Methods of Services Expansion in International Markets

As with domestic market expansion, several options are available.

These include:

  • Embedding services in some physical storage medium as a form of support which may be self-delivered (in the form of computer software, videos or international
  • Satellite and telecommunications for example) or delivered in person by an on-site representative of the service organization.
  • Using licensing agents or brokers.
  • Joint ventures.
  • Direct investment through some form of buyout or capital establishment.
Six reasons of McDonald’s success in international markets
Methods of Services Expansion in International Markets
Methods of Services Expansion in International Markets

Key success factors that marketers should be expected to nominate include;

  1. Its extensive and high degree of standardization
  2. Its accommodation of local differences in taste
  3. The depth of its local research and market understanding
  4. Its well-established corporate identity
  5. Its purchasing economies and power
  6. The effective management control vested in its franchise agreements

McDonald’s makes a genuine attempt to accommodate local and regional taste differences and preferences by customizing menu items around the world.  A prime example of this is the McFeast, which was created in Australia.  McDonalds also customizes its promotional activities to suit each market in which it operates.

Most aspects of its typical servicescape and livery, service delivery, staff training, ordering and cooking procedures, management procedures and policies, however, are tightly formatted, standardized and controlled.

The Internet as an international marketing tool
Methods of Services Expansion in International Markets
Methods of Services Expansion in International Markets

By nature, the internet is international rather than domestic, and can facilitate the provision of services across many different countries.

The internet provides four key strategies in developing e-commerce opportunities in foreign markets:

  1. Customer service – can often provide service at a lower cost
  2. Pirating the value chain – the ability to distribute electronically often enables companies to take up that role in their supply chain
  3. Digital value creation – any service that can be digitized, can now be sent around the world with minimal costs
  4. Creating a customer magnet – the ability to form online communities and to establish strong brand equity on the internet
Barriers for going international

Internationalization offers new market and business growth opportunities, potentially valuable joint ventures and alliances, as well as economies of scale and risk-spreading opportunities.  As well, the move to internationalize is often instigated or encouraged by the expansionary activities of clients and influenced by the competitive nature of home markets and the activities of competitors.

In addition, expanding internationally can be a way of reducing overall risk by diversification, and can take advantage of business-friendly government policies. Figure 14.6 in the text shows how each of these options carries with it a successively increasing level of involvement, commitment and risk.

Concluding Notes

This article concludes with a discussion of strategy conducive to success in international markets and analyses the success of Servcorp and Graham Marsh Golf Design.  Among the key points in this section, to which marketers’ attention should be directed, are;

  • The importance of an organization’s reputation and personnel
  • Significance and value of local contacts and know-how
  • The need to be selective and discerning in foreign markets selected and targeted
  • The importance of alliances and partnerships
  • Maintaining a mutually satisfactory balance between standardization and customization
  • The value of global branding and identity

Leave a Reply