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Provides a framework for developing global strategies for service businesses. Integrates existing, separate frameworks on globilization and on service businesses, analyzes how the distinctive characteristics of service businesses affect globalization and the use of global strategy, and diagnoses which aspects favor globalization and which do not. Applies the new framework to numerous industry and company examples, with particular emphasis on the role of information technology.

Just because the competition is tough, that's no reason to be tough on customers, says Sir Colin Marshall, chairman of British Airways. Even in a cutthroat, mass-market business such as air travel, he argues, many people will pay a premium for good service--even those who travel economy. Marshall's views may be unconventional, but so is his company's performance: While the world airline industry has racked up billions of dollars in losses, British Airways has remained solidly profitable.

Li & Fung, one of the largest export trading companies in Asia, works primarily as an agent to connect U.S. and European manufacturers and retailers of nondurable, mass-market consumer goods with suppliers located all over East Asia who manufacture products according customer designs. Li & Fung's network of 2,000 suppliers in over a dozen countries is one of its most important competitive assets. This network consists of relationships with suppliers and knowledge of their capabilities and strengths. The network provides a number of benefits to customers, the most important being a wide variety of manufacturing options that differ by price, quality, and delivery time. Li & Fung's trading operations are organized into largely-independent, customer-focused divisions aided by regional branch offices. Its internal structure and incentives (especially compensation) are designed to motivate staff to customize service to each customer and to use the entire network to place each customer order with the supplier that most closely fits customer requirements. This design is especially important because of trading's low margins.

In 1993, Booz.Allen & Hamilton forsook its previous, highly local organizational structure. It was motivated by a desire to serve multinational clients more effectively and to provide greater value to clients with more localized business by collecting best practices from around the world. Following a plan entitled Vision 2000, the firm created unified staffing pools based on industry and functional (strategy, operations, or information technology) expertise, within each of the three large regions, Atlantic (containing Europe and N. America), Asia-Pacific-Japan, and Latin America. In staffing each client engagement, partners considered all available staff within their regions attempting to provide the best consultants for the project, regardless of where they were located. The firm also redesigned compensation and evaluation methods, segmentation strategy, and staff development programs to fit its more integrated service delivery system. New systems and programs for sharing intellectual capital between consultants increased the firm's ability to provide value.

Shows students how a custom software programming company takes advantage of differences between the United States and India in the cost of skilled labor (software engineers) to give its customers rare expertise and lower prices. Asks students to examine the company from its customers' point of view. HCL America offers customers three ways to purchase its services. The company can send its engineers to work on customers' premises on a temporary basis; do programming projects at its U.S. facilities, or send work to its "software factories" in India. A range of factors, including cost, determine which of these methods is best for a particular customer's project. Customers who send work to India often save 50% off the costs of doing the work in the United States. The decision point presents a potential customer, Sateesh Lele, who must decide whether to hire HCL America or a competitor, or use his own staff, for a particular project. If he hires HCL America, he must decide between three methods of work--on-site, in the United States, or in India.

Dr. Prathap Reddy has created India's first corporate hospital, Apollo Hospitals of Madras. The hospital is managed according to an integrated philosophy of customer service and support to employees. A new hospital, in the city of Hyderabad, has not performed as well, however. Futhermore, the company is considering widely franchising the Apollo brand name, and establishing India's first health maintenance organization. Main subjects for analysis and discussion include: the connections between Apollo's management philosophy and its success in Madras, the reasons for Hyderabad's less impressive performance, and the merits of franchising and establishing the HMO given Apollo's expertise and conditions in India.

The Indian Hospitals Corp. (IHC), a branch of Apollo Hospitals Group, is considering building a hospital and primary-care medical center in Colombo, the capital of Sri-Lanka, a small island off the southern coast of India. This case describes economic, social, and political conditions in Sri Lanka, particularly in and around Colombo, and the proposed project. There are both promising signs and potential problems.

The producer of a stage show society needs to use network planning as part of project management to ensure that 10 performances are scheduled well over the next four months. Students will have to construct a network diagram, identify the critical path, and address questions regarding activity crashing. What is particularly unique is that they will have to create a list from the data presented to them at a meeting with the assistant producer.

Gordon Johnston has taken his elite health-club concept from the germ of an idea to the pinnacle of success. But the most difficult decision in managing his company lies ahead. Gordon must figure out how to lead Transition fitness clubs into the next phase. In each of the 15 years since Transition's flagship club opened in New York City, its sales have doubled. The company boasts fitness trainers handpicked by Olympic medalists, health-conscious cuisine by in-house chefs, huge facilities in prime locations, and reciprocal memberships at other Transition clubs worldwide. But recently, the company's margins have been shrinking. An aging membership could mean problems for future expansion. And new, upscale competitors are challenging Transition's flat-rate pricing policy. Will Gordon have to run fast to stay in one place? Should he change Transition's pricing policy? In 95205 and 95205Z, William Campbell, Robert J. Dolan, Anita K. Hersh, Peter H. Farquhar, David Aaker, and Mary Shelman offer advice on this fictional case study.

Gordon Johnston has taken his elite health-club concept from the germ of an idea to the pinnacle of success. But the most difficult decision in managing his company lies ahead. Gordon must figure out how to lead Transition fitness clubs into the next phase. In each of the 15 years since Transition's flagship club opened in New York City, its sales have doubled. The company boasts fitness trainers handpicked by Olympic medalists, health-conscious cuisine by in-house chefs, huge facilities in prime locations, and reciprocal memberships at other Transition clubs worldwide. But recently, the company's margins have been shrinking. An aging membership could mean problems for future expansion. And new, upscale competitors are challenging Transition's flat-rate pricing policy. Will Gordon have to run fast to stay in one place? Should he change Transition's pricing policy? In 95205 and 95205Z, commentators William Campbell, Robert J. Dolan, Anita K. Hersh, Peter H. Farquhar, David Aaker, and Mary Shelman offer advice on this fictional case study.

Gordon Johnston has taken his elite health-club concept from the germ of an idea to the pinnacle of success. But the most difficult decision in managing his company lies ahead. Gordon must figure out how to lead Transition fitness clubs into the next phase. In each of the 15 years since Transition's flagship club opened in New York City, its sales have doubled. The company boasts fitness trainers handpicked by Olympic medalists, health-conscious cuisine by in-house chefs, huge facilities in prime locations, and reciprocal memberships at other Transition clubs worldwide. But recently, the company's margins have been shrinking. An aging membership could mean problems for future expansion. And new, upscale competitors are challenging Transition's flat-rate pricing policy. Will Gordon have to run fast to stay in one place? Should he change Transition's pricing policy? In 95205 and 95205Z, commentators William Campbell, Robert J. Dolan, Anita K. Hersh, Peter H. Farquhar, David Aaker, and Mary Shelman offer advice on this fictional case study.

Presents the results of a service process analysis of USAA's claims processing activity in its Great Lakes Region. Explores not only issues of redesigning the process but also the organizational implications of various alternatives.

Virtually all managers are aware that the key to winning in the market today is tailoring one's offerings to the needs of each customer while maintaining low costs and prices. But most manufacturers have focused only on the products themselves, largely ignoring another element that differentiates a company's offerings and has a huge impact on costs and profits: services. Instead of tailoring their packages of services to customers' individual needs, many suppliers simply add layers of services to their offerings. The authors have found that suppliers usually give customers more services than they want at prices that reflect neither their value to customers nor the cost of providing them. But some companies are realizing that they can lower the cost of providing services and use them more effectively to meet customers' needs, gain more business, and enhance profits. From the authors' study of the best practices of those companies, they have developed a model for providing flexible service offerings.

An internal guarantee is a commitment by one part of an organization to another to deliver its product or service to the complete satisfaction of the internal customer. If it fails to do so, it will incur a meaningful penalty, monetary or otherwise. Moreover, it is the employees involved--not management--who devise the commitment. The result? A spirit of partnership develops between different parts of the organization, and an environment of blameless error takes hold in which employees are rewarded, not punished, for identifying problems instead of sweeping them under the rug. In developing a guarantee, a department must first identify its mission in the organization. This leads to the second step: the ability to state exactly who its internal customers are. Third, the department should identify what its internal customers need. Fourth, drawing on their input, the department should design a guarantee that reflects those needs. Finally, those involved must decide on a penalty that is meaningful to the internal customer as well as to the supplier.

Explores the uses of scanning technology, interactive software, and powerful data bases to assist customer relations representatives in resolving customer complaints. Competitive alliances in international markets are noted, but the focus is on the evolving commitment to customer service and the measures, technology, and economics that come into play to recover customers who have complained.

Explores the interface of an information system that keeps track of guests and their preferences, and the people systems that deliver multiple services at Ritz-Carlton hotels. The luxury hotel chain's unique service credo and commitment to quality principles are discussed as well as the attention to hiring and training. At the heart of the case is the Ritz-Carlton commitment to serving the customer.

Southwest Airlines management is faced with increasing competition. It must decide which of several route extensions provide the appropriate competitive response while preserving the internal culture that has made the airline so successful.

Engineering Inspection & Insurance Co. (EIIC) is a small but highly successful company that offers machinery and boiler inspection and insurance services. After years of above-average growth and profits, both are retreating toward the industry average, policy delivery times are excessive, and employee morale is low. There is increasing concern that the company's current strategy and organization are no longer working. The problem appears to be that, while the company initially was organized to provide inspection and insurance services for complex equipment, most of its premium revenue in 1991 comes from relatively simple, low-premium objects for which inspection probably is unnecessary. Reconciling the conflicting demands of these two types of businesses with the company's existing structure and value system is the essential issue. Teaching Purpose: To illustrate the basic operations strategy framework in the context of a service company, and to engage students in a discussion of the advantages and disadvantages of different methods for refocusing operations.

Describes the challenges facing a cellular telephone company in Mexico as it positions itself in the explosive cellular market and prepares to become a full-service telecommunications provider. Faced with declining market share, revenues per subscriber, and operating income, IUSACELL attempts to understand the economics of its customers and define its customer acquisition and retention strategies.

The largest ski resort in Colorado must determine how to select customer segments to focus its promotional and service-delivery efforts. Making segmentation work depends on reordering its pricing policy and "service packages."