Growth and Expansion
Globalization of ServicesMcGraw-Hill/Irwin Copyright 2011 by The
McGraw-Hill Companies, Inc. All rights reserved.#Learning
ObjectivesIdentify and differentiate the four domestic growth and
expansion strategies.Discuss the nature of franchising from point
of view of the franchiser and the franchisee.Differentiate between
the three generic international strategies.Discuss the three
factors to be considered in planning transnational
operations.Discuss the five Cs that must be balanced in a
borderless world.Identify and differentiate the five global service
strategies.14-2Expansion Strategies Single Service Multiservice
Focused service: Clustered service:Single * Dental practice *
Stanford UniversityLocation * Retail Store * Mayo Clinic * Family
restaurant * USAA Insurance
Focused network: Diversified network:Multisite * Federal Express
* Nations Bank * McDonalds * American Express * Red Roof Inns *
Accenture
14-3#FranchisingBenefits to the FranchiseeManagement
TrainingBrand NameNational AdvertisingAcquisition of Proven
BusinessEconomics of ScaleIssues for the FranchisorFranchisee
AutonomyFranchise ContractConflict Resolution14-4#Generic
International Strategies
TransnationalStrategy
GlobalStrategy
Multi-domesticStrategy
NoInternationalStrategy
Low
High
Force Towards Local Responsiveness
Force Towards GlobalIntegration
High
Low
14-5Multinational DevelopmentThe Nature of the Borderless World
(Triad)Customers - information has empowered Competitors - nothing
stays proprietaryCompany - fixed costs require large
marketsCurrency - become currency neutralCountry - deprive
competitor of home marketPlanning Transnational OperationsCultural
TransferabilityWorker NormsHost Government Policy14-6#International
Strategic Service Vision
Service DeliverySystem
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?
14-7Considerations in Selecting a Global Service Strategy
Globalization Global Service Strategies Factors Multicountry
Importing Follow Your Service Beating the Expansion Customers
Customers Offshoring Clock Customer Train local Develop foreign
Develop Specialize in Provide Contact 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 Exploit Intensity 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#Goodwill
Industries InternationalService Renewal14-9BackgroundGoodwill
mission is to help people with disabilities lead productive
livesMajor source of revenue from donations of used clothing, house
ware, electronics, and other salable items.Competition for
donations and sales emerging:- Salvation Army- Small consignment
and thrift stores- Aggressive encroachment from for-profit thrift
stores (e.g. Thrift Town)How should the introduction of for-profit
thrifts affect Goodwills decisions about the role of customer
service?
14-10Goodwill Industries Sources of Revenue
14-11Goodwill StrategyAvoid head-to-head competition by using a
niche marketing strategy (e.g. Halloween costumes)Open stores in
high-traffic locationsPolish image to look more like a department
store than a thrift shop.Who are Goodwills customers and how have
their demographics changed over time?How can Goodwill differentiate
itself from the competition?
14-12Customer IssuesDiscontinued pickup service (avoid trash)All
sales are final policy
14-13QuestionsWho are Goodwills customers and how have their
demographics changed over time?How should the introduction of
for-profit thrifts affect Goodwills decisions about the role of
customer service?How can Goodwill differentiate itself from the
competition?Visit http://shopgoodwill.com/ where Goodwill auctions
items of special interest and discuss why this on-line store has
great profit potential.
14-14FedEx: Tiger International AcquisitionDescribe the growth
strategy of Federal Express. How has this strategy differed from
those of its competitors?What risks are involved in the acquisition
of Tiger International?In addition to the question of merging FedEx
and Flying Tigers pilots, what other problems could be anticipated
in accomplishing this acquisition?Suggest a plan of action that
Fred Smith could have used to address the potential acquisition
problems given in your answer to question 3.14-15Topics for
DiscussionRecall that service operations can be classified as
processing people, goods, or information. What challenges are faced
in each category when globalization is undertaken?Chilis, a U.S.
based restaurant chain that offers Mexican food, has its largest
establishment in Monterrey, Mexico. Why is Chilis so successful in
Monterrey?What is the inherent conflict in a franchising
arrangement?What explains the continuing trade surplus in services
for the United States?14-16Interactive Exercise Break the class
into small groups with at least one international student in each
group, if possible. Based on overseas travel, have the group report
on features of day-to-day living that they have found different
from home and worth
emulating.14-17Chart10.650.150.060.050.040.05
Sheet1Donated Goods65%Temporary Services15%Subcontract
Services6%Public Support5%Grants4%Miscellaneous5%
Sheet1
Sheet2
Sheet3
