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CHALLENGES IN THE GLOBAL MARKET
Service organizations that operate globally face various challenges. The special characteristic of services like intangibility, inseparability, heterogeneity and perishability pose specific challenges to global service providers. The intangible nature of services requires service providers to add tangibility to the services they offer, inseparability forces them to train employees to offer impeccable service, heterogeneity requires organizations to ensure consistency in delivering service and perishability requires them to balance demand and capacity effectively. Apart from these challenges, international service organizations face other challenges too like the following:
Legal Barriers Legal barriers include discriminating laws, subsides, restrictions on Foreign Service provider‘s operations, infringement of copyrights and t rade marks, etc., specific to each country of operation. For example, in Tanzania, an organization that seeks to establish its banking operations has to face many legal restrictions. It has to satisfy all the terms and conditions laid down by the central bank of Tanzania to earn a license. The proposals for setting up a banking institution should include plans to offer financial services in the rural sectors and training and employment programs for citizens. The approval to any proposal depends on these plans. Further, banks cannot open a new branch or close an existing branch or declare dividends, without prior approval from the central bank.
Discriminating laws Some countries have a legal system with polices that favour domestic firms and discriminate against foreign firms. For example, the branch offices of a foreign company in India are treated as a foreign company and declare liable for higher income tax of 48%, as against 35.7% for companies set up in India.
Cultural Barriers Though convergence of tastes and preferences can be seen in some developing and developed countries, it is limited. There is a still a large cultural gap between the vast population of the eastern part of the world and that of the western countries. People in developing countries from the high-income group or socio- economic class, who get exposed to western culture, are influenced by it. There is still a large section of the society in developing countries, which is unexposed to and uninfluenced by the western culture. Therefore, differences still do exist in cultures, posing challenges to international; service organizations. The cultural barriers arise from differences in language, customs and beliefs, values and attitudes, lifestyle, etc.
Language
People indifferent countries speak different languages and this poses difficulties to service organizations in effectively communicating with customers. Communication with internal as well as external customers, as we have already studied, is very important for services business to survive and flourish. In the absence of proper translation of messages from one language to another, service organizations can communicate unintended messages and land up in trouble.
Customs Different countries have different customs and manners.
―Customs are established practices, while manners are behaviors that are regarded as appropriate in a particular society.‖ In some countries, people value time immensely and expect others to do the same. For example, say two parties from two different countries have an appointment at 5.00pm. the first party from country A values time immensely and is there at the appointed venue five minutes before the scheduled the time. The second party of country B however, does not value time and reaches the venue
10 minutes late. This will naturally annoy the first party, and he would cancel the business dealing.
In some countries, it is customary to make or avoid some gestures to show their respect to the other party. The management of a service firm should learn this business etiquette to maintain positive relations with clients and partners.
Values and attitudes Values and attitudes differ from society to society. For example, most Muslims consider the pig as inauspicious. Hindus revere the cow as a holy animal. Therefore, international service organizations involved in the hospitality industry should take special care not to offer beef or pork so as not to hurt religious sentiments of the people. McDonald‘s for example, takes special care to avoid beef in its menu in India.
Lifestyle
Lifestyle varies across countries. The way people spend their money, leisure time, etc., differs from one country to another. For example, earlier, people in India emphasized saving. There were not many who spent lavishly. However, things have changed and more and more Indians are willing to spend more on lifestyle and luxury items. The status symbols used by people to reflect their status, also differ from one country to another. For example, in India, most people value assets like jewelry. They try to accumulate as much silver and gold as possible. However, in the west, people prefer to buy luxury products like expensive cars. The way people spend their leisure time is also different. People‘s perception of beauty and aesthetics also varies across countries. The knowledge of these differences will help services organizations choose the right dress code for employees, the right architecture for buildings and design proper service offerings and marketing programs.
Fast food outlets like McDonald‘s have to procure the best quality raw materials and other inputs to serve quality food to customers. McDonald‘s has to source bread, bun, batter mixes, meat, cheese, sauce, potatoes and other vegetables from the best suppliers, which means a lot of investment.
FIRM
FACTORS INFLUENCING SUCCESS OF
Select the right marketing research methods
In some countries, people do not want to answer personal questions and dislike being monitored. It would be difficult for organizations to conduct marketing research in such countries. Therefore, service organizations should use indirect measurement techniques, which do not involve approaching customers directly. Rather, they may have to collect information from service
provider‘s who can provide reliable data and information on consumer behavior.
Customize the service offering
Global service providers should customize their services to suit the tastes and preference of customers in different countries. For example, in some countries, people do not like invasion of privacy. In such situations, service personnel do not take the initiative to try and entertain customers. However, in some countries people may expect the service personnel to keep enquiring about their needs and taking care of them. In such cases, the front-line personnel should be pro-active and approach customers before they feel they are not being attached to. Similarity, during an economics downturn, companies might need to customize their service offering to suit the existing needs of the customers.
Train the service personnel
Service personnel should be educated about the differences in the culture of the customers they serve. For example, the service personnel in a Chinese restaurant need to realize that they have to treat an Indian customer and an American customer differently. The service personnel should be trained to customize their service offering and delivery to suit the customer‘s preference. In some countries, people are not comfortable talking to a salesperson o the phone. They expect the salesperson to visit their home/office and explain the service offer to them in person. Service personnel need to feel trained to catch the pulse of the customer immediately and change their approach strateg y accordingly.
Select the right promotion strategy In some countries like Japan, comparative and aggressive advertising is unacceptable. So, in these countries, service firms should emphasize the benefits of their service offering rather than point out the drawbacks of the competitor‘s service offerings. In countries like the US and India, where such advertising is allowed, at least in some sectors, service organizations should use the opportunity to explain to customers how their service offers out weight those of their competitors. For example, in India, ICICI bank advertises that it does not charge any processing fee from customers who apply for home loans. HDFC claims that it charges a processing fee for home loans, but provides many valuable supplementary services unlike its competitors, who might not charge any processing fee, but include hidden costs for customers.
