• 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:

  1. Intangibility: Services produced in the tertiary level of production are intangible, meaning they cannot be physically touched or held.
  2. Perishability: Services cannot be stored and must be consumed immediately or within a short period of time.
  3. Heterogeneity: Services are often customized to meet the specific needs of each customer.
  4. Labor-Intensive: Tertiary level production relies heavily on skilled labor to provide services.
  5. 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:

  1. Contribution to GDP: Tertiary level production is a major contributor to the Gross Domestic Product (GDP) of many countries.
  2. Employment: The service industry provides employment opportunities to millions of people around the world.
  3. 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:

  1. Flexibility: Tertiary level production is often more flexible than manufacturing-based production, allowing businesses to quickly adapt to changing customer needs.
  2. Customization: Services can be customized to meet the specific needs of each customer, leading to increased customer satisfaction and loyalty.
  3. 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:

  1. Perishability: The perishable nature of services can make it difficult for businesses to maintain a steady stream of revenue.
  2. Labor Costs: Tertiary level production relies heavily on skilled labor, which can be expensive for businesses.
  3. Difficulty in Measuring Quality: The quality of services is often subjective and difficult to measure, making it challenging for businesses to ensure consistent quality.

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