1. Ch.14 Growth and Global Expansion McGraw-Hill/IrwinCopyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.

2. 14-2 Learning Objectives 1. Domestic growth strategies. 2. Franchising: franchiser, franchisee. 3. International strategies, 5C in a borderless world. 4. Global service Strategies

3. 14-3 1. Expansion Strategies (Risks) Single Service Multiservice Focused service: Clustered service: Single Location * Family restaurant * USAA Insurance Focused network: Diversified network: Multisite * Federal Express * American Express * McDonald’s e.g. Concentric diversification!

4. 14-4 2. 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

5. 14-5 3. Generic International Strategies Transnational Strategy Global Strategy Multi- domestic Strategy No International Strategy LowHigh Force Towards Local Responsiveness Force Towards Global Integration High Low

6. 14-6 3. Globalization of Services The Borderless World (Kenichi Ohmae, 1990), 5C: Customers (Triad), Competitors, Company, Currency, Country It may be offset by others! Sony: Global localization! McDonald in Germany: Beer! Mr. Donut’s in Japan: changed everything but logo!

7. 14-7 3. Planning Transnational Operations 1. Cultural Transferability: Commercial bank in Middle East (Muslim) 2. Worker Norms: Cultural Dimensions, Hofstede, 2004 3. Host Government Policy: Labor-intensive services: ok. Information? Restrictions in China!

8. 14-8 4. Global service Strategies (Risks) 1. Multicountry Expansion: standard, routine. 2. Importing Customers: Develop foreign language & cultural sensitivity. 3. Follow Your Customers: Move experienced managers. 4. Service Offshoring: Home office employee morale. 5. Beating the Clock: Provide extended hours of service, Common language necessary. e.g. India.

9. 14-9 Topics for Discussion Recall that service operations can be classified as processing people, goods, or information. What challenges are faced in each category when globalization is undertaken? Chili’s, a U.S. – based restaurant chain that offers Mexican food, has its largest establishment in Monterrey, Mexico. Why is Chili’s 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?

10. 14-10 Interactive 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.