to be done for inspection in order for them to be sold. Due to these
reasons, you can focus more on sales rather than the inventory or manufacturing.
In manufacturing certain products, others might be able to produce the same
goods making them to have more close competitors since physical outputs can be
easily imitated. When it comes to services, even though competitors may also arise,
there will be difficulties for others to have the exact service that one provides. In
this case, there is a chance for a greater competitive advantage especially if you
are an expert in the service industry that you entered.

Collier, P. M. (2009). Accounting
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Hughes, R.J., Kapoor, J.R., Pride, W.M. (2014). Business Twelfth Edition: What is
Production?. Melbourne,Australia: South-West Cengage Learning Publisher