2Learning ObjectivesRecommend an expansion strategy for a service firm.Discuss the nature of franchising.Discuss the factors to be considered in multinational development.Describe and contrast global service strategies.
3Expansion Strategies Focused service: Clustered service: Single Service MultiserviceFocused service: Clustered service:Single * Dental practice * Stanford UniversityLocation * Retail Store * Mayo Clinic* Family restaurant * USAA InsuranceFocused network: Diversified network:Multisite * Federal Express * Nations Bank* McDonald’s * American Express* Red Roof Inns * Arthur Andersen
4FranchisingBenefits to the Franchisee Management Training Brand Name National Advertising Acquisition of Proven Business Economics of ScaleIssues for the Franchisor Franchisee Autonomy Franchise Contract Conflict Resolution
5Multinational 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 marketPlanning Multinational Operations Cultural Transferability Worker Norms Host Government Policy
6International Strategic Service Vision Target Market Service Concept Operating Strategy Service Delivery System--culture culture labor market technology--industry structure --perceptions --managerial operating premisesof value practices--demographics expectations labor market norms--language and customs--usage patterns
7Considerations in Selecting a Global Service Strategy Globalization Global Service StrategiesFactorsMulticountry Importing Follow Your Service Beating theExpansion Customers Customers Unbundling ClockCustomer Train local Develop foreign Develop Specialize in ProvideContact workers language & foreign front- or back extendedcultural sensitivity customers office service hours ofskills components serviceCustomization Usually a Strategic Re-prototype Meet segments’ More need forstandard opportunity locally needs better reliability &service coordinationComplexity Usually Strategic Modify Opportunity for Timeroutine opportunity operations focus compressionInformation Satellite On site advantage Move May require ExploitIntensity network experienced heavy capital opportunitymanagers investmentsCultural Modify Accommodate Could be Manage worker CommonAdaptation service foreign guests necessary to diversity languageachieve scale necessaryLabor Intensity Reduced Increased labor Hire local Reduced labor Reduced laborlabor costs costs personnel costs costsOther Government Logistics Inadequate Merchandise Capitalrestrictions management infrastructure unbundled investmentscomponent
8Topics for DiscussionFor service firms, how does the operations strategy differ from the marketing strategy?Is the competitive role of operations more important for a service firm than a manufacturing firm?Do you agree that the effect of learning and experience on total unit cost has not been demonstrated in a service situation?Manufacturing firms often grow through product innovation. Are there examples of service firms that practice the equivalent strategy?What is your assessment of the multinational competition in services?
9Goodwill Industries International Who are Goodwill’s customers and how have their demographics changed over time?How should the introduction of for-profit thrifts affect Goodwill’s decisions about the role of customer service?How can Goodwill differentiate itself from the competition?Visit where Goodwill auctions items of special interest and discuss why this on-line store has great profit potential.
10Goodwill Industries International Sources of Revenue