Question: 1. Describe the growth strategy of Federal
1. Describe the growth strategy of Federal Express. How did this strategy differ from those of its competitors?
2. What risks were involved in the acquisition of Tiger International?
3. In addition to the question of merging FedEx and Flying Tigers pilots, what other problems could have been anticipated in accomplishing this acquisition?
4. Suggest a plan of action that Fred Smith could have used to address the potential acquisition problems given in your answer to the previous question.
FedEx: Tiger International Acquisition11
What has become one of America’s great success stories began operations almost two decades ago in Memphis, Tennessee. At that time, those who knew of Fred Smith’s idea did not realize that his small company was about to revolutionize the air-cargo industry.
In 1972, the Civil Aeronautics Board ruled that operators flying aircraft with an “all-up†weight of less than 75,000 pounds could be classified as an “air taxi†and would not be required to obtain a certificate of “public convenience and necessity†to operate. This made it possible for Federal Express (FedEx) to penetrate the heavily entrenched air-freight industry. FedEx ordered a fleet of 33 Dassault Falcon fan-jets in 1972 and commenced operations a year later. On April 17, 1973, the company delivered 18 pack- ages, becoming the first to offer nationwide overnight delivery.
One of FedEx’s fundamental principles was use of the hub-and-spoke system, in which all packages were flown to Memphis first, sorted during the night, and then shipped to their destinations the following morning. This system allowed FedEx to serve a large number of cities with a minimum number of aircraft. It also provided tight control and efficiency of ground operations and soon became increasingly important as package-tracking systems were installed.
During the first two years of operations, FedEx lost money, but revenues surpassed the $5 billion mark in fiscal year 1989, partly because of the acquisition of Tiger International.
As Table 10.3 shows, FedEx began global expansion in 1984, when it purchased Gelco International. FedEx followed that expansion with its first scheduled flight to Europe in 1985, and it established a European headquarters in Brussels, Belgium, that same year.
Table 10.3: Federal Express Corporation and Flying Tiger Timeline
Domestic operations were expanded as well. In 1986, regional hubs were established in Oakland, California, and in Newark, New Jersey. In 1987, a sorting facility was opened in Indianapolis, and Honolulu was chosen for the Far East headquarters. That same year, FedEx was granted the rights to a small-cargo route to Japan, and the following year the company was making regularly scheduled flights to Asia.
International expansion did not result in immediate inter- national success, however. In Asia, its planes were flying at half their capacity because of treaty restrictions, and a lack of back-up planes in its South American operations jeopardized guaranteed delivery when regular aircraft were grounded. Even worse, many managers of the companies acquired in Europe had quit.
As a solution to these international bottlenecks, FedEx made a dramatic move in December 1988, announcing plans to purchase Tiger International, the parent company of Flying Tigers, the world’s largest heavy-cargo airline. The purchase price was about $880 million.
This action catapulted FedEx to the forefront of the international cargo market, giving it landing rights in 21 additional countries; however, the addition of Tigers was not without challenges. For example, the leveraged acquisition more than doubled FedEx’s long-term debt, to approximately $2 billion. Moreover, FedEx had bought into the business of delivering heavy cargo, much of which was not sent overnight, which represented a significant departure from FedEx’s traditional market niche. One of the largest dilemmas facing FedEx following the merger was how to integrate the two workforces.
MAJOR PLAYERS IN THE DOMESTIC AIR-CARGO INDUSTRY
Federal Express is the nation’s largest overnight carrier, with more than 40 percent of the domestic market. United Parcel Service (UPS), DHL (an international carrier based in Brussels), and a few other carriers account for the remaining market share. FedEx had revenues of $3.9 billion and a net income of $188 million in 1988. FedEx had lost approximately $74 million its international business since 1985, however, prompting the carrier to purchase Tiger International. That acquisition, which gained U.S. government approval on January 31, 1989, gave FedEx a strong entry position into heavy cargo as well as access to 21 additional countries.
Price wars, which began with UPS’s entry into the overnight business, have decreased FedEx’s revenues per package by 15 percent since 1984. Another setback to FedEx was its $350 million loss on Zapmail, which it dropped in 1986. A document transmission service that relayed information via satellite, Zapmail was quickly made obsolete by facsimile machines.
FedEx does offer its customers several other benefits not matched by its competitors, however. For example, it offers a 1-hour “on-call†pickup service, and through use of its data- base information system, COSMOS, FedEx guarantees that it can locate any package in its possession within 30 minutes. FedEx has found that this type of customer security helps to ensure continued growth.
THE NATURE OF THE COMPETITION
The air-cargo industry has undergone a series of mergers resulting from price wars that rocked the industry. Also, marketing alliances have been formed between domestic and foreign carriers to take advantage of international trade and to create new routes and services (e.g., package tracking).
When UPS entered the overnight-package market in 1982, competition rose substantially, starting the series of price wars that have hurt all air-cargo players. FedEx’s average revenue per package declined by 30.3 percent between 1983 and 1988.
Fortunately, it appears that the price-cutting strategy might have run its course. When UPS, which created the price wars, announced another price cut in October 1988, its competitors refused to follow, and in January 1993, UPS announced its first price increase in almost six years, a 5 percent increase in charges for next-day service. Several factors such as continued overcapacity, low switching costs, and high exit barriers, however, will continue to make the air-cargo industry extremely competitive.
CONCLUSIONS ON THE AIR-CARGO ENVIRONMENT
Although the situation might be improving, intraindustry competition and rivalry remain the main deterrent to the air-cargo industry. With overcapacity in the industry, firms, desperate to fill planes, continue to realize declining yields on the packages they ship.
Moreover, passenger airlines reentered the air-cargo market with increased vigor, which also does not help the capacity situation. All of these factors are leading current players to consolidate their operations in hope of achieving increased economies of scale.
Technology is acting as both friend and foe of the air-cargo industry. Facsimile machines have carved a large niche from the overnight-document segment; on the other hand, improved databases are enabling companies to provide their clients with another valuable service: improved tracking information on the status of important shipments.
Until now, the large number of shippers has enabled buyers to enjoy low rates, but because of their wide dispersion, buyers are not able to control the air cargo companies effectively. Likewise, air-cargo companies continue to have an advantage over their suppliers. The ability to purchase older planes keeps firms less dependent on aircraft manufacturers, and a large, unskilled labor pool helps to keep hub labor costs down. A lack of available airport facilities, however, presents a serious problem to the commercial air-freight industry. Not only is the lack of landing slots a problem in the United States, but acquiring government-controlled access to crowded international hubs can present a formidable challenge.
WORLDWIDE DISTRIBUTION
As the globe continues to shrink and economies grow more interdependent, customers are demanding new services to facilitate revamped production processes. One of the most publicized is the just-in-time (JIT) system that many U.S. firms have borrowed from their Japanese competitors. JIT systems argue for elimination of the traditional inventory stock- piles common to manufacturing, including the raw material, work-in-process, and finished-goods inventories. Without question, such a scheme relies on having the right part at the right place at the right time.
Air express has been able to play a reliable role in delivering these needed materials on time. FedEx and its competitors have succeeded in contracting with manufacturers to supply the needed logistical expertise to support its JIT framework. Essentially, the planes have become flying warehouses. As this area grows, the Tiger addition to FedEx should reap large yields with its ability to handle the heavier shipments that are associated with international manufacturing. For example, an increasing amount of parts made in Asia are being shipped to the United States for final assembly.
POWERSHIP
To facilitate further penetration into a customer’s business, FedEx developed Power ship, which is a program that locates terminals on a client’s premises and, thus, enables FedEx to stay abreast of the firm’s needs. In simplifying the daily shipping process, an automated program tracks shipments, provides pricing information, and prints invoices. Such a device helps to eliminate the administrative need of reconciling manifests with invoices.
At FedEx, customer automation is expected to play an increasingly significant role. The company has kept up with the explosive growth of technology and now offers several ancillary resources such as its Compatible Solutions Program, Developer Resource Center, FedEx Ship Manager Software, and FedEx Mobile. By tying technological innovations with reliable on-time delivery, FedEx is achieving its goal of getting closer to the customer.
CORPORATE CULTURE
Many believe that FedEx could not have grown to its current magnitude had it been forced to deal with the added pressure of negotiating with a unionized workforce. FedEx has never employed organized labor, although attempts at unionization have been made. In 1976, the International Association of Machinists and Aerospace Workers tried to organize the company’s mechanics, who rejected the offer. Likewise, FedEx’s pilots rejected an offer by the Airline Pilots Association during that same period. In 1978, the Teamsters attempted to organize the hub sorters but could not get enough signatures for a vote.
Despite an admirable human resource track record, the outlook for FedEx to continue its past performance is hazy. Because of the Tiger International acquisition, FedEx had to merge the unionized Flying Tigers workforce with its own union-free environment. Previously, the willingness of FedEx workers to go above and beyond in performing their duties had given the company a marked advantage over UPS, the nation’s largest employer of United Brotherhood of Teamsters members. As the FedEx–Tiger merger progressed, however, many questions remained to be answered.
ACQUISITION OF TIGER INTERNATIONAL
In December 1988, FedEx announced its intent to purchase Flying Tigers, and in early 1989, more than 40 years of air- cargo experience were merged with FedEx. Besides giving FedEx entry into an additional 21 nations, the Tigers merger possessed several other advantages for the aggressive company. Almost overnight, FedEx became owner of the world’s largest full-service, all-cargo airline, nearly three times the size of its nearest competitor. Because FedEx could use this large fleet on its newly acquired routes, it no longer would be forced into the position of contracting out to other freight carriers in markets not served previously.
The addition of heavy freight to the FedEx service mix was viewed as a boost to its traditional express package–delivery business. The merger fit in neatly with the company’s plans to focus on the higher-margin box business while shifting away from document service. During the preceding two years, box shipments had increased by 53 percent, generating as much as 80 percent of revenues and an estimated 90 percent of profits.
On the downside, as noted earlier, the $2 billion debt that was incurred by the merger and the capital intensiveness of the heavy-cargo business made the company more vulnerable to economic swings. Although the merger meshed well into its plans, FedEx still was a newcomer to the heavy-cargo market. Another hurdle was that many premerger Flying Tigers customers were competitors that used Tigers to reach markets where they, like FedEx, had no service or could not establish service.
Finally, FedEx had to integrate the 6,500 unionized Tigers workers into a union-free company. Although Flying Tigers was founded with much the same type of entrepreneurial spirit that was cherished at Federal Express, the carrier had seen its workforce become members of organized labor early in its existence.
At the time of the merger, the Tigers union ties were severed. FedEx promised to find positions for all employees, but critics felt that the union background of Tigers workers would dilute the corporate culture at Federal Express. Whether FedEx could continue its success story appeared to hinge on its ability to impart its way of life to the Tigers workers, not vice versa.
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1973 1977 1978 1980 1981 1982 1983 1984 1986 1987 1988 1989 Began service with Falcon fan-jets to 25 citles from Memphis in April. Air-cargo Industry deregulated. Purchased its first Boeing 727 and became a publicly held corporation. Took delivery of first McDonnell Douglas DC10 and Implemented computerized tracking system. Introduced Overnight Letter, a lower-cost document service. Opened greatly expanded Superhub in Memphis. Shortened overnight delivery commitment to 10:30 AM in all major markets. Opened first Business Service Center. Became first company to achieve annual revenues of $1 billion in ten years. Purchased Gelco International and made first scheduled trans-Atlantic flight to Europe. Established European headquarters in Brussels. Enhanced tracking and Informational capabilities with Introduction of SuperTracker. Acquired Lex Wilkinson Ltd. of United Kingdom and Cansice of Canada. Acquired Indianapolls hub. Was granted exclusive small-cargo route to Japan. Scheduled first trans-Pacific flight to Japan. Acquired nine offshore transportation companies. Announced plan to purchase Tiger International. Completed purchase of Tiger International and merged Flying Tigers into system, becoming the world's largest full-service all-cargo airline.
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> 14. The procedure to improve flow distance in a process layout by arranging the relative location of departments is known as operations sequence analysis. 15. A product layout affords some degree of customization. 16. Mid-Columbia Medical Center has a sp
> 1. The servicescape can influence perceived quality. 2. The design of facilities is dependent entirely on the construction and operating costs of the facilities. 3. A well-conceived servicescape can communicate desired customer behavior. 4. Heuristic alg
> 14. Internet banking is a service that would appeal to the economizing customer, the personalizing customer, and the convenience customer. 15. Efficiency- versus-satisfaction is the possible source of conflict in the relationship between the customer and
> 1. Services are deeds, processes, and performances. 2. The Clark-Fisher hypothesis notes the shift of employment from one sector of the economy to another. 3. The fall in employment in the agricultural sector is the primary reason for the increase in se
> 1. Who are Goodwill’s customers and how have their demo-graphics changed over time? 2. How should the introduction of for-profit thrifts affect Goodwill’s decisions about the role of customer service? 3. How can Goodwi
> 1. Marketing analysts use market position maps to display visually the customers’ perceptions of a firm in relation to its competitors regarding two attributes. Prepare a market position map for Alamo Draft house using “food quality” and “movie selection
> 1. For the Burger Palace example, perform a complete analysis of efficiency improvement alternatives for unit S2, including determination of a composite reference unit. 2. For the Burger Palace example, perform a complete analysis of efficiency improveme
> 1. Compare and contrast the strategic service vision of El Banco and United Commercial Bank. 2. Identify the service winners, qualifiers, and service losers for El Banco and United Commercial Bank. 3. What are the differentiating features of banks tha
> 1. Use DEA to identify efficient and inefficient terminal operations. Formulate the problem as a linear programming model, and solve using computer software such as Excel Solver that permits input file editing between runs. 2. Using the appropriate refer
> 1. Assume that you are part of the management staff whose task is to develop this sketch plan. Using Microsoft Project, develop the PERT network as outlined above, identify the critical path, and determine the expected time to reach basic operational sta
> 1. Using Microsoft Project, prepare a network and identify the critical path activities, the expected project duration, and scheduling times for all activities. 2. The elapsed time for delivery of the hardware is estimated at 90 days. Would the project c
> Located in a major southwestern U.S. city, Elysian Cycles (EC) is a wholesale distributor of bicycles and bicycle parts. Its primary retail outlets are located in eight cities within a 400-mile radius of the distribution center. These retail outlets gene
> 1. Assuming that the cost of stock out is the lost contribution of one dessert, how many portions of Sweet Revenge should the chef prepare each weekday? 2. Based on Martin Quinn’s estimate of other stock out costs, how many servings sho
> A.D. Small, Inc., provides management consulting services from its offices located in more than 300 cities in the United States and abroad. The company recruits its staff from top graduates of recognized MBA programs. Upon joining A.D. Small, a recruit a
> Gnomial Functions, Inc. (GFI), is a medium-sized consulting firm in San Francisco that specializes in developing various forecasts of product demand, sales, consumption, or other information for its clients. To a lesser degree, it also has developed ongo
> Oak Hollow Medical Evaluation Center is a nonprofit agency offering multidisciplinary diagnostic services to study children with disabilities or developmental delays. The center can test each patient for physical, psychological, or social problems. Fees
> Computer simulation provides management an experimental laboratory in which to study a model of a real system and to determine how the system might respond to changes in policies, resource levels, or customer demand. A system, for our purposes, is define
> 1. Describe Xpresso Lube’s service package. 2. How are the distinctive characteristics of a service operation illustrated by Xpresso Lube? 3. What elements of Xpresso Lube’s location contribute to its success? 4. Given the example of Xpresso Lube, what o
> On a hillside in Rolling wood, a community just southwest of Austin, Texas, the Renaissance Clinic provides dedicated obstetric and gynecological services. The medical treatment at this facility is wrapped in an exclusive-feeling physical environment tha
> Let us revisit the Automobile Driver’s License Office Example 5.2 and model the proposed process improvement shown as Figure 5.6 (b). Recall that the improvement consisted of combining activities 1 and 4 (Review Application and Eye Test
> Renaissance Clinic is a hospital dedicated to the health care of women. It is located in the hill country surrounding Austin, Texas, and offers an environment that is unique in the city. At the time of a visit, a patient of Dr. Margaret Thompsonâ&#
> 1. During periods of bad weather, as compared with periods of clear weather, how many additional gallons of fuel on aver-age should FreeEx expect its planes to consume because of airport congestion? 2. Given FreeEx’s policy of ensuring that its planes do
> The Houston Port Authority has engaged you as a consultant to advise it on possible changes in the handling of wheat exports. At present, a crew of dockworkers using conventional belt conveyors unloads hopper cars containing wheat into cargo ships bound
> Go forth armed with clipboard and stopwatch and study an actual waiting experience (e.g., post office, fast-food restaurant, retail bank). Begin with a sketch of the layout noting the queue configuration. Describe the characteristics of the calling popul
> 1. In this chapter, we referred to Maister’s First and Second Laws of Service. How do they relate to this case? 2. What features of a good waiting process are evident in Dr. X’s practice? List the shortcomings that you see. 3. Do you think that Mrs. F is
> Thrifty Car Rental (now part of Hertz) began as a regional business in the southwest, but it now has more than 470 locations across the country and almost 600 international locations. About 80 percent of its U.S. locations are at airports, and the rest a
> 1. For the forecast period (i.e., July–December), determine the number of new trainees who must be hired at the beginning of each month so that total personnel costs for the flight-attendant staff and training program are minimized. For
> On the morning of November 10, 2002, Jon Thomas, market analyst for the Mexico leisure markets, canceled more than 300 seats “illegally” reserved on two flights to Acapulco. All of the seats on Jon’s Acapulco flights were booked by the same sales represe
> 1. How is SSM different from Deming’s PDCA cycle? 2. Prepare a cause-and-effect or fishbone diagram for a problem such as “Why customers have long waits for coffee.” Your fishbone diagram should be s
> 1. Assume that you are the assistant to the manager for operations at the FAA. Use the techniques of work shift scheduling to analyze the total workforce requirements and days-off schedule. For the primary analysis, assume that a. Operator requirements w
> River City National Bank has been in business for 10 years and is a fast-growing community bank. Its president, Gary Miller, took over his position 5 years ago in an effort to get the bank on its feet. He is one of the youngest bank presidents in the sou
> Securing a mortgage often is a time-consuming and frustrating experience for a homebuyer. The process involves multi- ple stages with many handoffs to independent organizations providing specialized services (e.g., property survey and title search). The
> 1. What features of the 7-Eleven Japan distribution system illustrate the concept of the bidirectional service supply relationship? 2. Does the 7-Eleven Japan distribution system exhibit scalability economies? 3. How does the 7-Eleven example of B2C e-co
> 1. How does the Boomer Technology Circle illustrate the concept of the bidirectional service supply relationship? 2. How has Boomer Consulting, Inc., made the client a coproduce in the service delivery process? 3. How is the concept of “
> 1. Utilizing a spreadsheet version of the Huff location model (with λ = 1.0), recommend a store size and location for AFI. Assuming that AFI does not wish to consider a store that is smaller than 10,000 square feet, assess the store sizes (b
> Joan Taylor, the administrator of Life-Time Insurance Company, which is based in Buffalo, New York, was charged with establishing a health maintenance organization (HMO) satellite clinic in Austin, Texas. The HMO concept would offer Austin residents an a
> 1. Briefly summarize the complaints and compliments in Dr. Loflin’s letter. 2. Critique the letter of Gail Pearson in reply to Dr. Loflin. What are the strengths and weaknesses of the letter? 3. Prepare an “improved” response letter from Gail Pearson. 4.
> 1. Prepare an -chart and R-chart for complaints, and plot the average complaints for each crew during the nine-month period. Do the same for the performance ratings. What does this analysis reveal about the service quality of CSI’s
> 1. Describe Village Volvo’s service package. 2. How are the distinctive characteristics of a service firm illustrated by Village Volvo? 3. How could Village Volvo manage its back office (i.e., repair operations) like a factory? 4. How can Village Volvo d
> 1. How do the environmental dimensions of the services cape explain the success of Central Market? 2. Comment on how the services cape shapes the behaviors of both customers and employees. Central Market5 The original Central Market grocery store, locat
> 1. Use CRAFT logic to develop a layout that will maximize customer time in the store. 2. What percentage increase in customer time spent in the store is achieved by the proposed layout? 3. What other consumer behavior concepts should be considered in the
> 1. Identify the bottleneck activity, and show how capacity can be increased by using only two pharmacists and two technicians. 2. In addition to savings on personnel costs, what benefits does this arrangement have? Health Maintenance Organization (B) Th
> 1. Beginning with a good initial layout, use operations sequence analysis to determine a better layout that would minimize the walking distance between different areas in the clinic. 2. Defend your final layout based on features other than minimizing wal
> 1. How has Enterprise Rent-A-Car (ERAC) defined its service differently than that of the typical national car rental company? 2. What features of its business concept allow ERAC to compete effectively with the existing national rental car companies? 3. U
> 1. Describe the service organization culture at Amy’s Ice Cream. 2. What are the personality attributes of the employees who are sought by Amy’s Ice Cream? 3. Design a personnel selection procedure for Amy’s Ice Cream using abstract questioning, a situat
> 1.How does Amazon.com illustrate the sources of service sector growth? Comment on information technology, the Internet as an enabler, innovation, and changing demographics. 2.What generic approach(s) to service design does Amazon.com illustrate, and what
> 1. Prepare a service blueprint for Commuter Cleaning. 2. What generic approach to service system design is illustrated by Commuter Cleaning, and what competitive advantages does this design offer? 3. Using the data in Table 3.5, calculate a break-eve
> 1. Prepare a service blueprint for the 100 Yen Sushi House operation. 2. What features of the 100 Yen Sushi House service delivery system differentiate it from the competition, and what competitive advantages do they offer? 3. How has the 100 Yen Sushi
> 1. Prepare a run chart on each of the incident categories. Does she have reason to be concerned about burglaries? What variable might you plot against burglaries to create a scatter diagram to determine a possible explanation? 2. What is unusual about th
> Conduct a Google search on “project finance” and find employment opportunities in project finance. What is the role of finance in projects?
> Could firms in the “world-class service delivery” stage of competitiveness be described as “learning organizations’?
> Discuss the difference between time variance, cost variance, and schedule variance.
> Explain why the PERT estimate of expected project duration always is optimistic. Can we get any feel for the magnitude of this bias?
> Are Gantt charts still viable project management tools? Explain.
> Illustrate the four stages of team building from your own experience.
> Give an example that demonstrates the trade-off inherent in projects among cost, time, and performance.
> Identify dependent and independent demand for an airline and a hospital.
> Service capacity (i.e., seats on an aircraft) has characteristics similar to inventories. What inventory model would apply?
> How is a service level determined for most inventory items?
> How valid are the assumptions for the simple EOQ model?
> Discuss how information technology can help to create a competitive advantage through inventory management?
> Determine if the U.S. service sector currently is expanding or contracting based upon the Non-Manufacturing Index (NMI) found at ISM Report on Business on the Institute of Supply Management website: http://www.ism.ws/pubs/ismmag/.
> Compare and contrast a continuous review inventory system with a periodic review inventory system?
> How would one find values for inventory management costs?
> Discuss the functions of inventory for different organizations in the supply chain (i.e., manufacturing, suppliers, distributors, and retailers).
> What changes in (, (, and ( would you recommend to improve the performance of the trendline seasonal adjustment forecast shown in Figure 11.4? Figure 11.4: Profile of Operator Requirements and Tour Assignments Number of operators 25 20 15 10 5 0 12
> Why is the N-period moving-average model still in common use if the simple exponential smoothing model has superior qualities?
> Suggest a number of independent variables for a regression model to predict the potential sales volume of a given location for a retail store (e.g., a video rental store).
> The number of customers at a bank likely will vary by the hour of the day and by the day of the month. What are the implications of this for choosing a forecasting model?
> For each of the three forecasting methods (i.e., time series, causal, and subjective), what costs are associated with the development and use of the forecast model? What costs are associated with forecast error?
> What characteristics of service organizations make forecast accuracy important?
> Discuss how the M/G/( model could be used to determine the number of emergency medical vehicles that are required to serve a community.
> Give an example of a firm that began as world-class and has remained in that category.
> What are some disadvantages associated with the concept of pooling service resources?
> For a queuing system with a finite queue, the arrival rate can exceed the capacity to serve. Use an example to explain how this is feasible.
> Example 13.1 presents a naïve capacity planning exercise and was criticized for using averages. Recall the concept of a "bottleneck" from Chapter 5, "Supporting Facility and Process Flows," and suggest other reservations about this planning exercise.
> Discuss how one could determine the economic cost of keeping customers waiting.
> When the line becomes long at some fast-food restaurants, an employee will walk along the line taking orders. What are the benefits of this policy?
> Suggest ways that service management can influence the arrival times of customers.
> Select a bad and good waiting experience, and contrast the situations with respect to the aesthetics of the surroundings, diversions, people waiting, and attitude of servers.
> Suggest diversions that could make waiting less painful.
> Suggest some strategies for controlling the variability in service times.
> Go to http://en.wikipedia.org/wiki/Yield_Management and discuss the ethical issues associated with yield management.
> What is the value of self-service in an economy?
> Will the widespread use of yield management eventually erode the concept of fixed prices for any service?
> What possible dangers are associated with developing complementary services?
> Illustrate how a particular service has implemented strategies for managing both demand and capacity successfully.
> How can computer-based reservation systems increase service capacity utilization?
> What organizational problems can arise from the use of part-time employees?
> What explains the continuing trade surplus in services for the United States?
> What is the inherent conflict in a franchising arrangement?
> Chili’s, a United States based restaurant chain that offers Mexican food, has its largest establishment in Monterrey, Mexico. Why is Chili’s so successful in Monterrey?
> Recall that service operations can be classified as processing people, goods, or information. What challenges are faced in each category when globalization is undertaken?
> Conduct a Google search and find the definition of “location intelligence.” What use can be made of geographic information?
> For each of the three generic strategies (i.e., cost leadership, differentiation, and focus), which of the four competitive uses of information is most powerful?
> What are the benefits of using intermediaries in the service distribution channel?
> What are the characteristics of a service that would make communication a good substitute for travel?
> How would you proceed to estimate empirically the parameter "(" in the Huff retail location model for a branch bank?
> Pick a particular service and identify shortcomings of its site selection.
