A second way to classify organizations is according to their output of prod¬ucts, the goods or services they produce. Manufacturing organizations use raw materials to produce goods, physical items such as pencils, televisions, and candy bars. Goods are tangible, so they can be touched, seen, measured, and otherwise physically evaluated by customers. Further, the cus¬tomer does not generally have to be present during production; goods can be manufactured in a central location and then stored until needed or shipped to a location where customers can obtain them. In contrast, service organizations produce services, activities that provide some value to the recipient such as financial, legal, medical, or recreational benefits. Services such as education and health care are intangible, so they cannot be physically examined before they are produced. Moreover, services are generally produced at the same time the cus¬tomer uses them, so they cannot he stored.
Many organizations offer products that are, in reality, a combination of goods and services. Manufacturing organizations often bundle services along with the tangible items they produce, just as service organizations frequently include goods in their service offerings. Car manufacturers, including Ford and Mazda, offer services such as financing for car buyers; restaurants such as Olive Garden are service businesses because they take orders and prepare meals, but their menu items are tangible goods. The combination of goods and services produced by manufacturing and service organizations determines the unique challenges faced by their managers.
Many organizations offer products that are, in reality, a combination of goods and services. Manufacturing organizations often bundle services along with the tangible items they produce, just as service organizations frequently include goods in their service offerings. Car manufacturers, including Ford and Mazda, offer services such as financing for car buyers; restaurants such as Olive Garden are service businesses because they take orders and prepare meals, but their menu items are tangible goods. The combination of goods and services produced by manufacturing and service organizations determines the unique challenges faced by their managers.
