Chapter 10 - Globalization of Services

CHAPTER 10
GLOBALIZATION OF SERVICES

True/False
1. Network development is a consideration in the decision to plan a multinational service. (T)

2. When a firm offers multiple services at a single location, it is using a clustered service strategy. (T)

3. A franchise is a low risk investment, because the franchiser ensures success. (F)

4. Following its initial success, the Kinko copying service employed a diversified network expansion
strategy. (F)

5. The famous Mayo clinic in Minneapolis is an example of a firm that employs a clustered service
strategy. (T)

6. The start-up phase for a franchise business is shorter than that for an independent business, because
of the existence of a well-known brand. (T)

7. Consumers develop expectations for a low divergent set of products and services from franchises. (T)

8. Concentric diversification is a means of ensuring rapid market growth. (F)

9. From the standpoint of the franchiser, decision-making autonomy is not a benefit of franchising. (F)

10. A diversified network is not feasible with complex services. (F)

11. A diversified network is a situation where many services are offered at a single location. (F)

12. Franchising usually is used when developing a focused network. (T)

13. A family restaurant is an example of a focused service. (T)

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Chapter 10 - Globalization of Services

14. Communication is included in the five C’ s of strategic planning. (F)

15. One of the advantages of franchising is that a firm can grow without the cost of developing key
managers. (T)

16. The disadvantage of concentric diversification is that it does not allow for economies of scale. (F)

17. American Express is an example of a firm that has a multisite, multiservice expansion strategy. (T)

18. Rapid growth with investment capital from franchisers is the main objective of franchising. (F)

19. Hedging is a strategy adopted by multinational corporations to neutralize their exposure to fluctuating
currency exchange rates. (T)

20. A company that adopts the concept of importing customers usually is following a multiservice single-
site strategy. (T)
Multiple Choice
1. Which of the following is not one of the major considerations in planning multinational operations?

a. Cultural transferability

b. Technological compatibility*

c. Network development

d. Host government policy

2. Multinational expansion by a service firm is:

a. often driven by customer demand.*

b. vital for growth.

c. not recommended for labor intensive operations.

d. primarily a defense strategy.

3. Which of the following is not a benefit to the franchisee of a franchise?

a. Brand name

b. National advertising

c. Economics of scale

d. Autonomy*

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
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Chapter 10 - Globalization of Services

4. Which of the following is not one of Kenichi Ohmae's five "Cs" of strategic planning in a borderless world
economy?

a. Competitors

b. Creativity*

c. Company

d. Country

5. The "cookie-cutter" concept best describes which expansion strategy?

a. Focused service

b. Clustered service

c. Focused network*

d. Diversified network

6. A relatively recent concept that refers to the movement of new products through existing distribution
channels is called:

a. economies of scale.

b. economies of scope.*

c. diversification.

d. micromarketing.

7. What is the principal reason that service trade receives low priority at WTO meetings?

a. Controlling service trade is difficult.

b. Governments are more concerned with trade in manufactured products.*

c. Service trade is an insignificant factor in international trade.

d. Tariffs cannot be applied to services.

8. All of the following are benefits of a multisite type of expansion except:

a. ability to reach a mass market quickly.

b. reduced financial risk from local economic downturn.

c. preemption of competitors by capturing premium locations.

d. retention of control.*

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 10 - Globalization of Services

9. American Express, which offers financial and travel services on a global basis, is an example of a:

a. focused service.

b. focused network.

c. clustered service.

d. diversified network.*

10. In what cell of the matrix below would you place the fast food chain McDonald's?

Single Multi
Service Service

Single
Location a b

Multi
c* d
Site

11. Global service strategies include all but one of the following:

a. Exporting services*

b. Following your customers

c. Beating-the-clock

d. Service offshoring

12. Mayo Clinic is a service firm that would fall under which of the following categories:

a. single location, single service.

b. single location, multiservice.*

c. multisite, single service

d. mulitsite, multiservice

13. USAA, which provides financial services to military officers by mail, telephone, and Internet is an
example of a:

a. focused service.

b. focused network.

c. clustered service.*

d. diversified network.

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any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 10 - Globalization of Services

14. When franchising which one of the following is not a benefit to the franchiser?

a. Proven business*

b. Rapid expansion

c. Right to dictate conditions

d. Fees from the franchisee

15. “Hiring local personnel” addresses the labor intensity factor in the ________ global service strategy.

a. multicountry expansion

b. following your customers*

c. service offshoring

d. beating the clock

16. A 5:00 p.m. pickup for FedEx was not workable in Spain owing to extended business hours. This is an
example of cultural adoption under which of the following global service strategies:

a. beating the clock.

b. service offshoring.

c. following your customers.

d. multicountry expansion.*

17. A community hospital is an example of a:

a. diversified network.

b. focused network.

c. focused service.

d. clustered service.*

18. “Develop foreign customers” is a consideration for the global service strategy of “following your
customers”. The relevant globalization factor is:

a. cultural adoption.

b. customer contact.*

c. complexity.

d. Customization.

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any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 10 - Globalization of Services

19. When franchising, which of the following is not an issue for the franchisee?

a. Establishing a brand*

b. Franchise contract

c. Degree of discretion

d. Conflict resolution

20. McDonald’s includes beer on its menu for German franchises. This is an example of _______

a. cultural transferability.*

b. network development.

c. host government policy.

d. labor norms.

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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.