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Organization Resource Management

Post-Graduate Diploma in Business Management (ABE)

Closing Service Gaps in a B2B Service Firm

A Case Study on Ace Dragon Media Management Co., Ltd

Submitted by

Phone Su Soe (Mr.)

Myanmar Human Resources Institute

1st June 2010

Word Count - 2200

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  Contents Page

Personal Statement

Executive Summary

1. Introduction 1

2. Company Profile 2

3. Methodology 2

4.

Literature Review 4.1.SWOT Analysis 4.2.The Service Gap Model 4.3.The Service Marketing Triangle 4.4.Business Process Reengineering

3 3 4 5 6

5. Analysis and Findings 5.1. SWOT analysis 5.1.1. Strengths 5.1.2. Weaknesses 5.1.3. Opportunities 5.1.4. Threats 5.2. Service Gaps Analysis

7 7 7 7 8 8 9

6.

Recommendations 6.1. Managing Organisational Resources 6.2. Closing Gap 1 6.3. Closing Gap 2 6.4. Closing Gap 3 6.5. Closing Gap 4

10 10 12 12 13 13

7. Conclusion 14

References 15

Appendix 1. Services of Ace Dragon

Exhibit 4.1.SWOT Analysis 4.2.The Service Gap Model 4.3.The Service Marketing Triangle 4.4.Business Process Reengineering 6. Recommendations to Close the Service Gaps

3 4 5 6

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Personal Statement

Post graduate diploma in business management course fills some colours to

my objective, “to become a leader who is a major change agent and who brings

about changes to achieve competitive advantages and the sustainable

development of my organization and my country, Myanmar (Burma) by

developing ideal and empowering people in dynamic changing environment”.

Organisational Resource Management module enables me to be more attuned

to the existing resources within our organisation and to be aware of how these

resources can be managed to create values to satisfy our customer requirements,

increase shareholder value and to satisfy other stakeholders for sustainable

development in dynamic changing environment.

Special thanks to my teachers, Dr. Ohnmar Myint for her lectures and kind

supervising for the whole subject, Mr. Aye Kyaw (Principal cum MD, Myanmar

Human Resource Institute) for his kind support, Mr. Aung Chit Khin (Principal cum

MD, Strategy First Institute) for his guidance, Ms. Htet Htet Aung (Suntec) for her

sharing and support, and thank to Ace Dragon, Mr. Su Tin (Managing Director),

Ms. Khin Thet Maw (Executive Director), Ms. Htway Htway Phyu (General

Manager) and all employees. Finally, I thank to my parents who always encourage

me to get MBA and wish me to become a successful businessman.

This assignment is dedicated to my organisation and not submitted to any

association or institute for any degree before. Ace Dragon allowed using company

data for educational purpose only and it is confidential.

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Executive Summary

Nowadays, market environment is changing and turbulence. Market

fragmentation, hyper competition and disintermediation i.e. suppliers and customers

direct contact to each other, lack of media freedom causes challenges for Ace

Dragon.

Ace Dragon was a successful media management company for its media

advertising and IEC production. But it had weaknesses such as lack of printing and

publishing machines, lack of standard operation procedures (SOP), cannot deliver

on promised services and cannot leverage the senior managers’ expertise in

operations, poor internal communication and operationalisation of strategies. This

will prevent Ace Dragon to get market share in this competitive environment.

By reviewing literatures; SWOT analysis, Service Gap Model, Service

Marketing Triangle and Business Process Reengineering, the research was carried

for this paper. Recommendations were provided both for the whole organisation and

for each function; marketing, human resource and operation which may fit to the

hybrid business strategy of Ace Dragon to solve the problems by managing

organisational resources effectively and efficiently.

As a media management agency, Ace Dragon has to differentiate among the

agencies by offering innovative services and IEC and sales promotion products with

competitive price. Organisation resources must be managed; promote and invest in

human resource, information technology and reengineer its different operation

processes according to its hybrid business strategy. Finally, Ace Dragon is believed

to be changed by actions according to vision in order to get competitive edge and

sustainable growth in more competitive and turbulence environment in the near

future.

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1. Introduction

The core objectives of any businesses are to achieve good returns on

investment and to do so as long as possible. Nowadays, many companies become

short-term and lack of future strategy. Especially in Myanmar, the country is full of

uncertainties and challenges for businesses.

Ace Dragon is an Information, Education, Communication (IEC),

Advertising & Media Management Co., Ltd which was successful for its media

advertising and IEC production. But nowadays, market environment is changing

and turbulence. Market fragmentation, hyper competition and disintermediation i.e.

suppliers and customers direct contact to each other, lack of media freedom causes

challenges for Ace Dragon.

When Ace Dragon was established in 1998, there were few competitors and

suppliers in the market. Nowadays, about 237 advertising agencies, under

Advertising Agencies, Counselors & Services and 28 media agencies under Media

Services – Multi-media heading in Yangon Directory. (http://www.myanmar-

yellowpages.com/yellow_pages). The competitive environment is dramatically

changing.

This assignment focuses on closing service gaps of Ace Dragon by reflecting

human resource management, marketing management, and operation management

theories, specifically by using the service gaps model. Advise strategic

recommendations which include a business process reengineering exercise for Ace

Dragon. The effective management of organisation resources will minimize threats

in turbulence environment and will help Ace Dragon to get competitive advantages

and sustainable development.

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2. Company Profile

Ace Dragon Information, Education, Communication (IEC), Advertising &

Media Management Co., Ltd. was established in 1998 in Yangon, Myanmar by a

group of experienced media professionals to provide customised media

management services to business organisations for promotional activities, and IEC

materials and emergency kits creation and production services to non profit

organisations. Two partners, Managing Director (MD) and Executive Director (ED)

steer the company. The company currently has about 50 employees with flat

organisation structure. The company is now reengineering after 10 years.

The services of Ace Dragon were to organise the products with innovative

ideas according to the customers’ requirements. Its only has creative team and

media, advertising and marketing professionals which is the core competence of

Ace Dragon. According to the general manager, unique selling points were 24 hours

service, fast and best quality creative services and products, and create value added

IEC and sales promotion materials (IEC, POP, Printing and Production for

advertising, etc) with competitive price. It could be doubt that unique selling points

were robust enough for competitive advantages and sustainable developments? Are

they relevant to the needs of customers and difficult for competitors to imitate?

3. Methodology

In this assignment, a case-study method was adopted and information was

collected through in-depth interviews to understand the issues thoroughly. Non-

financial performance of Ace Dragon was analysed. The primary purpose is to

report the senior management about challenges and actions required to improve

competitiveness of the organization for the future. The chief executive officer, the

executive director, the general manager, line managers and front line employees

were interviewed for this assignment. Under the permission of the executive

director, a two-hour discussion session was organised with employees to get their

perception on the organisation and their expectation from organisation.

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4. Literature Review

4.1. SWOT analysis

A scan of the internal and external environment is an important part of the

strategic planning process. Environmental factors internal to the firm usually can be

classified as strengths (S) or weaknesses (W), and those external to the firm can be

classified as opportunities (O) or threats (T). The SWOT analysis provides

information that is helpful in matching the firm's resources and capabilities to the

competitive environment in which it operates. As such, it is instrumental in strategy

formulation and selection. The following diagram shows how a SWOT analysis fits

into an environmental scan:

Exhibit 4.1 – SWOT Analysis Framework

Source: http://www.quickmba.com/strategy/swot/

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4.2. Service Gap Model

Service gap model is used in service providing organisations to find out the

reason for customers’ dissatisfactions i.e. differences between expected services and

perceived services (gap 5) because of misunderstanding expectations (gap 1), wrong

specification (gap 2), failure to deliver (gap 3) and over promising (gap 4).

Exhibit 4.2 – Service Gap Model (Parasuraman, Zeithaml, Berry 1985)

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4.3. The Service Marketing Triangle

Gronroos (1984) argued that services require external, internal and interactive

marketing. The company has to communicate not only to its external customers but

also to its internal customers of employee. Because employees are the people who

will directly provide services to the customers and the quality of service will be

decrease and cause customer dissatisfaction because of weak in internal marketing.

 

Exhibit 4.3 – Three Types of Marketing in Service Industries

(cited in Kotler, 2010, p.401)

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4.4. Business Process Re-engineering

Hammer and Champy (1993) defined re-engineering as ‘[t]he fundamental

rethinking and radical redesign of business processes to achieve dramatic

improvements in critical, contemporary measures of performance such as cost,

quality, service and speed.’ BPR is about the proper reengineering method of

implementation within a company for better returns,

Exhibit 4.4 – Business Process Reengineering Cycle

Source: http://www.nickmutt.com

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5. Analysis and Findings

Know your enemy and know yourself – your victory will be painless.

Know the weather and the field – your victory will be complete.

Sun Tzu, the Art of War  

5.1. SWOT Analysis  

5.1.1. Strengths

• Media professionals who have over 15 year’s experiences.

• Customer loyalty

• Government social networks and international social networks.

According to the general manager, USP were

• 24 hours service, fast and best quality creative services and products.

• Create value added IEC and sales promotion materials with competitive

price.

5.1.2. Weakness

• No printing and publishing machines

• Cannot deliver on promised services and

• Cannot leverage the senior managers’ expertise in operations.

• Poor internal communication and operationalisation of strategies.

• No written standard operation procedures (SOP).

• Tacit knowledge reduces when trained personnel quit – lack of explicit

knowledge.

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5.1.3. Opportunities

• Myanmar is one of the ASEAN member countries - ASEAN Free Trade

Agreements may bring about increase business activities.

• Market liberalization, deregulation and privatization.

• Increase talent pool from increasing management schools

• High technology and internet access.

• Increasing number of NGOs.

5.1.4. Threats

• Hyper competition from entrants.

• Disintermediation in the industry i.e. suppliers and customers direct

contact to each other.

• Customer organisations demand fragmentation.

• Lack of media freedom i.e. censorship from different ministries and

government organisations.

• Knowledge worker shortage.

• Situated in one of the least developing countries, Myanmar with high risks

and uncertainties.

According to SWOT analysis, Ace Dragon must deliver better service

quality, tangible and distinct value to survive and achieve competitive edge to get

higher customer satisfaction. Service gaps model is used to deliver service quality

and to iron out flaws in the system.

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5.2. Service Gaps Analysis

As a service providing agency, Ace Dragon has to consider some limitations

trigged by the service characteristics such as lack of ownership, high perceived

risks, difficulty in pricing, required high involvement of customers, competences of

service providers, service quality variability and evaluation of service, etc.

According to the service gap model, Ace Dragon’s delivered services are not

what its customers expect. There have been delays and discrepancies in the services

currently delivered. The customers have been sometimes upset due to the

differences between what they are expected and what they experienced. Therefore,

there exists Gap 5.

• Gap 1: Customers’ requirements are identified during the sales process.

Senior management also know the customer expectations well according to

their professional experiences. Therefore, the service Gap 1 does not exist.

• Gap 2: Ace Dragon management does not clarify the goals and specify the

service quality levels clearly to the operational level staff. The management

does not consider the capacity of employees when specifying the steps

required. There are no-written procedures for standard services and thus

employees especially operation staffs do not understand what is required of

them. Therefore, Gap 2 exists.

• Gap 3: The employees do not have enough competences to deliver the

services because of role ambiguity, poor employee job fit, weak in

information system, poor supervision, trainings and control systems.

Therefore, Gap 3 exists

• Gap 4: Ace Dragon’s external communications handled mainly by the sales

representatives do not match the services quality levels specified by senior

management due to weakness in internal communication. The quality levels

are already weakened by Gap 2 and 3. Therefore, external communications

sometimes become overpromises to the customers, Gap 4 exists.

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6. Recommendations

6.1 Managing Organisational Resources

In order to close the above service gaps especially gap 5, all the business

activities such as marketing, human resource, operation and information technology

must be integrated to manage their allocated organisational resources according to

the business strategy. There different models for each department to manage

organisational resources including marketing mix (7Ps). As a service organisation,

additional three Ps; people, process and physical evidence have to be managed

effectively.

People must be managed effectively because competent employees can

manage other organisational resources effectively and efficiently by HR planning,

Human Resource Development, Knowledge Management, Performance

Management, Employee Relation and Quality Management. Effective HP models

such as high performance working and management models, high commitment,

involvement and engagement models.

Process includes procedures and information systems which are important for

smooth operation of different organisation departments and functions such as

human resource department, marketing department, operation department and

finance and accounting department, etc. By means of business process

reengineering the company can reduce costs by reduction of non-value added

activities and smoothing its internal operations within and between the departments.

Some advantages of information technology include;

• bringing down barriers of linguistic and geographic boundaries and share

information quickly and efficiently,

• cheaper, quicker and more efficient communication,

• computerise the business process thus streamlining businesses to make them

extremely cost effective,

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• bridging the cultural gap,

• more time for delivering your products and services worldwide and

• Creation of new jobs, etc.

Physical evidence is important to mention the company image and its quality

product or service for customer emotional satisfaction before, during and after

purchasing. This is especially useful in service delivering companies because of five

service characteristics such as lack of ownership.

Exhibit 6 – Recommendations to Close the Service Gaps

Marketing Human Resource Operations

Gap 1 Market research

Marketing Information

System

Customer feedback

Recruitment and selection

Induction

Training and Development

Encourage interaction

Staff feedback

Gap 2 Service process

Develop (BPR)

Set Key Performance

Indicators (KPIs)

High Involvement

Management Model (HIMM)

Standardised services

Develop (BPR)

Quality related goals

Gap 3 Internal Marketing Recruitment and selection

Clear job description &

job specification

Training and Development

Employee Relation

Performance Appraisal

Reward

Follow Standard operating

procedures

Technology

Operation efficiency

Quality Control

Gap 4 Service Marketing Triangle

Manage Customer

expectations

Research and Monitor

Communications

Integrated Marketing

Communications (IMC)

Performance Management

Reward

Operation efficiency

Quality Control

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Following are the strategies to manage organisational resources for each

function to follow in order to close service gaps to get service quality attributes;

reliability, responsiveness, assurance, empathy and tangibles, to improve customer

satisfaction profitability.

6.2. Closing Gap 1

• Although gap 1 does not exist now, Ace Dragon has to prepare for the future

potential gap. Not only senior management, but also employees must be

capable to understand the future customers’ expectations.

• Senior management can better understand customer expectations through

market research, customers’ feedback, suggestions, complaints and feedback

from front-line staffs.

• Incorporating IT – such as database systems, in marketing information

system could greatly improve marketing decisions

• HR must recruit and select competent managers and staffs, provide good

induction and trainings for customer service and relation.

6.3. Closing Gap 2

• Specify standard media management services that reflect customers’

expectations and set quality related goals.

• Develop Business Process Reengineering with cooperation between

marketing and operation.

• Take employee suggestions & contribution, especially customer facing staff

by using high involvement management model.

• Set standard operating procedures for specified services and using advanced

technology to reduce human error.

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6.4. Closing Gap 3

• Promote internal communications i.e. set, communicate and reinforce

customer-oriented service standards for all employees.

• Start from recruitment and selection, HR should recruit with service in mind

and clarify role of every employees.

• Endorse Internal marketing i.e. employees as customers and empower

employees.

• Practice high involvement management model to create climate in which a

continuing dialogue.

• Conduct trainings and development for employees and get better employee

relation to retain the competent employees.

• Make performance appraisal and reward for their best service provision.

• Encourage to follow standard operating procedures and build capacity of

employees to use high technology.

• Develop operation efficiency and make quality control.

6.5. Closing Gap 4

• Improve internal and external communications according to service

marketing triangle.

• Manage customers’ expectations through integrated marketing

communication.

• Research and monitor communications and take appropriate action to

customers’ feedback.

• Practising performance management and reward to meet the customer

expectation caused by external communication.

• Improve operational efficiency and quality control for the customers’

experiences to match with their expectations.

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7. Conclusion

Previous achievement does not grantee the future success. The previous and

current core competences may even become core rigidities. The question is how it

should face the change by taking opportunities and minimizing threats as macro

environment is uncontrollable and changing dynamically. Unless Ace Dragon is

proactive to get the competitive advantages, it will be forced to change by the

turbulent environment. How it is performing now will decide where it will be in the

future.

The effective management of resources according to business strategy leads

to competitive edge, sustainably and the future success of the company. Therefore,

the cooperation, commitment and participation of different management levels and

departmental integration are essential for the effective management of

organisational resources.

Ace Dragon has to be flexible enough to face the change with strong strategy

and structure. Resources are the backbone of the organisation for survival and

growth. As a service organisation, it has to close the service gaps to improve

customer satisfaction and to increase shareholders’ wealth by following the

recommendations to manage system, staff and capital, organisation resources

according to its hybrid strategy of differentiation and cost-leadership by cooperation

among departments and different management levels for competitive advantages

and sustainability of the company.

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References

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Pearson Education International. Prentice Hall.

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15. http://www.acedragon-myanmar.com/

16. http://www.myanmar-yellowpages.com/yellow_pages

17. http://www.nickmutt.com

18. http://www.quickmba.com/strategy/swot/