Growth and Global Expansion

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

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 Arthur Andersen
4
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

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 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.

10
Goodwill Industries International Sources of
Revenue