Globalization of Services Chapter 14 McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Course Overview Define, describe and classify services (Ch 1,2) Strategic view of service design & development (Ch 3,4) Process view of quality improvement (Ch 6,7,8) Encounter view of customers & employees (Ch 9) VIEWSSPECIAL TOPICSTOOLS Capacity planning & queuing models (Ch 11,12,16) Project management (Ch 15) Information technology (Ch 5) Supply Chains & Outsourcing (Ch 13) Globalization (Ch 14) Facility location (Ch 10) Inventory control (Ch 18) 2

Expansion Strategies Single 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 * McDonald’s * American Express * Red Roof Inns * Accenture 3

Franchising Benefits to the Franchisee Management Training Brand Name National Advertising Acquisition of Proven Business Economics of Scale Issues for the Franchisor Franchisee Autonomy Franchise Contract Conflict Resolution 4

Generic International Strategies Transnational Strategy Global Strategy Multi-domestic Strategy No International Strategy LowHigh Force Towards Local Responsiveness Force Towards Global Integration High Low 5

The Borderless World (Kenichi Ohmae) Customers - information has empowered Competitors - nothing stays proprietary Company - fixed costs require large markets Currency - become currency neutral Country - deprive competitor of home market 6

International Strategic Service Vision (Extension of Chapter 3) Service Delivery System Operating StrategyService ConceptTarget 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? 7

International Strategic Service Vision (Extension of Chapter 3) Service Delivery System Operating StrategyService ConceptTarget 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? 8

International Strategic Service Vision (Extension of Chapter 3) Service Delivery System Operating StrategyService ConceptTarget 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? 9

Hofstede Dimensions Power Distance Index Individualism Masculinity Uncertainty Avoidance Index Long-Term Orientation 10

International Strategic Service Vision (Extension of Chapter 3) Service Delivery System Operating StrategyService ConceptTarget 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? 11

Examples of Global Service Strategies 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 12