When companies expand does service quality contract?

What's with marketing case studies that brings out the creative juices in the students? I guess, it's the feel of that breath of fresh air after the didactic monologues that pass off as instructions in conventional classrooms.

Been through a case study on the famed 'Dell Service'. What caught the attention is its startling resemblance to the "Starbucks" case study (one that we did in the services marketing class earlier on). Viewing the negative 'word of mouth' that both the firms garnered (during a particularly unforgettable period in their lives), one is prone to contemplate on the fact that both started out selling great customer experiences. Starbucks came with its concept of the 'third place' - a place where one congregated to hit it out with friends, a place that was distinctly different from the workplace and home; a place where one could unwind and catch up with 'my types'. Dell, on the other hand, shocked the world with its impossibly insane proposal of selling computers directly to the consumer, thereby cocking a snook at distribution channels, that entrenched agglomeration of entities that get the goods from the factory gate to the end user.

In both the cases, the customers enjoyed it thoroughly. However, somewhere down the line, both got it wrong. Was it their expansive plans of growth that send them down the slippery slope of self damnation? Search me! One fact is certain. Both shifted their 'position' from 'delighting' their customers, to taking on the challenge of amassing more customers. Was the cost worth it? No clear answers there. What is apparent though, is the fact that there is no silver bullet that lets you expand your business and retain the customer experience. Does it mean that expansion will always penalise the existing customer at the cost of the new additions? If so, should companies attempt it? Also, how do some firms come out the experience unscathed? Lots of questions that beget answers!