INTERNATIONALIZATION OF SERVICES

Globalization of a service company brings many issues to the fore. Issues whether to
standardize a service or differentiate it becomes a major hitch. Factors like management of the
personnel, cultural differences, economic performance of the area, and level of quality should be
of a higher concern. As companies globalize, the importance of attention to customers need
remains paramount. Operating in different regions of the world, a service company often
discovers that the mix of services that must be designed in order to be successful including
sometimes the nature of core and peripheral products themselves may significantly differ from
one location to another. In fact it can be true even in the case of transnational service provided
internationally, although one might naturally believe that the mix of this type of service would
be identical everywhere it is offered. If we look briefly at the expansion of the express delivery
service in Europe, we find that one of the reasons DHL has been so successful is not because it
can mobilize more capital. When Federal Express and UPS, for example began to enter the
European market, the first factor for them was the need for capital. TNT, an Australian-based
company, spent about $2bn to acquire 72 aircraft. In the early 1980s when FedEx began building
a delivery system within Europe, they had no doubt it would lead to tremendous success, given
the growth potential of the market.
The Uppsala model proposed by Johansson and Vahlne is arguably one of the most
significant contributions to internationalization literature, even though its validity is challenged
by the appearance of bom-global businesses and international network effects. In particular, it
does not effectively describe services internationalization because service organizations often
cannot separate the service from the location in which it is to be provided, limiting their market
entry-mode options.
An exploratory research is conducted on Australian Service company internationalization to
China and it is concluded that there is a high resource commitment entry modes through which
many participants entered the Chinese market without the experience levels predicted by the
Uppsala internationalization model. Time in market was found to have little impact on entry-
mode selection or changes to entry mode. The implications highlighted by the research are
The nature of the service is an important factor in determining a suitable entry mode
The entry mode behaviors of non-service organizations are different from those of service
organizations.
Entry modes altered over time and reflected the participants increased knowledge of the
local market and internationalization.
Therefore, service organization should select entry mode they select as a short term strategy
and acknowledge that other entry modes may become more suitable in the future. Higher
resource commitment and control entry modes will become more attractive as the
international service organization becomes more successful in that market, increases its
knowledge of the market, and becomes more risk tolerant.

EXPANSION MODE AND MANAGEMENT OF MATURITY
To establish new operations in various countries and to coordinate activities at the global
level many new questions arise. The success also depends on how a company builds a mature
network of branches or partners which fit in with its global ambitions. Also the maintenance of
its competitive position, keeping its best people on board and controlling the cost also become
major challenges. One can buy existing companies, form a franchise or setup a joint venture. As
an industry becomes global so does its labor market. To retain key staff worldwide, it is
important to maintain a strong corporate culture. Airlines make the strongest possible use of
corporate identity from co-ordinated uniforms to interior colors and design of the aircraft. Not
only does this provide differentiation but also internal focus for the staff. As for preserving the
loyalty of team members and human resource, issues of geographic mobility of the executives,
of-homogeneity or not- of- the remuneration systems, evaluation procedures and training
programs must all be considered in the process of designing international strategies of large
service companies
TECHNOLOGICAL PERSPECTIVE:
Technological taxonomy of services is the persuasive influence of information
technology on the services. Information technology refers to the interconnected set of
technological and organizational innovations such as electronic computers, software engineering,
control systems, integrated circuits and telecommunications. The taxonomy identifies the three
groups namely supplier-dominated sectors, scale intensive physical networks sectors and
information network sectors, science based and specialized suppliers sectors. Increased
digitalization of information and processing by microelectronics and advancements in neural
networks and other knowledge technologies are the two trends which account for the growing
application of information technology in the service sectors. Due to the effective handling of the
databases, CRM systems have been a huge development for recording the information of the
consumers in the service sector.