quiz 3 (chapter 10) Flashcards
(35 cards)
whats chapter 10 about? what are the 4 classifications of service? whats franchising? what else does the chapter address?
globalization of services;
This chapter explores strategies for service growth through multisite and multiservice expansion, classifying services into four types: focused service, focused network, clustered service, and diversified network.
It highlights franchising as a key method for multisite expansion and outlines the roles of franchisees and franchisers.
The chapter also addresses the global nature of service markets and the unique challenges of international expansion, including cultural differences and protectionist policies.
What are the two fundamental service growth strategies?
Multisite expansion (focused network) and multiservice expansion (clustered service).
What is a focused service?
A single service offered at a single location, often built around a unique concept or talent.
Give an example of a focused service.
A fine restaurant with a renowned chef, such as Chez Panisse in Berkeley.
What is a focused network?
A single service offered at multiple sites, usually through franchising (e.g., McDonald’s).
What is the main risk of a focused service?
It’s vulnerable to local economic conditions and competitive entry.
What is a clustered service?
Many services offered at a single location (e.g., hospitals, universities).
What is the main risk of a clustered service?
Losing focus on the core service and managing facility complexity.
What is concentric diversification?
Expansion into related services that complement the core service (e.g., convenience stores adding car washes).
What is a diversified network?
A combination of multisite and multiservice strategies (e.g., United Airlines acquiring hotels and car rentals).
What is franchising?
A method of replicating a service through investor-owners bound by contracts ensuring standardized operations.
Benefits of being a franchisee include?
Management training, brand recognition, national advertising, economies of scale, and lower risk of failure.
Key issues for franchisers?
Franchisee autonomy, contract fairness, and conflict resolution mechanisms.
What is “Beating the Clock” in global service strategy?
Leveraging global time zones to offer 24-hour service or speed up project timelines.
What is service offshoring?
Sending back-office tasks to foreign countries for labor cost savings.
What does “Follow your customers” mean?
Expanding globally to continue serving existing corporate clients abroad.
What are the five Cs of strategic planning in a borderless world?
Customers, Competitors, Company, Currency, and Country.
What are the three generic international strategies?
Global, Multidomestic, and Transnational strategies.
What challenges does globalization of services face?
cultural transferability, labor market norms, and host-government policy.
Q: What drives the need for expansion after a service innovation is accepted?
Increasing customer demand and pressure to protect the service from competitors by building barriers to entry.
What are the four fundamental expansion strategies shown in Figure 10.1?
Focused Service, Focused Network, Clustered Service, and Diversified Network.
Focused service: What is a focused service? What’s an example of a focused service? How do focused services handle increased demand? What risks are associated with focused services? Why are focused services often tied to a single location?
Q: What is a focused service?
A: A single-location service delivering a unique, well-defined service concept.
Q: What’s an example of a focused service?
A: Federal Express starting with an overnight delivery hub in Memphis.
Q: How do focused services handle increased demand?
A: By expanding the facility and adding staff.
Q: What risks are associated with focused services?
A: Dependence on local economic conditions and vulnerability to new competition.
Q: Why are focused services often tied to a single location?
A: Due to unique talent or site-specific advantages (e.g., a renowned chef or special geography).
Focused Network: What is a focused network strategy? Why is franchising often used in a focused network strategy? What is the “cookie-cutter” approach? What major shift happens in management as locations increase? What financial benefit does multisite expansion offer?
Q: What is a focused network strategy?
A: Expanding a single service concept across multiple sites, often via franchising.
Q: Why is franchising often used in a focused network strategy?
A: It enables rapid expansion using franchisee investment and ensures consistency.
Q: What is the “cookie-cutter” approach?
A: Replicating service units with standardized facilities, training, and manuals.
Q: What major shift happens in management as locations increase?
A: Control shifts from informal to formal systems using communication and planning tools.
Q: What financial benefit does multisite expansion offer?
A: Risk containment from geographic diversification (e.g., La Quinta during oil bust).
Clustered service: What is a clustered service? What is a key characteristic of clustered services? What is a risk of multiservice expansion? What is concentric diversification?
Q: What is a clustered service?
A: Offering a variety of services at a single location (e.g., hospitals, universities, USAA).
Q: What is a key characteristic of clustered services?
A: Customers either travel to the location or use remote communication.
Q: What is a risk of multiservice expansion?
A: Losing focus on the core service or failing to meet the needs of different market segments.
Q: What is concentric diversification?
A: Expanding into services that complement the core offering and create economies of scope.
