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Global Service Expansion: Franchise and Borderless Strategies

Explore franchising as an expansion strategy with benefits for franchisees, addressing operational issues, generic global strategies, and borderless world challenges. Learn about global service strategies for multi-country expansion, customer importation, time zone optimization, and more.

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Global Service Expansion: Franchise and Borderless Strategies

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  1. SERVICE OPERATIONS GLOBALISATION

  2. GROWTH STRATEGIES

  3. FRANCHISING • Expand using own resources • Franchising is an alternative • Independent owner operators bound by a contractual agreement • Initial investment varies • Market or region is specified • Franchiser dictates operating policies - Purchase source/quality - No deviation from product - Franchise fee

  4. BENEFITS : FRANCHISEE • Management training • Brand name • National advertising • Acquisition of proven business • Economies of scale

  5. GLOBAL DEMAND • Service from centralized location • Open service centers in new locations

  6. OPERATIONAL ISSUES • Government regulations • Bureaucratic red tape to protect local operators • Tight centralized control • Working hours - 8 hrs with minimum break - 12 hours with long mid day break

  7. OPERATIONAL ISSUES • Language • Culture • Operating standards • Local firms to handle marketing & deliveries

  8. GENERIC STRATEGIES

  9. GLOBAL STRATEGIES • World is one large market • Homogenous approach • Integrated across countries • Strong brand name /special identity • Example : Citibank allows customers to do banking anyway, anywhere & anytime

  10. MULTIDOMESTIC • Operation in each country is autonomous serving the needs of the local country • Staffed /manned by local nationals • Confederation

  11. TRANSNATIONAL • Service is homogenous : Fast food chains offering local menus • R&D (Specialized expertise) centralized • Centralized procurement

  12. BORDERLESS WORLD • Customer :Availability of information • Competitors : - Nothing stays proprietary for long - First mover - Timely delivery - Operating with partners (not alone)

  13. BORDERLESS WORLD • Company : Reduce unit fixed cost • Airlines & communications • Huge investments in equipments & facilities • Focus shifting from variable cost to fixed cost • Search for a larger market

  14. BORDERLESS WORLD • Currencies • Fluctuating exchange rates • Hedging & options • Forced in to global expansion to become currency neutral

  15. BORDERLESS WORLD • Country • Economic downturn in one country offset by operations in other countries • Compete in competitors country • Global localization • Understand the unique service needs • Local units to be able to modify to meet the local needs

  16. TRANSNATIONAL OPERATIONS • Cultural transferability : • Global standardization vs local customization (Banking – Islamic countries) • Language barrier • Behavioral customs ( non smoking zones in Restaurants)

  17. TRANSNATIONAL OPERATIONS • Worker Norms : • Power Distance Index : equality • Individualism : Focus on individual achievement • Masculinity : • Uncertainty Avoidance index : Tolerance • Long Term Orientation : Long term commitment & respect for tradition ( strong work ethic & reward in long term). Change takes time

  18. TRANSNATIONAL OPERATIONS • Host Government policies • Repatriation of profits • Entry barrier for certain operations (insurance) • Delays in licensing agreements • Foreign airlines landing rights • Preferential treatment to local shippers • Nations may perceive threat (economic & cultural). • Labor intensive services welcome : creates more job opportunities

  19. GLOBAL SERVICE STRATEGIES • Efficient delivery system • High quality product • Flexible cost structure

  20. GLOBAL SERVICE STRATEGIES • Multi country expansion • Importing customers • Following your customers • Service offshoring • Beating the clock

  21. GLOBAL SERVICE STRATEGIES Multi country expansion • Customer travels physically to the service facility • Franchisee route • Clone the service rapidly in multiple locations • Customer contact & front office requires sensitivity to local culture • Recruit & train locals • Cultural adaptation a major issue

  22. GLOBAL SERVICE STRATEGIES Importing customers • Multi service single-site strategy • Customer to travel long distance or substitute travel with communication tools • Example : Universities Medical centers Places of tourist attraction

  23. GLOBAL SERVICE STRATEGIES Following your customers • Follow corporate clients & provide service in other countries • Attracting local business may need modification in the service package • Examples : Travel agents Consultants Auditors Hotel chains

  24. GLOBAL SERVICE STRATEGIES Service offshoring • Global service strategy • Back office operations to cheaper locations • BPO • Examples : Customer service, Financial analysis, software development

  25. GLOBAL SERVICE STRATEGIES Beating the clock • Bypass the constraint of domestic time zones, working hour regulations • Combining the demand from multiple time zones can improve productivity of Reservation clerks • Example : Telemarketing

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