Growth and Global Expansion

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Growth and Global Expansion
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Learning Objectives

• Identify the expansion strategy that a service
  firm is using.
• Discuss the nature of franchising.
• Discuss the factors to be considered in
  multinational development.
• Describe and contrast global service strategies.

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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
McDonalds
American Express Red
Roof Inns Accenture
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Franchising

• Benefits to the Franchisee Management
  Training Brand Name National Advertising Acquis
  ition of Proven Business Economics of Scale
• Issues for the Franchisor Franchisee
  Autonomy Franchise Contract Conflict Resolution

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

• The Nature of the Borderless World
  (Triad) Customers - information has empowered
  Competitors - nothing stays proprietary Company
  - fixed costs require large markets Currency -
  become currency neutral Country - deprive
  competitor of home market
• Planning Transnational Operations Cultural
  Transferability Worker Norms Host Government
  Policy

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International Strategic Service Vision
 
 
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Considerations 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
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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?
• 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?

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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.

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Goodwill Industries International

• Who 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.

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Goodwill Industries International Sources of
Revenue
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FedEx Tiger International Acquisition

1. Describe the growth strategy of Federal Express.
   How has this strategy differed from those of its
   competitors?
2. What risks are involved in the acquisition of
   Tiger International?
3. In addition to the question of merging FedEx and
   Flying Tigers pilots, what other problems could
   be anticipated in accomplishing this merger?
4. Suggest a plan of action that Fred Smith could
   have used to address the potential acquisition
   problems given in your answer to question 3.