Services Marketing

Chapter 23 : Globalization of Services

The Growth in Global Service Markets

Factors Influencing Globalization

Changes in Social Factors
Changes in Technology
Changes in Political Conditions
Competition in the Market
Competitive Advantage
Regulations in Home Country
Lack of Demand in Home Country

Overseas Market Entry Decisions

Exporting
Turnkey Projects
Licensing
Franchising
Joint Ventures
Strategic Alliance
Wholly Owned Subsidiaries
Mergers and Acquisitions
Piggyback

Assessing Globalization

Challenges in the Global Market

Legal Barriers
Cultural Barriers
Financial Barriers

Factors Influencing Success of Global Service Firm
Prospects for the Global Marketing of Services

Chapter Summary

Globalization refers to the free movement of goods, services, people, capital and technology across the globe. Globalization has been given major thrust by agreements like GATS signed by several countries in the world. The major factors that drive globalization are changes in social factors, technology, political and legal conditions, the competition scenario and the urge to gain a competitive advantage.

Organizations can enter foreign markets using different modes of entry. These include exporting, turnkey projects, licensing, franchising, joint ventures, wholly owned subsidiaries, strategic alliances, mergers and acquisitions and piggybacking. Though many organizations aim for globalization, only a few succeed in it.

The parameters that can be used to measure the level of globalization achieved by an organization are presence in strategic markets, location of value-adding activities, achieving a desirable balance between globalization and customization, consistency in quality and pricing of services, and responding to the changes in the environment.

Some of the major challenges faced by organizations in establishing and expanding their operations in foreign markets are legal barriers, cultural barriers and financial barriers. The factors that contribute to the success of a global firm are selecting the right entry mode, selecting the right marketing research methods, customizing the service offering, training the service personnel and selecting the right promotion strategy. Though the prospects for globalization of services marketing are high, some forces are opposing it and trying to slow down the pace.

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