War Room

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  • accounted for 67% of world GDP in 2006 (United Nations Publication 2008).Also of note, services made up 50.8% of GDP in developing countries in 2006. 3. Exported services accounted for 72.9% of GDP in developed countries in 2006
  • > 2.5 times growth
  • The United States, the United Kingdom, and China were Australia’s largest export markets for services, accounting for approximately AU$14.4 billion in 2007, a third of Australia’s total service exports (DFAT 2008). In terms of economic groupings, member economies of APEC and OECD accounted for the majority of Australian service exports in 2007. Australia exported $28.056 billion to APEC economies (58.4 per cent of total service exports), and $23.881 billion to OECD members (49.7 per cent)
  • Consistent with the global trend, service exports remain an important component of Australia’s international trade. The total value of service exports was AU$48 billion in 2007, an increase of 9.4 per cent over the previous year (DFAT 2008). Australia’s service exports have, in fact, almost doubled in the past 10 years and have grown more rapidly than agriculture, mining and manufacturing exports since the mid-1980s (DFAT 2006, 2007a, 2008). However, the average growth rate of Australian service exports during 2002-2007 was 6 per cent per annum, slower than that of global service exports Australia’s exports of services have benefited from a wide range of contributing factors, ranging from rising incomes and changing preferences, to technological advances, deregulations and improved market access. First, the global market for services has experienced exceptionally strong growth . Second, a lot of trade barriers to exporting have been lowered and/or removed after the Uruguay Round of GATT negotiations and the opening of previously closed markets. Third, there is an existing high recognition of Australian expertise in many overseas markets, especially in terms of the quality of services. Fourth, distance has become less critical for international marketers, as advances in technology make national borders less significant. Fifth, many services are embedded in physical products and are consequently exported with those products, making it a lot easier for the service exporter to enter that market. Finally, all Australian exporters have access to a vast range of resources provided by Austrade.
  • Transportation services and travel services, which included business-related travel, education-related travel, and other personal travel, accounted for more than 70 per cent of total services exports in 2007 (Figure 2.7). Exportations of other commercial services were valued at AU$12,836 million (DFAT 2008).
  • This study undertakes an integrated theoretical approach, which has been utilized in several international business studies by incorporating two theories in the literature, including transaction cost economics and relational contracting theory. The chosen research method was in-depth face-to-face interviews with 10 service firms represented a range of industries , utilising a key informant approach. The interviewees were chief executive officer, managing directors, general managers, or other senior staff within the company that were very familiar with the firm’s international operations. Each interview lasted around 1-1.5 hour. The interviews were also semi-structured, enabling the researchers to cover a specific list of topics. Industries
  • Host: jobs, nation’s competitiveness index, country image Service exporters, especially those in the early stage of internationalisation, should also take advantage of their home government’s export assistance programs as a form of resource to undertake market research, attend trade shows, and identifying market potential. In addition, service firms are also encouraged to invest a concerted effort in strengthening the industry-based associations to which they are associated, in order to better promote their common interests and build business networks for future success.
  • War Room

    1. 1. How to best satisfy your consumers’ needs? Lessons from Australian service exporters
    2. 2. <ul><li>This paper is to be presented </li></ul><ul><li>@ </li></ul><ul><li>The 18th Annual Frontiers in Service Conference </li></ul><ul><li>Co-authors: Professor Pascale Quester, Dr Carolin Plewa </li></ul><ul><li>University of Hawaii at Manoa </li></ul><ul><li>American Marketing Association </li></ul><ul><li>IBM </li></ul><ul><li>University of Maryland </li></ul><ul><li>INFORMS </li></ul>Slide
    3. 3. <ul><li>Service exports </li></ul><ul><li>Research steps </li></ul><ul><li>Key findings </li></ul>Overview Slide
    4. 4. The Service Economy <ul><li>~ 70% of global GDP </li></ul><ul><ul><li>> 70% in developed economies </li></ul></ul><ul><ul><li>50% in developing economies </li></ul></ul><ul><li>70% of employment in OECD </li></ul><ul><li>Global service exports </li></ul><ul><ul><li>US$3.29 trillion in 2007 (18% growth) </li></ul></ul><ul><ul><li>50% of world trade by 2020 </li></ul></ul>Slide
    5. 5. Global Service Exports 1997 – 2007, billions USD Slide Source: WTO (2008)
    6. 6. Leading Service Exporters - 2007 Slide Top 10 Exporters Billions USD % Contribution United States United Kingdom Germany France Spain Japan China Italy India Ireland Australia (24) 456.4 273.0 205.8 136.7 128.3 127.1 121.7 110.5 89.7 89.0 39.7 13.9 8.3 6.6 4.2 3.9 3.9 3.7 3.4 2.7 2.7 1.2 WORLD TOTAL Source: UNCTAD (2008) 3,291.5 100
    7. 7. Australian Service Exports <ul><li>> 2,600 service exporters </li></ul><ul><ul><li>35% exporting between $1-$100 million </li></ul></ul><ul><ul><li>64% exporting less than $1 million </li></ul></ul><ul><li>$48 billion in 2007 </li></ul><ul><li>4.5% of GDP </li></ul><ul><ul><li>2.5% in 1985 </li></ul></ul>Slide
    8. 8. Australian Service Exports, millions AUD Slide Sources: DFAT (2007; 2008)
    9. 9. Composition of Australian Service Exports Slide
    10. 10. BUT… <ul><li>“ Under-serviced” service sector </li></ul><ul><ul><li>Fragmentary , exploratory and lacking a strong theoretical base </li></ul></ul><ul><ul><li>Fail to keep pace with globalisation of services </li></ul></ul><ul><ul><li>Very limited attention to success drivers of service exporters </li></ul></ul><ul><li>Current international business climate </li></ul><ul><ul><li>High competitive intensity </li></ul></ul><ul><ul><li>Volatile market demand </li></ul></ul><ul><li>What internal capabilities help better satisfy international customer needs? </li></ul><ul><ul><li>Service exporter defined. </li></ul></ul>Slide
    11. 11. Research Phase 1: Qualitative <ul><li>10 in-depth interviews </li></ul><ul><li>Service exporters in South Australia </li></ul><ul><ul><li>Computer, communication & information services </li></ul></ul><ul><ul><li>Consulting services </li></ul></ul><ul><ul><li>Financial services </li></ul></ul><ul><ul><li>Transportation services </li></ul></ul><ul><ul><li>Legal services </li></ul></ul><ul><ul><li>Training services </li></ul></ul>Slide
    12. 12. Research Phase 2: Quantitative <ul><li>Self-administered survey </li></ul><ul><ul><li>Online </li></ul></ul><ul><ul><li>Mail </li></ul></ul><ul><li>Sample of 770 service exporters Australia-wide </li></ul><ul><ul><li>254 responses </li></ul></ul><ul><ul><li>33% response rate </li></ul></ul><ul><ul><li>Export-venture focus: 1 services sold in 1 overseas market </li></ul></ul>Slide
    13. 13. Respondent Profile Slide
    14. 14. Sales Profile Slide
    15. 15. Industry Profile Slide
    16. 16. International Business Profile Slide
    17. 17. International Business Profile Slide
    18. 18. Key Findings Slide International Competency Personnel Advantage Brand Advantage Financial Advantage Customer Orientation
    19. 19. Implications for Business Practitioners <ul><li>International Competency </li></ul><ul><ul><li>Identify sources of market information </li></ul></ul><ul><ul><li>Develop a base of information on sales opportunities </li></ul></ul><ul><ul><li>Obtain specific information on the legislation/ regulations relative to your provision of services </li></ul></ul><ul><ul><li>Interpret the quality of market information </li></ul></ul><ul><li>Finance Advantage </li></ul><ul><ul><li>Access to capital </li></ul></ul><ul><ul><li>Speed of acquiring and deploying financial resources </li></ul></ul><ul><ul><li>Size of financial resources devoted to the market </li></ul></ul><ul><ul><li>Ability to find additional resources when required </li></ul></ul>Slide
    20. 20. Implications for Business Practitioners <ul><li>Personnel Advantage </li></ul><ul><ul><li>Knowledge </li></ul></ul><ul><ul><li>Quality </li></ul></ul><ul><ul><li>Experience </li></ul></ul><ul><ul><li>Skills </li></ul></ul><ul><li>Brand Advantage </li></ul><ul><ul><li>Brand name awareness </li></ul></ul><ul><ul><li>Distinctiveness of brand image </li></ul></ul><ul><ul><li>Appeal of brand image </li></ul></ul><ul><ul><li>Strength of brand image </li></ul></ul>Slide
    21. 21. Implications for Business Practitioners <ul><li>Customer Orientation </li></ul><ul><ul><li>Objectives driven by the creation of customer satisfaction </li></ul></ul><ul><ul><li>Regular contact with customer to learn how to serve them better </li></ul></ul><ul><ul><li>Competitive strategies based on understanding customer needs </li></ul></ul><ul><ul><li>Integrated internal functions to serve customers </li></ul></ul><ul><ul><li>Desire to increase value for customers </li></ul></ul><ul><ul><li>Managers understand how employees value customers </li></ul></ul>Slide
    22. 22. Implications for Policy Makers <ul><li>Export assistance/promotion/incentives </li></ul><ul><ul><li>Benefits? </li></ul></ul><ul><li>“ for emerging exporters in service industries, we need to be aware of all relevant government agencies, what grants there are out there, what sort of information can be obtained for free…” ( Executive in South Australia ) </li></ul><ul><li>“ We have and will continue to work with Austrade. We’ve sought assistance from the South Australian government and their representatives in the overseas market. Those agencies have been very helpful to us and they have definitely made a difference.” ( Executive in South Australia ) </li></ul><ul><li>Source: Vinh Lu (2009), Unpublished PhD Dissertation </li></ul>Slide
    23. 23. EMDG: $190 million for 2009-2010 <ul><li>SMEs with annual income < $50 million </li></ul><ul><li>Spent at least $10,000 on eligible export promotion activities </li></ul><ul><li>Get 50% of export promotion expenditure to a maximum of $200,000 </li></ul><ul><ul><li>Overseas representatives/ Marketing consultants </li></ul></ul><ul><ul><li>Marketing visits/ Communications </li></ul></ul><ul><ul><li>Free samples/ Trade fairs, seminars and in-store promotion </li></ul></ul><ul><ul><li>Overseas buyers/ Promotional literature & advertising </li></ul></ul><ul><ul><li>Registration/insurance of IP rights </li></ul></ul>Slide
    24. 24. Follow Up Research <ul><li>Sub-group analyses </li></ul><ul><ul><li>Firm size </li></ul></ul><ul><ul><li>High vs. low international experience </li></ul></ul><ul><li>Other drivers </li></ul><ul><ul><li>Competition </li></ul></ul><ul><ul><li>Home/host government actions </li></ul></ul><ul><ul><li>Market turbulence </li></ul></ul><ul><ul><li>Relationships </li></ul></ul>Slide
    25. 25. Thank you! <ul><li>[email_address] </li></ul>Slide

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