short and clear note on the Internationalisation of Service Firms, along with its definition, process, and strategies:
20/June/2025 02:02
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Here is a short and clear note on the Internationalisation of Service Firms, along with its definition, process, and strategies:
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Internationalisation of Service Firms – Short Note
Definition:
Internationalisation of a service firm refers to the process by which a service-based business expands its operations beyond domestic borders and enters foreign markets to offer services globally.
Unlike products, services are intangible, people-dependent, and often location-sensitive, which makes their international expansion more complex and strategic.
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Forms of Internationalisation in Services
1. Cross-border supply – Services provided from one country to another (e.g., online consulting, software support).
2. Consumption abroad – Customers travel to consume services (e.g., tourism, education, medical treatment).
3. Commercial presence – Establishing branches, franchises, or subsidiaries in foreign markets (e.g., banks, hotels).
4. Presence of natural persons – Sending employees or professionals abroad to deliver services (e.g., IT engineers, consultants).
(These are based on the WTO’s GATS model – General Agreement on Trade in Services)
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Process of Internationalisation of Service Firms
1. Market Research and Feasibility Study
Identify target markets, customer needs, legal environment, and cultural factors.
2. Mode of Entry Selection
Choose between licensing, franchising, joint ventures, subsidiaries, or digital platforms.
3. Adaptation of Services
Modify service offerings to fit the local culture, language, and regulatory requirements.
4. Establishing Local Presence or Network
Either set up local branches or partner with local firms for easier market access.
5. Marketing and Branding
Develop international marketing strategies tailored to the new audience.
6. Human Resource and Training
Hire local staff or send trained employees to maintain service quality.
7. Monitoring and Evaluation
Constant assessment of performance, customer satisfaction, and compliance.
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Strategies for Internationalisation of Services
1. Franchising
Suitable for services like hospitality, education, and retail (e.g., McDonald’s, Marriott Hotels).
2. Licensing
Service firms license their brand, processes, or software to local partners (e.g., software firms).
3. Joint Ventures/Partnerships
Collaborate with local firms to enter regulated or complex markets (e.g., foreign banks in India).
4. Wholly Owned Subsidiaries
Establishing a full-service branch or unit abroad for complete control (e.g., Deloitte India by Deloitte Global).
5. Digital/Online Expansion
Leveraging digital platforms to deliver services globally (e.g., online education, telemedicine, IT services).
6. Contractual Outsourcing
Providing backend services to foreign clients through contracts (e.g., BPOs, KPOs).
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Conclusion
The internationalisation of service firms allows businesses to access new markets, diversify income, and build global brands. With strategic planning and adaptation, service firms can successfully expand beyond borders and compete on a global scale.
