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Globalization of Services

McGraw-H il l/I rwin Copyri ght 2011 by The McGraw-H il l Companies, I nc. Al l ri ghts reserved.

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Learning Objectives Identify and differentiate the four domestic growth

and expansion strategies.

Discuss the nature of franchising from point of viewof the franchiser and the franchisee.

Differentiate between the three generic internationalstrategies.

Discuss the three factors to be considered in planningtransnational operations.

Discuss the five Cs that must be balanced in a

borderless world.

Identify and differentiate the five global servicestrategies. 14-2

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Expansion StrategiesSingle Service Multiservice

Focused service: Clustered service:Single * Dental practice * Stanford University

Location * Retail Store * Mayo Clinic

* Family restaurant * USAA Insurance

Focused network: Diversified network:

Multisite * Federal Express * Nations Bank

* McDonalds * American Express

* Red Roof Inns * Accenture

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Franchising Benefits to the Franchisee

Management Training

Brand NameNational AdvertisingAcquisition of Proven BusinessEconomics of Scale

Issues for the FranchisorFranchisee AutonomyFranchise ContractConflict Resolution

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Generic International

StrategiesTransnational

StrategyGlobal

Strategy

Multi-domestic

Strategy

No

International

Strategy

Low High

ForceTowardsLocal Responsiveness

ForceTowards

Global

Integration

High

Low

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Multinational Development The Nature of the Borderless World (Triad)

Customers - information has empoweredCompetitors - nothing stays proprietaryCompany - fixed costs require large marketsCurrency - become currency neutralCountry - deprive competitor of home market

Planning Transnational OperationsCultural TransferabilityWorker NormsHost Government Policy

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International Strategic Service

VisionService Delivery

System

Operating Strategy Service Concept Target Market

Segments

Available technology?

Infrastructure?

Utility service?

Labor market norms and

customs?

Space availability?

Interaction with suppliers?

Educating customers?

Appropriate managerial

practice?

Participative?

Autocratic?

Labor market institutions?

Government regulations?

Unions?

Host government policies?

Language?

Front office?

Back office?

What are customer

expectations?

Perception of value?

Service ethic?

Service encounter?

Language?

Acceptance of self-serve?

What are the usage

patterns?

Cultural transferability?

What are the market

segments?

Domestic?

Multinational?

Tourist?

What are important cultural

differences?

Language?

Life style?

Disposable income?

What are the workforce

demographics?

Skills?

Age distribution?

Attitudes?

Work ethic?

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Considerations in Selecting a

Global Service StrategyGlobalization Global Service Strategies

FactorsMulticountry Importing Follow Your Service Beating the

Expansion Customers Customers Offshoring Clock

Customer Train local Develop foreign Develop Specialize in ProvideContact workers language & foreign back- office extended

cultural sensitivity customers office service hours of

skills components service

Customization Usually a Strategic Re-prototype Quality and More need for

standard opportunity locally coordination reliability &

service coordination

Complexity Usually Strategic Modify Opportunity for Time

routine opportunity operations focus compression

Information Satellite On site advantage Move Training ExploitIntensity network experienced investments opportunity

managers

Cultural Modify Accommodate Could be Cultural Common

Adaptation service foreign guests necessary to understanding language

achieve scale necessary

Labor Intensity Reduced Increased labor Hire local Reduced labor Reduced labor

labor costs costs personnel costs costs

Other Government Logistics Inadequate Home office Capital

restrictions management infrastructure employee investments

morale 14-8