Service Management

SMG 301
Spring 2015
Dr. Beenish

Group Project

Impact of globalization on service industry

Prepared by
Name ID
Khaled Mohammed Albaloushi K-91262102

Abdullah Salem Al Kaabi K-91262124

Mahmoud Ahmed K-91254118

Ahmad Saleh Albadri K-21362143

Table of Contents
Introduction ............................................................................................................................................................ 3
Globalization ........................................................................................................................................................... 4
Factors Influencing Globalization .............................................................................................................. 4
Offshoring ............................................................................................................................................................ 4
Outsourcing......................................................................................................................................................... 4
Franchising.......................................................................................................................................................... 5
Trends in the Services Sector under Globalization .................................................................................. 6
Impacts and implication of globalization on economies ....................................................................... 7
The benefits ........................................................................................................................................................ 7
The risks ............................................................................................................................................................... 8
Summary .................................................................................................................................................................. 9
References ............................................................................................................................................................ 10
Introduction
Over the years service enterprises have been a significantly growing business over the globe.

Many companies currently importing and exporting services and products in the global market.

International trading companies establishing or relocating their business depend of their

customer intensity

Globalization is a broad concept casually used to describe a variety of phenomena that reflect

increased economic interdependence of countries. Such phenomena include flows of goods and

services across borders, reductions in policy and transport barriers to trade, international capital

flows, multinational activity, foreign direct investment, outsourcing, increased exposure to

exchange rate volatility, and immigration. These movements of goods, services, capital, firms,

and people are believed to contribute to the spread of technology, knowledge, culture and

information across borders.

Globalization

Globalization refers to the free movement of goods, services, people, capital and technology

across various countries in the world

Factors Influencing Globalization

Change in social factors

Changes in technology

Changes in political and legal conditions

Competition in the market

Competitive advantage

Regulations in home country

Lack of demand in home country

Offshoring

Offshoring is the practice by which companies outsource processes, chiefly IT-based services,

across large distances to other parts of the world, often low-wage countries. It is a technical term

from financial economics, in which offshore centers are used to describe tax havens attracting

foreign investment with low rates of taxation and strict banking secrecy.

Outsourcing

Outsourcing is an arrangement in which one company provides services for another company

that could also be or usually have been provided in-house. Outsourcing is a trend that is

becoming more common in information technology and other industries for services that have

usually been regarded as intrinsic to managing a business. In some cases, the entire information
management of a company is outsourced, including planning and business analysis as well as the

installation, management, and servicing of the network and workstations.

Franchising

Franchising is a business model in which many different owners share a single brand name. A

parent company allows entrepreneurs to use the company's strategies and trademarks; in

exchange, the franchisee pays an initial fee and royalties based on revenues. The parent company

also provides the franchisee with support, including advertising and training, as part of the

franchising agreement.
Trends in the Services Sector under Globalization

Globalization: Free entry; competition on quality, price, And image: More choice for consumer-

he can take another airline, hotel, travel to another country; Likelihood of large domestic and

foreign demand growth. We have to be prepares with quantity and with quality; we need

information to be easily available.

Services: Pity that a country with so many poor has services at 50% of GDP. It should be

agriculture and industry that should have grown faster so that more people can consume more

and have a better life.

Delivering consistent quality of Services over time and space: Unlike products service quality is

a matter of perception; Perceptions vary depending on mood, state of mind, weather, etc; Service

delivery has to be perceived even through this curtain; essential to define what service

experience we want the consumer to receive and carry away in his memory; Services are

delivered by individuals and they have to deliver the same experience to different consumers;

There must be full understanding among all deliverers as what experience they wish to deliver;

all must receive training to do so; training has to be repetitive; Using technology to make this

easier.
Impacts and implication of globalization on economies

The benefits

Foreign Direct Investment. Foreign direct investment (FDI) tends to increase at a much

greater rate that the growth in world trade, helping boost technology transfers, industrial

restructuring, and the growth of global companies.

Technological Innovation. Increased competition from globalization helps stimulate new

technology development, particularly with the growth in FDI, which helps improve

economic output by making processes more efficient.

Economies of Scale. Globalization enables large companies to realize economies of scale

that reduce costs and prices, which in turn supports further economic growth, although

this can hurt many small businesses attempting to compete domestically.

More efficient markets

Efficient markets should be what every economy strives for. Essentially, the sign of an

efficient market is where there is an equilibrium between what buyers are willing to pay

for a good or service and what sellers are willing to sell for a good or service.

Increased competition

Anytime that you have multiple producers competing for a hold of the economy, thats a

good sign for consumers, as the quality of goods and services often goes up as a result.

Stabilized security

When your economy depends largely on another countrys economy, it is hard to imagine

either one of the countries attacking the other. In a weird sort of way, globalization

helped heighten world security.

The risks

Interdependence. Globalization leads to interdependence between nations, which could

cause regional or global instabilities, if local economic fluctuations end up impacting a

large number of countries relying on them.

National Sovereignty. Some see the rise of nation states, multinational or global firms

and other international organizations as a threat to sovereignty. Ultimately, this could

cause some leaders to become nationalistic or xenophobic.

Equity Distribution. The benefits of globalization can be unfairly skewed towards rich

nations or individuals, creating greater inequalities and leading to potential conflicts both

nationally and internationally as a result.

Summary
Globalization will continue to grow significantly and those operations will transform the

standardizations of the market today. Firms will invent new segments and service options to

reach their intensive customers and globe will not contain borders between countries or

seashores and knowledge-based consulters will be needed.

References
Al-Rodhan, R.F. Nayef and Grard Stoudmann. (2006). Definitions of Globalization: A

Comprehensive Overview and a Proposed Definition.

Albrow, Martin and Elizabeth King (eds.) (1990). Globalization, Knowledge and Society

London: Sage. ISBN 978-0803983243 p. 8.

Stever, H. Guyford (1972). "Science, Systems, and Society". Journal of Cybernetics 2

(3): 13. doi:10.1080/01969727208542909.

Frank, Andre Gunder. (1998). ReOrient: Global economy in the Asian age. Berkeley:

University of California Press. ISBN 978-0520214743

Robertson, Roland (1992). Globalization : social theory and global culture (Reprint. ed.).

London: Sage. ISBN 0803981872.

Giddens, Anthony. (1991). The Consequences of Modernity Cambridge: Polity Press. p.

64. ISBN 9780745609232

Held, David, et al. (1999). Global Transformations Cambridge: Polity Press. ISBN

9780745614984

Larsson, Thomas. (2001). The Race to the Top: The Real Story of Globalization

Washington, D.C.: Cato Institute. p. 9. ISBN 978-1930865150