Growth strategies for service firms

Two characteristics of services-intangibility of the offering and simultaneity of production and consumption-have important implications for strategic planning. Four of these implications are described Life cycle, experience, and market share, which are the usual determinants of profitability that p...

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Bibliographic Details
Published in:Strategic management journal 1980-01, Vol.1 (1), p.7-22
Main Authors: Carman, James M., Langeard, Eric
Format: Article
Language:English
Subjects:
Analysis
Companies
Conceptualization
Financial risk
Growth
Investment risk
Market segmentation
Market share
Market strategy
Marketing
Packaged goods
Portfolio diversification
Product development
Product innovation
Profitability
Risk
Service
Strategic planning
Strategy
Technological innovation
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Summary:Two characteristics of services-intangibility of the offering and simultaneity of production and consumption-have important implications for strategic planning. Four of these implications are described Life cycle, experience, and market share, which are the usual determinants of profitability that provide guides for strategic planning are not easily applied to the service firm Therefore growth strategies need to be revised In its second part the paper suggests alternative growth strategy paths for service firms. It brings forward three main remarks. First, the service firm should not overuse its delivery system and its image by attempting to serve the needs of too many sociodemographic segments. Second, service development and concentric diversification are not sequential choices, the latter is not so distant from the former as may be commonly perceived Third, expansion to out-of-country markets represents a risk discontinuity, it should be approached by service firms with considerable flexibility and willingness to interact with different cultures.
ISSN:0143-2095
1097-0266
DOI:10.1002/smj.4250010103