Notes:

If a firm decides to grow by adding services to the existing site, it manages capacity expansion in much the same manner as firms at the entrepreneurial stage. Service firms that choose multiple sites have an additional option for managing the demand volatility—by shifting resources between sites to cover the peak demands. Car and truck rental firms will shift vehicles from slow locations to where the demand is currently highest. In fact, through the use of select discount fares on one-way rentals, these firms actually have the customers transport the vehicles to where they are most needed. Companies with multiple telephone call handling centers will often reroute the overload during peak hours to call centers in other time zones that peak earlier or later in the day. One engineering firm is able to handle rush jobs by electronically moving the work among sites around the globe. By passing work on at the end of one site's day to a new site where the day is just beginning, the company is able to work 24 hours a day on an important project, even though none of its offices actually keep those hours.

As shown in Exhibit 8.7, some firms (such as resorts, universities, and hospitals) manage to grow quite large without ever becoming multisite operations by adding more and more services at their existing site. Other firms (such as chain restaurants and hotels) replicate a more focused concept in a large number of different sites. Despite the success of a limited number of firms, those that try to expand in both directions most often fail. In some cases, this is because the complexity of managing a large variety of services at multiple sites becomes overwhelming. In other cases, some or all components of a complex package of services that evolve to serve customers in one location may simply not be appropriate for customers in another. The opening vignette shows how one of the most successful multiservice firms learned this the hard way when it added a site in Europe.