International business 7e czinkota moffett ch15

Chapter 15
Services

1


Learning Objectives
Examine the important role of services
in international business.
Understand why trade in services is more
complex than trade in goods.
Appreciate the heightened sensitivity
required for international service
success.
Learn that stand-alone services are
becoming more important to world trade.
Examine the competitive advantage of
firms in the service sector.
2


Differences Between Sales and Goods
“a good is an
object, a device,
a thing;”
“a service is a
deed, a
performance, an
effort.”
3

Links Between Services and Goods
Services may
complement
goods; at
other times,
goods may
complement
services.
4


Stand-Alone Services
Services Can Compete Against Goods
Types of
Offerings:
Intangible

Tangible

Communicatio
n services,
reservations,
car rentals,
etc.
Food and
drink, cars,
books, etc.
5

How Services Differ From Goods
Services are difficult to
inventory.
For services offerings,
the time of production is
close to the time of
consumption.
Services are more often
intangible.
Services are often
custom-made.
Services often require
new forms of
distribution.
6


The Role of Services in the U.S.
Since the Industrial Revolution, the
United States has seen itself as a
primary international competitor
in:

The Production of Goods
7


The Role of Services in the U.S.
In the past decades the U.S.

economy has increasingly become
a:

Service Economy

8


The Role of Global Services in the
World Economy
The rise of the service sector is a
global phenomenon.
Economies of developing countries
generally first establish agricultural
and manufacturing sectors before
entering into the services sector.
As more countries enter the sector,
the global services business will
become more competitive.
9


Global Transformations in the
Services Sector

The rise in services trade is due
to changes in the environment
and in technology.
10

Global Transformations in the
Services Sector
Reduction of
government
regulation.
Technologica
l
advancemen
t.
11


Problems in Service Trade

New problems have emerged
in the service sector together
with the increase in the
importance of service trade.
12


Problems in Service Trade
Data Collection Problems.
Data is often sketchy.
Service transactions are often statistically
invisible.

Global Regulations of Services.
National and economic security issues result

in barriers to entry.
Additional problems in the performance of
services abroad—tradition, regulation, etc.

13


Corporations and Services Trade
Services and E-Commerce
Easy access to
global markets.
Little-known firms
can become known.
Electronic business
media occurs at
different rates in
different countries.
14


Corporations and Services Trade
Typical International Services
Banking and consulting services can
become internationally competitive.
Insurance services can be sold
internationally.
Communication services have excellent
success in international operations.
Institutions successfully offer
international teaching services.

Tourism is a major service export.
15


Starting to Offer Services
Internationally
Novices follow the path
of the good, if the
service is delivered in
support of a good.
New marketers search
for similar market
situations abroad if the
service is independent
from goods.
16


Strategic Indications
Will the service be
directed at people or
things?
Will the service act
result in tangible or
intangible actions?

17


Strategic Indications

Services Aimed at People
Directed at People’s Minds:
Arts
Religion
Consulting

Directed at People’s
Bodies:
Healthcare
Fitness
Restaurants
18


Strategic Indications
Services Aimed at Things
Directed at physical
possessions:
Laundry
Landscaping
Refueling

Directed at intangible assets:
Banking
Research
Investments
19


Strategic Indications

Gaining Credibility Abroad
Providing objective
verification of their
capabilities.
Providing personal
guarantees of performance.
Cultivating a professional
image.
20


The Role of Personnel in International
Service
Customer interface is intense.
Proper provisions must be
made for training of
personnel.
Major emphasis must be
placed on appearance.
The person delivering the
service communicates the
overall attitude/value of the
service corporation.
21


Pricing and Financing in
International Strategy
Because services cannot
be stored, there is

greater responsiveness
to demand fluctuations.
Greater pricing flexibility
must be maintained.
The intangibility of
services makes financing
more difficult.
22