Lecture 8 - Examples, framework and models

Why are barriers important when analysing service internationalisation?

Even scalable services face real-world constraints like regulation, culture, or infrastructure that must be analysed using tools like PEST or Institutional Theory.

What does PEST stand for in international strategy analysis?

Political, Economic, Social/Cultural, Technological.

Give an example of a political/legal barrier to internationalisation.

Telecoms, banking, and healthcare require local licences; e.g., HSBC adapts to financial regulation in each country.

Give an example of an economic barrier to service internationalisation.

In emerging markets, services like KFC may struggle due to inflation or unstable real estate.

What’s a social/cultural barrier in service internationalisation?

Religious norms or language barriers, e.g., McDonald’s removing beef from Indian menus.

What is a technological barrier to service internationalisation?

The digital divide; services like Spotify or Zoom may be unusable in rural areas with poor internet.

: How does Institutional Theory explain internationalisation barriers?

Through formal institutions (laws like GDPR) and informal ones (trust norms, cultural expectations).

What’s an example of a formal institutional barrier?

GDPR in the EU makes it harder for US tech firms to scale due to data privacy laws.

What’s an example of an informal institutional barrier?

Low trust in digital banking in some cultures limits growth for firms like Revolut.

What are the 3 types of international service delivery models?

People-processing, Possession-processing, Information-based.

How are people-processing services internationalised?

Via local service factories or by importing customers (e.g., hotels, hospitals).

How are possession-processing services internationalised?

Must have local physical presence (e.g., car repairs, dry cleaning).

How are information-based services internationalised?

Exported digitally or transformed via local partnerships (e.g., Spotify, online banking).

How should firms tailor international strategy?

Match the mode of internationalisation to the service type (Lovelock & Yip, 1996).

Why does McDonald's need a local presence?

As a people/possession-processing service, it must be close to customers to deliver consistent service.

What entry strategy does McDonald’s use globally?

Franchise partnerships to manage regulation and local tastes.

How does McDonald’s adapt to cultural barriers?

Removes beef in India, adds regional items like teriyaki burgers in Japan.

Why can Spotify scale faster than McDonald’s?

It’s an information-based service that exports digitally with minimal physical presence.

What are Spotify’s main barriers?

Music licensing laws and platform regulations that vary by country.

What does the McDonald’s vs Spotify comparison show?

That a firm's international strategy must align with service type and customer interaction level (Lovelock & Yip, 1996).