Strategies for Globalizing Service Operations By Curtis P. Fitzsimmons & James A. McLaughlin

Services are becoming Globalized Managers can no longer avoid international competition in services  Back room operations have become extremely globalized They need to come up with strategies to compete in the global market of services  Private service exports have stagnated as imports continue to rise

2 Questions managers face when developing a global strategy 1. What are the factors that we can use to classify services in terms of their potential for moving globally? 2. How do these factors translate into strategies for the globalization of specific services?

Factors recommended to consider Customer contact  Problems controlling the customer contact experience in a foreign culture i.e. Euro Disney outside Paris Complexity  Workers are responding to new, more complex tasks  i.e. Indian on–site reps handling interactions w/customer reps. & programmers successfully

Factors continued Information intensity  New telecommunications modes available has helped globalize services  Telecommunications coupled with air freight is key Cultural adaptation  Should you adapt your services to the user’s culture or deliver the product as is? i.e. Benihana Restaurants

Remaining Factors Labor intensity  Less expensive, and well educated  Apte & Mason (1992) report wages of $400 per month for informational professionals overseas Technical capability, legal restrictions, & distance becoming less important Flexibility & public policy  New pools of flexible workers  Policies of governments that want to create employment opportunities

Five Basic Globalization Strategies Multi-country expansion  Moving entire service operation global Strategy is necessary when the service market is defined by the need for customers to travel physically to service facility i.e. Fast food restaurants  Cultural adaptation requires modification i.e. McDonalds in Europe selling beer

Strategies continued Importing Customers  Customers must be willing to travel a long distance and stay for extended amount of time i.e. Disney World, Prestigious University, Club Med  Can be more expensive Follow your customers  Enter markets to serve existing corporate clients overseas Ignores growing middle class of many countries  Must ask oneself Should I design my service to follow my customers or local culture?

Remaining Strategies Service Unbundling  Separating front and back room operations Can lead to minimal real estate investment and savings in labor costs by moving off-shore Beating the Clock  Gaining competitive advantage by giving 24 hr service Time based domestic work rules & regulations are not an issue

Conclusions Strategies can be combined depending on the service i.e. Combining Beat the clock with multi-country expansion Understanding these factors and strategies will lead to better understanding issues pertaining to cultural adaptation of front room services All areas of front and back room management will need some form of adaptation from country to country as services become globalized