Lecture 1
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Transcript of Lecture 1
SERVICE OPERATIONS
GLOBALISATION
GROWTH STRATEGIES
SINGLE SERVICE MULTISERVICE
Focused service Clustered serviceSINGLE LOCATION * Dental Practice * University
* Retail store * Apolo clinic* Family restaurant * Insurance
Focused network Diversified networkMULTILOCATION * Federal express * Banks
* McDonald's* Hotel chains
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
BENEFITS : FRANCHISEE
• Management training
• Brand name
• National advertising
• Acquisition of proven business
• Economies of scale
GLOBAL DEMAND
• Service from centralized location
• Open service centers in new locations
OPERATIONAL ISSUES
• Language
• Culture
• Operating standards
• Local firms to handle marketing & deliveries
GENERIC STRATEGIES
GLOBAL STRATEGY
TRANSNATIONAL STRATEGY
HIGH
NO INERNATIONAL STRATEGY
MULTIDOMESTIC STRATEGY
LOW
LOW HIGH
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
MULTIDOMESTIC
• Operation in each country is autonomous serving the needs of the local country
• Staffed /manned by local nationals
• Confederation
TRANSNATIONAL
• Service is homogenous : Fast food chains offering local menus
• R&D (Specialized expertise) centralized
• Centralized procurement
BORDERLESS WORLD
• Customer :Availability of information
• Competitors : - Nothing stays proprietary for long - First mover - Timely delivery - Operating with partners (not alone)
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
BORDERLESS WORLD
• Currencies
• Fluctuating exchange rates
• Hedging & options
• Forced in to global expansion to become currency neutral
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
TRANSNATIONAL OPERATIONS
• Cultural transferability :
• Global standardization vs local customization (Banking – Islamic countries)
• Language barrier
• Behavioral customs ( non smoking zones in Restaurants)
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
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
GLOBAL SERVICE STRATEGIES
• Efficient delivery system
• High quality product
• Flexible cost structure
GLOBAL SERVICE STRATEGIES
• Multi country expansion
• Importing customers
• Following your customers
• Service offshoring
• Beating the clock
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
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
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
GLOBAL SERVICE STRATEGIES Service offshoring
• Global service strategy
• Back office operations to cheaper locations
• BPO
• Examples : Customer service, Financial analysis, software development
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
Service Definitions
Services are deeds, processes, and performances.
Valarie Zeithaml & Mary Jo Bitner
A service is a time-perishable, intangible experience performed for a customer acting in the role of a co-producer.
James Fitzsimmons
Definition of Service Firms
Service enterprises are organizations that facilitate the production and distribution of goods, support other firms in meeting their goals, and add value to our personal lives.
James Fitzsimmons
Role of Services in an Economy
The Four Realms of an Experience
Customer Participation
Passive Active
Environmental
Absorption Entertainment (Movie)
Education (Language)
Relationship Immersion Esthetic (Tourist)
Escapist (ScubaDiving)