internationalisation of services Flashcards
Define international services
“deeds, performances, efforts, conducted across national boundaries in critical contact with foreign cultures’’
(Clark et al., 1996, p. 15)
What is important from a service context to consider regards the momevement of services ? (6)
- In a services context, we often don’t move physical products
- Experiences, performances, and solutions are not being physically shipped and stored
- More and more informational transactions are conducted through electronic and not physical channels
- Physical proximity between supplier and customer is essential (Hotels, hairdressing and industrial cleaning).
- Services have characteristic of inseparability (cannot be traded separately from their production).
- Many service producers find it necessary to establish a commercial presence in countries they wish to trade in, in order to be close to their customers.
Why expand service firm to international market? (4)
- A firms portfolio management may direct that the company reduce its dependence on one geographical market
(Economic cycles and influence of govt policies) - Environmental factors may make it difficult for a company to exploit its service concept fully in its domestic market
(Forces firm to look overseas) - Firms may have saturated (maturity stage of PLC) the existing domestic market
- Consumers demand the service be internationally available
Example: Car-hire business
Why Expand Service Firm Into International Market? (6)
- Firms may be obliged to follow competitors into new markets to protect own positions elsewhere
- Saturation of domestic markets
- Desire to reduce dependency upon one market
- Spread risks in numerous markets
- Extend product life cycle in new markets
- Stretch a strong brand to new markets
What are factors influencing service internationalisation? (6)
- Exploitation Of Comparative Cost Advantages: An economy will “export” those services that it is particularly well-suited to producing, and
“import” those services in which another country has an advantage - Removal Of Trade Barriers:
Favourable Trade Policies, Compatible Technical Standards, Common Marketing Regulations - Increasing Disposable Household Incomes
Means Greater Consumption Of “Luxury” Services (E.G. Holidays, Overseas Travels) - Cultural Convergence: Homogenization Of International Market Segments: Common Customer Needs Across Countries
- Ability to cater for needs overseas Example: using accountants that are familiar with the country (accounting standards) – employed by the firm
- Advances in information technology, Internet offers access to international markets
What are methods of international trade in services? (3)
- Production of service in one country for consumption in another country: This can only occur for services where production and consumption can be separated. The internet and falling communication costs have created new opportunities E.g. Call centres located thousands of miles away
- Production of a service at home for sale to foreign customers for consumption in the domestic market: Demand for a highly specialised service may be very thinly dispersed, making it uneconomic to take highly specialised staff and equipment to the market. E.g. visiting specialist doctors far away
- Production of a service by a domestic company in a foreign market for foreign consumption
- Domestic producer may only be able to access a foreign market by setting up production facilities in that market
- Production costs may be lower in the organisations own country
- Cost of labour in other country
- A country may possess unique geographical features
Tourism- the must travel to that country to see X
How is people processing affected by international market distribution? (4)
People processing services require direct contact with customers
2. Export service concept
Reach out to new customers or follow existing customers to new locations (or both)
3. Acting alone or in partnership with local suppliers
e.g., chain restaurants, hotels, car rental firms
Import customers
4. Inviting customers from overseas to firm’s home country
e.g., hospitals, resorts etc
5. Transport customers to new locations
Passenger transportation (air, sea, rail, road)
How is possessions processing affected by international market distribution? (4)
Possession processing involves services to customer’s physical possessions
- Repair and maintenance, freight transport may require ongoing local presence
- Is geographically constrained although personnel may visit customer or vise-versa
- Items may also be shipped for repair or maintenance
How is information processing affected by international market distribution? (3)
Information-based services include mental processing services and information processing services
1. Export the service to a local service factory
(Hollywood film shown around the world)
2. Import customers – similar to people processing, e.g. education
3. Export the information via telecommunications and transform it locally
What are the Impact Of Globalisation Drivers On people processing? (5)
- Competition: Simultaneity of production and consumption limits leverage of foreign competitive advantage esp in front-service, but management systems can be globalized.
- Market: People differ economically and culturally, so needs for service and ability to pay may vary. Culture may affect adoption of self-service
- Technology: Use of IT for delivery of supplementary services may be a function of ownership and familiarity with technology.
- Cost: Variable labor rates may impact pricing in labor-sensitive services.
- Government: Social policies (e.g., health) vary widely and may affect labor cost, etc.
Role of women in labor force etc
What are the Impact Of Globalisation Drivers On possession processing? (5)
- Competition: Technology may be key basis for competitive edge
- Market: Level of economic development impacts demand for services to individually owned goods.
- Technology: Need for technology- based service delivery systems depends on possessions requiring service and the cost trade-offs in labor substitution
- Cost: Variable labor rates may favor low-cost locations.
Can equipment be substituted for labor - Government: Policies may decrease/increase cost and encourage/discourage certain activities
What are the Impact Of Globalisation Drivers On information based services? (5)
- Competition: Highly vulnerable to global dominance by competitors with monopoly or competitive advantage in information (e.g. CNN)
- Market: Demand for many services is derived to a significant degree from economic and educational levels. (e.g. demand for entertainment)
- Technology: Ability to deliver core services through remote terminals may be a function of investment in computerization, etc.
- Cost: Major cost elements can be centralized and minor cost elements localized.
- Government: Policies may impact demand and supply and distort pricing
Define culture + what it is (2)
‘The sum of all behavioural norms and patterns collectively shared by a social group’ (Usinier, 1993)
- Is learned, shared, multidimensional and transmitted from onegeneration to the next
- People from different cultures have different behavioural norms
What are other important cultural dimensions? (5)
- Long-Term Orientation
The extent to which a society exhibits a pragmatic future-oriented perspective (fostering virtues like perseverance and thrift), rather than a conventional historic or short-term point of view - Masculinity-Feminism
Pertains to societies in which social gender roles are clearly distinct:
Masculinity side represents a preference in society for achievement, heroism, assertiveness and material reward for success
Feminism - preference for cooperation, modesty, caring for the weak and quality of life - Uncertainty avoidance
Degree to which the members of a society feel uncomfortable with uncertainty and ambiguity - Power Distance
The extent to which the less powerful members of a society expect and accept that power is distributed unequally - Individualism/Collectivism
Pertains with societies in which the ties between individuals are loose: everyone is expected to look after himself or herself and his or her immediate family
Compared with societies that have a more communal orientation (collectivism)
What are the important implications of understanding culture? (6)
Individuals from different markets buy different services but also respond differently to the same service:
- Social structure could render the service obsolete:
- Family structure may be able to produce services
(Example: Caring for children) - Customs may make the service obsolete
Example: staying with friends and family as opposed to staying in a hotel which could be seen as discourteous - Buying processes vary between different cultures
- Role of women in selecting a service may differ in a foreign market compared with the domestic market
- Different approach to service design and promotion needed
