Services

1
Services

• Chapter 15

2
Learning Objectives

• Examine the important role of services
  in international business.
• Understand why trade in services is more complex
  than trade in goods.
• Appreciate the heightened sensitivity required
  for international service success.
• Learn that stand-alone services are becoming more
  important to world trade.
• Examine the competitive advantage of firms in the
  service sector.

3
Differences Between Sales and Goods

• a good is an object, a device, a thing
• a service is a deed, a performance, an effort.

4
Links Between Services and Goods

• Services may complement goods at other times,
  goods may complement services.

5
Stand-Alone ServicesServices Can Compete Against
Goods

• Types of Offerings

• Communication services, reservations, car
  rentals, etc.
• Food and drink, cars, books, etc.

Intangible
Tangible
6
How Services Differ From Goods

• Services are difficult to inventory.
• For services offerings, the time of production is
  close to the time of consumption.
• Services are more often intangible.
• Services are often custom-made.
• Services often require new forms of distribution.

7
The Role of Services in the U.S.

• Since the Industrial Revolution, the United
  States has seen itself as a primary international
  competitor in

The Production of Goods
8
The Role of Services in the U.S.

• In the past decades the U.S. economy has
  increasingly become a

Service Economy
9
The Role of Global Services in the World Economy

• The rise of the service sector is a global
  phenomenon.
• Economies of developing countries generally first
  establish agricultural and manufacturing sectors
  before entering into the services sector.
• As more countries enter the sector, the global
  services business will become more competitive.

10
Global Transformations in the Services Sector

• The rise in services trade is due to changes in
  the environment and in technology.

11
Global Transformations in the Services Sector

• Reduction of government regulation.
• Technological advancement.

12
Problems in Service Trade

• New problems have emerged in the service sector
  together with the increase in the importance of
  service trade.

13
Problems in Service Trade

• Data Collection Problems.
• Data is often sketchy.
• Service transactions are often statistically
  invisible.
• Global Regulations of Services.
• National and economic security issues result in
  barriers to entry.
• Additional problems in the performance of
  services abroadtradition, regulation, etc.

14
Corporations and Services TradeServices and
E-Commerce

• Easy access to
• global markets.
• Little-known firms
• can become known.
• Electronic business
• media occurs at
• different rates in
• different countries.

15
Corporations and Services TradeTypical
International Services

• Banking and consulting services can become
  internationally competitive.
• Insurance services can be sold internationally.
• Communication services have excellent success in
  international operations.
• Institutions successfully offer international
  teaching services.
• Tourism is a major service export.

16
Starting to Offer Services Internationally

• Novices follow the path of the good, if the
  service is delivered in support of a good.
• New marketers search for similar market
  situations abroad if the service is independent
  from goods.

17
Strategic Indications

• Will the service be directed at people or things?
• Will the service act result in tangible or
  intangible actions?

18
Strategic IndicationsServices Aimed at People

• Directed at Peoples Minds
• Arts
• Religion
• Consulting
• Directed at Peoples Bodies
• Healthcare
• Fitness
• Restaurants

19
Strategic IndicationsServices Aimed at Things

• Directed at physical possessions
• Laundry
• Landscaping
• Refueling
• Directed at intangible assets
• Banking
• Research
• Investments

20
Strategic IndicationsGaining Credibility Abroad

• Providing objective verification of their
  capabilities.
• Providing personal guarantees of performance.
• Cultivating a professional image.

21
The Role of Personnel in International Service

• Customer interface is intense.
• Proper provisions must be made for training of
  personnel.
• Major emphasis must be placed on appearance.
• The person delivering the service communicates
  the overall attitude/value of the service
  corporation.

22
Pricing and Financing inInternational Strategy

• Because services cannot be stored, there is
  greater responsiveness to demand fluctuations.
• Greater pricing flexibility must be maintained.
• The intangibility of services makes financing
  more difficult.