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Group - 6 Sneha Satyamurthy (162) Sudeshna Gupta (168) Suhaas Sharma (169) Sumit Choudhary (171) Vaibhav Bansal (183) Vaishali Bansal (184)
Introduction
Services: Any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything Kotler
Pure Services : where customer contact is unavoidable. e.g.,
warehousing.
Introduction
De-coupling:
Breaking a process into its component back and front-office activities, segregating those activities into distinct back- and front-office jobs, and, usually, geographically separating the back and front offices.
Based on literature: Extensive de-coupling is needed to increase productivity. More coupled approach is appropriate for other strategic directives.
Current Case
The de-coupling decision has more texture than the two
alternatives that in certain business situations, decoupling is used to provide higher service, whereas in other situations, a highly coupled approach is necessary to lower costs.
Example taken : retail bank lending industry. The focus is on the service system strategy of a firm
creation time.
The potential for efficiency is best when that ratio is small. Smallest in quasi-manufacturing industries. Highest in pure services.
Degree of interaction and customization. Customer contact time per transaction. Degree of contact and complexity and divergence.
High
Labour intensity
Low
High
Strategic Force
It can classified among 2 dimensions Service & cost
Cost
Chase & Acquilanos classification of strategies Quality Speed Flexibility
Cost Leadership Low-cost competitive strategy Broad mass market Efficient-scale facilities Cost reductions Cost minimization
Differentiation
Broad mass market Unique product/service Premiums charged Less price sensitivity
Cost-Focus Low-cost competitive strategy Focus on market segment Niche focused Cost advantage in market segment
Differentiation Focus Specific group or geographic market focus Differentiation in target market Special needs of narrow target market
8 Dimensions of Quality
In low contact service environment, where there is opportunity for de-coupling, manufacturing type of procedures are more appropriate Above combination of cost minimization & high decoupling is termed as cost leader
Geographic separation in which back offices will be in a different location than the front office will provide an opportunity to exploit international wage differentials, tax treatments and better labor market for the back office.
There are 2 approaches to cost minimization 1) Strategic (based on business model) eg: locating production overseas core activities vs outsourced
2) Tactical (focused on detailed functions) eg: choice of suppliers Possible sources of cost minimization: 1) Lean production 2) Outsourcing non-core activities 3) Negotiating better pricing with suppliers 4) Simplifying processes & transactions 5) Pruning product ranges & customer accounts to eliminate unprofitable businesses 6) Aggressive control of overheads
TYPOLOGY DEVELOPMENT
Typology development
The objective of the model developed is to provide competitive positioning with respect to strategic operations focus and decoupling activity. Retail bank lending market has been used for analysis in the paper. Few of its characteristics are: 1. Involves money for personal and not business use 2. Loans taken to purchase a capital good, finance a vacation
Since loans have been there for a long time, it is expected banks will have a dominant service delivery system. BUT, that was not seen after the research was done.
Document signing
Line of visibility
Application processing -Employment verification -Credit check -Document preparation -Credit decision
Post loan processing - Payment processing - Insurance updating - Bad debt collection - Return of collateral documents
opportunity for de-coupling. Intensive marketing of immediate loan processing is only conditional. Almost every loan needs: 1. Verification of applicants credit history 2. Employment/ income verification 3. Other several legal documents 4. Collateral assessment (in case of collateral backed loans) This is followed by customer signature on loan documents, and subsequent interactions for pay-offs, damage to collateral checks, control on delinquents.
Kiosk Keep coupled to reduce idle time High contract worker Technology used to reduce job complexity
There is no best quadrant or dominant market position each represents a distinct strategic position. Each quadrant fits into corporate strategy and present a consistent set of operational, marketing and human resource policies that can provide the distinct competitive advantages of each quadrant.
Example: Cost Leader Bank Concern build rapport with customers reduce face-to-face contact
AmSouth
A telephone call for all local Nashville branches is automatically routed to a
commission-based.
Commission structures should only be large enough to give an incentive to
provide an incentive for high-contact personnel technology is used primarily to save labor.
Strategic conflicts
Revenue generation can be difficult Flexibility can be hurt as product lines are truncated
enhance customer convenience while providing a limited product line at a low cost
The product line is abbreviated Personnel staffing in small service units is a difficult issue
centralized.
Focus on standardizing tasks from a reduced product line.
Challenges faced
The human resource challenge is also difficult.
Conformance to quality. Maintaining and enforcing standards can be difficult. Extensive cross-training is essential. Employees are basically salaried with a small amount
IMPLICATIONS
IMPLICATIONS
Applicable Conditions for the typology to be true: Differing competitive strategies of cost minimization and non-cost minimization strategies exist. Front-office and back-office work can be de-coupled
PROPOSITIONS
Firms adhering more closely to ideal strategic types are more effective Formation of metrics to identify strategic congruence and results.
Firms that focus on one strategy are more effective than firms that attempt multiple strategies with same facilities Forming of departments within a department, like banks within a bank.
PROPOSITIONS
The level of de-coupling is not correlated with a strategy of cost minimization
The level of job complexity is not correlated with a strategy of cost minimization
PROPOSITIONS
Customization is not correlated with the level of de-coupling
PROPOSITIONS
Cost leader firms pursue labour replacing technology more than firms in other quadrants
THANK YOU!