1. Growth and Global Expansion

2. Learning Objectives
Recommend 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.

3. Expansion Strategies Focused service: Clustered service:
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 * Arthur Andersen

4. 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. 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 Multinational Operations Cultural Transferability Worker Norms Host Government Policy

6. International Strategic Service Vision
Target Market Service Concept Operating Strategy Service Delivery System
--culture culture labor market technology
--industry structure --perceptions --managerial operating premises
of value practices
--demographics expectations labor market norms
--language and customs
--usage patterns

7. Considerations in Selecting a Global Service Strategy
Globalization Global Service Strategies
Factors
Multicountry Importing Follow Your Service Beating the
Expansion Customers Customers Unbundling Clock
Customer Train local Develop foreign Develop Specialize in Provide
Contact workers language & foreign front- or back extended
cultural sensitivity customers office service hours of
skills components service
Customization Usually a Strategic Re-prototype Meet segments’ More need for
standard opportunity locally needs better reliability &
service coordination
Complexity Usually Strategic Modify Opportunity for Time
routine opportunity operations focus compression
Information Satellite On site advantage Move May require Exploit
Intensity network experienced heavy capital opportunity
managers investments
Cultural Modify Accommodate Could be Manage worker Common
Adaptation service foreign guests necessary to diversity 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 Merchandise Capital
restrictions management infrastructure unbundled investments
component

8. Topics for Discussion
For 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?

9. Goodwill 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.

10. Goodwill Industries International Sources of Revenue