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Strategies for Globalizing Service Operations

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Title: Strategies for Globalizing Service Operations


1
Strategies for GlobalizingService Operations
  • Curtis P. McLaughlin
  • University of North Carolina, USA
  • James A. Fitzsimmons
  • University of Texas, USA
  • Presented by David Truong

Article 17
2
Objective
  • This paper outlines approaches to considering two
    questions that managers face when developing a
    global service 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?

3
Factors Affecting Service Globalization
  • The most useful dimensions for classifying
    service operations are
  • Customer contact
  • Customization
  • Complexity
  • Information intensity
  • Cultural adaptation
  • Labor intensity
  • Other factors

4
Description of Factors
  • Customer contact
  • customer contact is not a factor where routine
    back office operations are involved.
  • the globalization of front office operations with
    its verbal customer contact still depends heavily
    on cultural adaptation of the service.
  • Customization
  • to learn what the customer needs and to adapt the
    service accordingly.
  • when taking a high customer contact service
    overseas, language and culture can create
    barriers to effective communication.

5
Description of Factors
  • Complexity
  • one path makes existing work routine.
  • the other path accepts mundane work but provides
    the opportunity to develop skills that ultimately
    lead to more interesting and complex work.
  • Information intensity
  • there is little doubt that new telecommunications
    modes have helped the globalization of services.
  • information-intensive services, such as financial
    services, travel reservations, and technical
    publishing, have led the way in globalization.

6
Description of Factors
  • Cultural adaptation
  • local attitudes towards work is a key attribute
    involved in the decision to relocate services.
  • because services relocate back office operations
    to small towns and cities, workers may accept low
    wage structures, if they are in line with that of
    the surrounding community.
  • Labor intensity
  • many of the back office operations moving
    offshore are doing so to acquire less expensive,
    but well-educated labor.
  • these activities can be supported by major
    investments in communications and computer
    systems that facilitate the transfer of
    information into and out of the process.

7
Description of Factors
  • Other factors
  • technical capability, legal restrictions and
    distance, are becoming less and less important.
  • flexibility and public policy are important.

8
Global Service Strategies
  • Five basic globalization strategies are
    identified
  • multi-country expansion
  • importing customers
  • following your customers
  • service unbundling
  • beating the clock

9
Description of Strategies
  • Multi-country expansion
  • this strategy is necessary when the service
    market is defined by the need for customers to
    travel physically to the service facility.
  • Importing customers
  • customers must be willing to travel a long
    distance and stay for an extended time.

10
Description of Strategies
  • Follow your customers
  • most foreign service companies entering China are
    not there to serve the local Chinese markets so
    much as to follow their corporate clients
    overseas and continue to serve them.
  • Service unbundling
  • involves separating out pieces of the value-added
    chain and focusing on those parts not requiring
    face-to-face interactions.

11
Description of Strategies
  • Beating the clock
  • describes the competitive advantages gained owing
    to the fact that one can bypass the constraints
    of the clock and the constraints of domestic time
    zones, including time-based domestic work rules
    and regulations.
  • by combining the demand from multiple time zones,
    it could improve the productivity of reservation
    clerks and telemarketers.

12
Conclusions
  • It is up to managers and management scholars to
    study this phenomenon and to provide useful
    analyses of it.
  • There exists an interesting array of factors to
    study, which are the factors of service
    globalization, and includes strategic
    requirements, flexibility, and public policy
    issues.
  • Within these factors there is great potential for
    managerial creativity and for new research topics
    and research hypotheses, especially for
    understanding better the issues pertaining to the
    cultural adaptation.
  • The benefits of globalization for domestic
    service managers include tapping overseas markets
    with large populations of rapidly expanding
    middle classes and retarding the growth rate of
    potential foreign competitors.
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