(This passage was excerpted from material published in 1993.)

Like many other industries, the travel industry is under increasing pressure to expand globally in orderto keep pace with its corporate customers, who have globalized their operations in response to market pressure, competitor actions, and changing supplier relations. But it is difficult for service organizations to globalize. Global expansion through acquisition is usually expensive, and expansion through internal growth is time-consuming and sometimes impossible in markets that are not actively growing. Some service industry companies, in fact, regard these traditional routes to global expansion as inappropriate for service industries because of their special need to preserve local responsiveness through local presence and expertise. One travel agency has eschewed the traditional route altogether. A survivor of the changes that swept the travel industry as a result of the deregulation of the airlines in 1978 — changes that included dramatic growth in the corporate demand for travel services, as well as extensive restructuring and consolidation within the travel industry - this agency adopted a unique structure for globalization. Rather than expand by attempting to develop its own offices abroad, which would require the devel- opment of local travel management expertise sufficient to capture foreign markets, the company solved its globalization dilemma effectively by forging alliances with the best foreign partners it could find. The resulting cooperative alliance of independent agencies now comprises 32 partners spanning 37 countries.

According to the passage, which of the following is true of the traditional routes to global expansion?

They have been supplanted in most service industries by alternative routes.

They are less attractive to travel agencies since deregulation of the airlines.

They may represent the most cost-effective means for a travel agency to globalize.

They may be unsuitable for service agencies that are attempting to globalize.

They are most likely to succeed in markets that are not actively growing.


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