Term Paper: Reviving a Company

Pages: 38 (10476 words)  ·  Bibliography Sources: 1+  ·  Level: College Senior  ·  Topic: Business  ·  Buy This Paper

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[. . .] " (Mercer, 1994, pages 14-15). In the global economy, his point is well taken. Customers today come from a wide range of cultures and backgrounds, and every company has unique needs and wishes. Therefore, a successful company must not attempt to interpret exactly what the customer wants, based on their own experiences and values; it is important to ensure that we determine from the customer himself, exactly what he needs to make the transaction completely successful.

Atkinson attributes the success of Japanese business to their determination to target certain markets, and then thoroughly doing their homework to find out exactly what that market's customer wants. The automotive and electronics industries are examples of their success in overcoming the stereotype decades earlier of producing shoddy goods. More recent sectors targeted and dominated are the banking and financial industries, and now the pharmaceuticals field appears to be next. In each instance, the Japanese were ready to overcome cultural and ideological barriers to understand what the customer really wanted, and then apply the Platinum Rule (Atkinson, 1990, pages 3-12).

Robert Tucker relates a story about British Airways, which had defined poor customer relations in the 1980s. New CEO Colin Marshall decided that they were going around in circles trying to find out what customers really wanted, and he authorized a customer survey. Come to find out, the customers resented the British staff's reserved manner and interpreted it as unfriendliness and hostility. This one factor weighed twice as heavily with them as other factors which the airline had assumed would be more important, such as decor and ambiance. The company spent millions on training their staff, and now is ranked tops in service by the International Foundation of Airline Passenger Association (Tucker, 1991,-page 168).

He gives other examples, among them Nordstrom Department Store. As the retail industry has attempted to compete with big-box stores in pricing, they have cut staff and essentially made the stores self-serve. However, Nordstrom has gone in the other direction, stressing personal service that goes above and beyond, and a wide range of free value-added services. The staff are the highest paid in the industry and the prices are higher than the norm, yet growth has been steady and positive. The public welcomed the chance to enjoy good service and were prepared to pay for it (Tucker, 1991, pages 165-166).

He also tells the story of Barry Fribush, the founder of Bubbling Bath Spa and Tub Works, who was so disgusted with the problems he had with his own spa and the poor service that followed, that he started his own company. He bought superior merchandise to minimize breakdowns, and hired technicians who worked during the day for companies such as Xerox. These people, although expensive, had the expertise and people skills to deal with the computerized controls of the spas, plus they were available in the evenings when most people wanted them to come and fix the spa. To reduce callbacks, he paid his technicians only for the first service call. Through these measures, he set a new standard in excellent service for the spa industry and kept operating costs in line (Tucker, 1991, 166-168).

Tucker has seven suggestions for improving customer service:

Improve service from the top down. Management must believe in excellent customer service and not simply pay lip service to the idea, and must be aware of the basics of their own operation.

Measurable customer-service goals must be set, for example, what are the maximum number of times the phone can be allowed to ring before answering?

Recruit a customer-centered team, hiring on the basis of communication skills and past demonstrated excellence in customer service.

Hire experience and then provide more training, for example, Home Depot's use of technical experts, then training them in addition.

Give incentives for excellent service: recognition, or a similar idea to the Spa company - paying the technician to fix it the first time.

Empower the team to solve the problem themselves right away, without having to go through a lot of red tape, for example, a Cadillac dealership in Dallas that authorizes the salespeople to have a certain budget per customer to look after-sale adjustments.

Encourage heroic acts. Provide special recognition and make sure that employees who go out of their way for customers become the stuff of legend. (Tucker, 1991, pages 169-176)

Tom Peters and Bob Waterman defined the new approach to the customer, the shaking off of complacency that began in the eighties, as obsession.

This [obsession] characteristically occurred [in the excellent companies] as a seemingly unjustifiable overcommitment to some form of quality, reliability or service. Being customer-oriented doesn't mean that our excellent companies are slouches when it comes to technological or cost performance. But they do seem to us more driven by their direct orientation to their customers than by technology or by a desire to be the low-cost producer." (Peters, Waterman, 1982,-page 157)

This ties in with #2 of their eight essential principles that drive excellent companies: staying close to the customer's preferences, following the Platinum Rule.

Larry Wilson sees the most insidious danger to established, successful companies as the gradual erosion of that obsessive desire to learn the customer's wishes and then delight him by surpassing them. A comfortable position in the market develops, and the early start-up desperation subsides. The company falls victim to "organizational arrogance"; it becomes "fat, dumb and happy" (Wilson, 1987,-page 41). It begins to repeat known patterns of success and the entrepreneurial spirit it once had begins to atrophy. In order to wake itself up, it needs to take risks again, search for new answers, and recommit to quality in its internal workings and in its dealings with clients and suppliers. (Wilson, 1987, pages 41-51)

He sums up the whole Platinum Rule as he sees it, as a variation of the baker's dozen, a value-added philosophy that gives "thirteen for twelve," constantly exceeding the customer's expectations, and stretching the company's understanding of its own capabilities (Wilson, 1987,-page 200).

Morale

According to Fred Jandt, "Actual working conditions are less important to job satisfaction than employees' feelings that management is concerned about them" (Jandt, 1994, p. 107); he cites the so-called Hawthorne effect to prove this point. The Hawthorne Works plant of Western Electric did an experiment, increasing the level of lighting to see if it would help employee morale. Morale went up. Later when they decreased the level of lighting, morale was still up. Therefore, they realized that the employees were responding more to management's interest in them than to the lighting level.

Atkinson tells a similar story about a visit to a Mitsubishi plant (Atkinson, 1990, p. 139). A shop-floor employee was asked about any suggestions he had recently given, and he mentioned that he had shown that a certain button which he would frequently push was so low that he had to bend to reach it. Management had immediately had the button moved up. Moving it did nothing for overall productivity or profit, but it made his life easier, and he was delighted that they had done it for that reason alone.

These two stories demonstrate the influence on employee morale of believing that management is concerned about them, and is willing to try things in a timely manner that may not have direct effect on the bottom line, in order to help them do their job.

Jandt makes the point that although it seems that employee morale does not directly translate into productivity, there are indirect ways in which it does. Absenteeism and substance abuse cost payroll dollars and may be the result of poor morale. Also, employee turnover is a real robber of profit. The cost of recruiting and training a replacement employee can range from $1,500 to $12,000 (Jandt, 1994, p. 108).

He talks about the differences between a bureaucratic or authoritarian management philosophy and an entrepreneurial one (Jandt, 1994, pages 147-149). In the former case, there is a clear requirement for obedience to authority. Self-expression is limited, and the employee is asked to sacrifice or commit to the goals of the company without clearly knowing what they are, or how they will affect him. Because of this culture, the employee starts to play politics, becoming calculating in what he says, not telling the truth unless it is seen to be what the higher-ups want to hear, and back-stabbing. However, in a more participative climate, the supervisor and employee both can say no when they mean no. They tell the facts and do not mince words out of fear that they will make a politically incorrect statement. They share information, including bad news. They use plain language rather than "baffle-gab" or double-talk, and do not imply false promises.

Jandt adds that "the evidence clearly shows that, today, high-control, autocratic, top-down systems are often less effective and less productive than more democratic participative systems" (Jandt,… [END OF PREVIEW]

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