UK Service Economy Case Study

This case study examines the UK's service economy, which constitutes 78% of its GDP. It analyzes both the advantages and disadvantages of this economic structure. Advantages include high employment rates mirroring the sector's GDP contribution, strong customer consolidation leading to global connectivity, efficient resource utilization, significant economic development despite initial perceptions, and a substantial global presence particularly in London's financial sector. However, disadvantages include slower growth compared to manufacturing, the need for highly skilled labor and advanced technology, longer gestation periods for service businesses, customer preference for tangible goods, and challenges in accurately evaluating service sector contributions to GDP. The conclusion highlights the significant positive contributions of the service sector while acknowledging the negative impacts of its dominance, emphasizing the need for skilled labor to ensure profitability and economic growth.

Case Study

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Real Evaluation......................................................................................................................1
Advantages of the service economy on nation.......................................................................1
Disadvantages of service economy to the nation...................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Service economy of UK comprises the transaction of the intangible goods between the
sellers and the buyers. The dominant sector of UK's economy with the 78% share in GDP has
been contributing significantly to the in the growth and development. UK has been the hub of
knowledge intensive services and the growth and development opportunities. The leading global
players of services such as banking, finance and business are located in UK (Metcalfe and Miles,
2012). Considerably contributing in the balance of payments with the similar ratio of
employment, Businesses in service economy are involved in the activities such as education,
health and social care; financial and business services; food services such as the hotels and
restaurants; defense and public administration; real estate and renting activities; Tourism and
hospitality; transport; communication and the creative industries like advertisement companies.
Real Evaluation
UK's has dis-validated the general perception that the service economies are structurally
disadvantaged on the global competitive platform and steadily expanded the service share in the
economic activities. Service sector in the economy builds the strong base for the other sectors
such as manufacturing. The magnitude and quality of the service inputs in all the sectors results
in the optimum industrial performance with high productivity and profitability. The movements
from the merchandise trades to the service trade has improved the competitive position of the
country in the significant manner (Wilson and et.al, 2012). The service sector industry has the
significant role in the enhancement of profitability in the balance of payments in different ways.
This is the holding pillar of all the sectors providing efficient and quality service providing
employees and resourceful operational structure. The organizations operating in the service
industry act as a artery in the manufacturing industry providing the linkages.
Advantages of the service economy on nation
The contribution of the service sector in the economy is assessed on these aspects: Employment: Employment in the service sector holds the similar ratio of the sector's
sharing in the GDP of the nation (Taylor and et.al, 2009). The sector provides the eligible
and capable employees to the manufacturing sector and also to the organization working
in the services' industry. Consolidation of customers: With the direct involvement of the employees with the
customer, the larger number ODF customers from around the world get connected to the
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organization and the nation as well. The customer centric service industries such as the
tourism, hospitality sector, the food services such as the restaurants and hotels capture the
wide stream of customer through the effective and the impact-full services provided by
the employees and staff. It helps in building the strong relational constructs between the
nations by increasing the emigration and immigration from both the parts (Henriques and
Kander, 2010). Utilization of resources: The service sector is the foundation stone of the activity to
utilize the resources of the nation. The manufacturing industries process the resources to
utilize the raw material and natural resources to generate revenues and earn profitability
using the human resources of the nation. Economic development: Service sector holding more that 80% share in the market has
the significant positive contribution to the economic growth of the country surpassing the
commonly accepted perception that the service economy with the slow productivity
hinders the fact paced growth of the nation. In UK it has evidenced that the skillful and
the quality service providers. Connectivity and networking: The sectors such as the communication, transport, banking
and financial sectors are the connecting channels to the other industries. Without these
industries other sectors can not run and function (Spohrer, Vargo, Caswell and Maglio,
2008). The advancement of the technology in the communication, transport, banking and
the financial industries has made the strong presence of UK in building the infrastructure
of the countries due to the endowing of the companies holding the top positions in the
world.
 Global presence: With the considerable amount of gross value addition and the
significant market share UK has the prominent establishment in all the sectors. The
organization operating in the sectors affect the dimensions and the macroeconomic
figures on the global ground as well with the effectual control. For instance, London is
the hub of the major trade agreements and the activities and the among the three
command centers of the Global economy. Further UK has the control over the stock
exchanges, foreign exchange market and the banking and the financial services around
the Globe as the headquarters of the major companies and banks are in London |(Jordan,
2006).
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Disadvantages of service economy to the nation
Along with the positive contributions the large hold of service economy in the nation has
the negative impacts as well.
 As compared to the manufacturing sector, the service economy brings the slower growth
to the economy. Importing the high tech machinery and encouraging the capital intensive
process brings faster growth and profits to the nation. Replacing the workforce with the
machinery and equipment slower down the productivity and hence results to the less
profit. As human resources has certain limitations and cannot be replaced with capital
intensive goods (Paulson, 2006).
 It requires the high skilled and advanced technology in the services provided. For
instance to have the predominance in the market place, the organizations are required to
come up with the employees endowed with the intimate knowledge and information
about the service. Also, it induces the cost of training for the organization to adapt with
the new technology and the methods required to process them.
 The gestation period of the service providing companies are more than the manufacturing
companies. For instance the companies such as the hospitality firms like hotels,
accommodation providers, the tour operators are required to enter the market with the
proper research and preparation. In absence of that it hinders the growth and
establishment.
 Customer's inclination and acceptance is more towards the tangible goods and products.
They have the focus on the things that are needed to survive and prosper and the services
are considered as the supplementary requirements not the necessity (Miozzo and
Grimshaw, 2005). The customers has the preferences for the availability of the wider
range of the tangible products rather that the choice for the services associated with it.
 While making the assessments, the evaluation of the services has been the difficult task
since its inception. Various methods have been used for the accurate valuation of the
services in the different sectors but the authenticity of the methods is not proved yet
whereas in the manufacturing sector the evaluation of the inventor, equipment and
products is more precise and measurable (Greener, 2004). Due to the non availability of
the appropriate tool for evaluation, the accurate estimation of GDP becomes difficult.
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CONCLUSION
Considering all the factors to check the viability of the service sector for the growth of
the UK's economy it can be inferred that the service economy in the country UK has the
significant positive contribution in the growth of the economy. Further, the sectors such as
communication, transport, stock exchange, banking and the financial services has the global
presence and impacts the dimensions and figures considerably and also has the strong influence
over the working and functioning of the organizations (Maglio and et.al, 2006). The companies
operating in the mentioned sectors affects the strength of the infrastructure of other countries as
the major companies operating has he predominance around the globe in almost every country.
On the contrary, the dominance of the service economy also has the negative impact on the
economy. As the replacement of the workforce and human resource with the capital equipment
and machinery does not give comparable results. The employees working in the service sectors
are required to the fully skilled and trained to bring the profitability and lucrative results to the
organization and the economy.
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REFERENCES
Greener, I., 2004. Health service organization in the UK: a political economy approach. Public
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Henriques, S.T. and Kander, A., 2010. The modest environmental relief resulting from the
transition to a service economy. Ecological economics. 70(2). pp.271-282.
Jordan, B., 2006. Public services and the service economy: individualism and the choice
agenda. Journal of social policy. 35(01). pp.143-162.
Maglio, P.P. and et.al.,2006. Service systems, service scientists, SSME, and
innovation. Communications of the AC. 49(7), pp.81-85.
Metcalfe, J.S. and Miles, I. eds., 2012. Innovation systems in the service economy: measurement
and case study analysis (Vol. 18). Springer Science & Business Media.
Miozzo, M. and Grimshaw, D., 2005. Modularity and innovation in knowledge-intensive
business services: IT outsourcing in Germany and the UK. Research Policy. 34(9).
pp.1419-1439.
Paulson, L.D., 2006. Services science: a new field for today's economy. Computer. 39(8). pp.18-
21.
Spohrer, J., Vargo, S.L., Caswell, N. and Maglio, P.P., 2008, January. The service system is the
basic abstraction of service science. In Hawaii International Conference on System
Sciences, Proceedings of the 41st Annua. pp. 104-104.
Taylor, P.J. and et.al., 2009. The UK Space Economy as Practised by Advanced Producer
Service Firms: Identifying Two Distinctive Polycentric City‐Regional Processes in
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pp.700-718.
Wilson, A. and et.al., 2012. Services marketing: Integrating customer focus across the firm (No.
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