- Tertiary level of production refers to the production of services rather than physical goods.
- The services produced can include anything from haircuts to education to banking services.
- This level of production is becoming increasingly important as economies around the world are shifting from manufacturing-based to service-based. In this section, we will discuss the features, importance, benefits, and drawbacks of tertiary level production.
Features of Tertiary Level Production:
- Intangibility: Services produced in the tertiary level of production are intangible, meaning they cannot be physically touched or held.
- Perishability: Services cannot be stored and must be consumed immediately or within a short period of time.
- Heterogeneity: Services are often customized to meet the specific needs of each customer.
- Labor-Intensive: Tertiary level production relies heavily on skilled labor to provide services.
- Customer Involvement: Customers are often involved in the production process, and their satisfaction is crucial to the success of the business.
Importance of Tertiary Level Production:
- Contribution to GDP: Tertiary level production is a major contributor to the Gross Domestic Product (GDP) of many countries.
- Employment: The service industry provides employment opportunities to millions of people around the world.
- Innovation: The service industry is constantly evolving and adapting to new technologies and consumer trends, leading to innovation and new business opportunities.
Benefits of Tertiary Level Production:
- Flexibility: Tertiary level production is often more flexible than manufacturing-based production, allowing businesses to quickly adapt to changing customer needs.
- Customization: Services can be customized to meet the specific needs of each customer, leading to increased customer satisfaction and loyalty.
- Efficiency: Tertiary level production can be more efficient than manufacturing-based production since services can be provided on demand, without the need for inventory.
Drawbacks of Tertiary Level Production:
- Perishability: The perishable nature of services can make it difficult for businesses to maintain a steady stream of revenue.
- Labor Costs: Tertiary level production relies heavily on skilled labor, which can be expensive for businesses.
- Difficulty in Measuring Quality: The quality of services is often subjective and difficult to measure, making it challenging for businesses to ensure consistent quality.
