GLOBALIZATION OF SERVICES

services. people.The Growth in Global Service Markets • Globalization refers to the free movement of goods. capital and technology across various countries in the world • WTO ( World Trade Organization) • GATT ( General Agreement on Tariffs and Trade) .

Services: Rules for growth and investment The General Agreement on Trade in Services has few elements: General obligations and disciplines •Total coverage •Most-favoured-nation (MFN) treatment •Commitments on market access and national treatment •Transparency •International payments and transfers •Progressive liberalization .

telecommunications. tourism. banking.g. foreign banks setting up operations in a country).g. fashion models or consultants).g. officially “consumption abroad” •A foreign company setting up subsidiaries or branches to provide services in another country (e. professional services. Electronic fund Transfer).g. etc.GATT Agreement on services The agreement covers all internationally-traded services — for example. officially “presence of natural persons” . tourism). officially known as “crossborder supply” •Consumers or firms making use of a service in another country (e. It also defines four ways (or “modes”) of trading services: •Services supplied from one country to another (e. international telephone calls. officially “commercial presence” •Individuals travelling from their own country to supply services in another (e.

Factors Influencing Globalization • • • • • • • Change in social factors Changes in technology Changes in political and legal conditions Competition in the market Competitive advantage Regulations in home country Lack of demand in home country .

. Consumer Service 3. as they seek to serve new clients and explore their own unique competitive advantage. Producer Service 2.International Marketing of Services Service firms are increasingly investing overseas on their own account. Outward Expansion: Chinese e-commerce company Alibaba announced that it plans to bring its PayPalpayment platform Alipay to Taiwan during the first half of next year. Such advantage takes several forms: 1.

These highly specialized firms sell what economist call producer services. Consumer services may include technical support. warranty registration. maintenance. something necessary for a persons survival . mediati on with other vendors.Consumer Services: The range of services provided to consumers of a product by the company that produces. Large firms today buy (contract out) these services from smaller highly specialize firms. and engineering) "in house". or supports the product. or other service depending on the nature of the product purchased by the customer. problem notifications. Most large firms in the 1970s began to "unbundled" these services in an effort to become more economically efficient. sanitation. Producer services: In the older economic order most large firms produced all their services (such as: advertising. markets. auditing. business consulting. account management.

Overseas Market Entry Decisions • Exporting:       Construction. construct and equip a manufacturing/ business/ service facility and turn the project over to the purchaser when it is ready for operation for a remuneration. Ex.website) • Turnkey projects: It is a contract under which a firm agrees to fully • Licensing • Franchising . and engineering Banking and financial services Insurance services Legal and accounting services Computer and data services Teaching services design. design. Real Estate .

” Ex. A restaurant partners with a hotel to offer a special weekend package with dinner and an overnight stay and they share the cost of a mailer.Continue… •Joint ventures •Strategic alliance( Lenovo and Asiainfo) •Wholly owned subsidiaries •Mergers and acquisitions •Piggyback: A low cost market entry strategy in which two or more firms represent one another’s complementary (but non-competing) products in their respective markets. .

Internet) •Growth of chains and franchising •Pressures to improve productivity and quality •More strategic alliances •Innovative hiring practices .g. digitization. speed. affluence. desire for experiences) • Manufacturers offer service •Advances in IT (e.g.Recent Trends •Off-shoring Service • Social Changes (e. lack of time... wireless.

Internet-based business models .•Create relational databases about customer needs and behavior for insights •Leverage employee capabilities and enhance mobility •Centralize customer service-faster and more responsive •Develop national/global delivery systems •Create new.

Competition Drivers: •High two-way trade / cross-border FDI •Global competitors •Increased ownership of corporations by foreign acquirers . Market drivers: •Common customer needs •Global customers •Convergence of lifestyles and tastes •Organizations beginning to behave as global consumers •Growth of global and regional channels •Establishment of world brands 2.Principal Driving Force in Global Marketing of Services Several factor driven and influence the globalization of firms: Types of globalization drivers: 1.

Government Drivers: Reduction of tariff barriers Reduction of non-tariff barriers Decline in role of governments as producers and consumers Privatization in previously state-dominated economies Shift to open market economies from closed communist systems in eastern Europe .Technology Drivers 4. Cost Drivers: •Continuing push for economies of scale •Accelerating technological innovation •Advances in transportation •Emergence of newly industrialized countries with productive capability and low labor costs •Increasing cost of product development relative to market life 5.3.

Assessing Globalization • Presence in strategic markets • Location of value adding activities • Achieving desirable balance between globalization and customization • Consistency in quality and pricing of services • Responding to changes in environment .

Challenges in the Global Market 1. Legal barriers     Discriminating laws Subsidies Restrictions on foreign companies entry Infringement of copyrights and trademarks .

Challenges in the Global Market 2. Cultural barriers Language Customs Values and attitudes Lifestyle 3. Financial Barriers Changes in currency exchange rates Problem with logistics .

Global market participation b. Multi local strategies a. Global marketing e.Service Strategy Elements of Global service strategy : 1. Delivering global products c. Global competitive moves . Global location d. Defining global vs.

Factors Influencing Success of A Global Firm • • • • • Select the right entry mode Select the right marketing research methods Customize the service offering Train the service personnel Select the right promotion strategy .