Global 3

Rolls-Royce has been a leading brand of luxury car.
BMWacquired its assets

and
managed its manufacturing plants. What is this manufacturing
globalization
mode?
2. Shenyang plant is a joint venture between BMW and Brilliance China
Automotive to product the BMW long-wheelbase version, only for the local
market. What is this manufacturing globalization mode?
3. Which manufacturing globalization mode has been used in BMWs CKD
assembly plants?
4. What are different advantages achieved by BMW through various global
production modes of wholly owned plants from origin (e.g., Munich plant),
wholly owned plants by acquisition (e.g., Rolls-Royce plant), joint venture
(e.g., Shenyang plant), and contract production (Graz plant)?
2.4 Globalization of Service Operations
2.4.1 Global Services and Key Operational Elements
The development of telecommunications facilitates the globalization of the
information-intensive service. Unbundling service components activates
the movement
of back-office service. Increasing demand and the distribution imbalance
of
service capacity cause the movement of high-quality professional service.
The
production globalization increases the global delivery of relevant services
such as
design, project management, quality controls, management strategic
consulting,
and accounting. With the globalization of market and competition, firms
are
globalizing their services. Examples of global service include:
Global hotel service by hotel chains and hotel agencies,
Global tourism service by tourism agencies and theme parks,
Global travel service by global railroad system and airline alliances,
Global management consulting and strategic planning,
Global accounting service,
Offshoring hospital,
International project management,
Quality evaluation and audit,
Risk analysis and management,
58 2 Globalization of Operations
Global investment advice and financial service,
Global IT service such as enterprise resource planning consulting, and
International supplier selection and assessments.
Chase (1978), Collier (1985), and Haywood-Farmer (1988) identify the
critical
operational elements in service operations: customer contact,
customization, cultural
adaptation, and labor intensity. McLaughlin (1992) and MacLaughlin and
Fitzsimmons (1996) propose more elements including telecommunications,
the
potential for unbundling service components, teamwork, and
reengineering
opportunities. Based on these studies, the key operational elements for
service
globalization are:
(1) Customization
Global service needs to respond to the customized demand of local
regions in a
global reach. Global restaurants will change the menu to suit local tastes.
Global hotel chains will change room layout, room service, and foods to
provide customized service.
(2) Cultural adaptation
Service companies have to decide whether to adapt their initial service
package
to the local culture. Disney Hong Kong incorporated Chinese cultural
elements,
speaking in Cantonese, English, and Mandarin, and increased the Chinese
New
Year celebration show. Overseas service organizations need to consider
adapting to local culture when hiring local employees. With about 99.9 %
employees being local Chinese, KFC China adapted to local Chinese

culture
and tried to be a part of Chinese society. Unlike Disneys American theme
parks, Disney Paris aimed more for permanent employees than seasonal
and
temporary part-time employees.
(3) Information intensity
Telecommunication technologies such as the Internet facilitate the
diffusion of
information, and have helped with the globalization of services. With the
development of new telecommunication technologies, physical distance
becomes less important and new service modes such as foreign call
centers
became possible. Once information is digitized, it becomes
instantaneously
accessible for customers all over the world. This stimulates the
development of
informant-intensive services.
(4) Service unbundling
Service can be viewed as a dichotomy between the front office to contact
customers and the back office to complete additional processing (Chase
1978), the dichotomy of which increases the possibility of service
globalization
by relocating back office service. With advanced communication systems,
service companies can unbundle services and focus their operations
strategy
on core services while outsourcing back office services to other sites.
(5) Labor intensity
Labor intensity influences the globalization of service. Firms outsource
laborintensive
service like information processing and routing software development
to low-cost sites to reduce cost or to labor-intensive locations to acquire
trained
talent.

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Rolls-Royce has been a leading brand of luxury car.

BMWacquired its assets

employees being local Chinese, KFC China adapted to local Chinese

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