Strategies for Globalizing Service Operations

1. Strategies for Globalizing Service Operations By Curtis P. Fitzsimmons & James A. McLaughlin

2. Services are becoming Globalized • Managers can no longer avoid international competition in services • Back room operations have become extremely globalized • They need to come up with strategies to compete in the global market of services • Private service exports have stagnated as imports continue to rise

3. 2 Questions managers face when developing a global strategy • What are the factors that we can use to classify services in terms of their potential for moving globally? • How do these factors translate into strategies for the globalization of specific services?

4. Factors recommended to consider • Customer contact • Problems controlling the customer contact experience in a foreign culture • i.e. Euro Disney outside Paris • Complexity • Workers are responding to new, more complex tasks • i.e. Indian on–site reps handling interactions w/customer reps. & programmers successfully

5. Factors continued • Information intensity • New telecommunications modes available has helped globalize services • Telecommunications coupled with air freight is key • Cultural adaptation • Should you adapt your services to the user’s culture or deliver the product as is? • i.e. Benihana Restaurants

6. Remaining Factors • Labor intensity • Less expensive, and well educated • Apte & Mason (1992) report wages of $400 per month for informational professionals overseas • Technical capability, legal restrictions, & distance becoming less important • Flexibility & public policy • New pools of flexible workers • Policies of governments that want to create employment opportunities

7. Five Basic Globalization Strategies • Multi-country expansion • Moving entire service operation global • Strategy is necessary when the service market is defined by the need for customers to travel physically to service facility • i.e. Fast food restaurants • Cultural adaptation requires modification • i.e. McDonalds in Europe selling beer

8. Strategies continued • Importing Customers • Customers must be willing to travel a long distance and stay for extended amount of time • i.e. Disney World, Prestigious University, Club Med • Can be more expensive • Follow your customers • Enter markets to serve existing corporate clients overseas • Ignores growing middle class of many countries • Must ask oneself • Should I design my service to follow my customers or local culture?

9. Remaining Strategies • Service Unbundling • Separating front and back room operations • Can lead to minimal real estate investment and savings in labor costs by moving off-shore • Beating the Clock • Gaining competitive advantage by giving 24 hr service • Time based domestic work rules & regulations are not an issue

10. Conclusions • Strategies can be combined depending on the service • i.e. Combining Beat the clock with multi-country expansion • Understanding these factors and strategies will lead to better understanding issues pertaining to cultural adaptation of front room services • All areas of front and back room management will need some form of adaptation from country to country as services become globalized