Service Quality and Service Excellence Features of British Airways - Case Study Example

?Business Excellence Contents Introduction 3 Company Background 4 Operation of the company’s quality processes 8 Suggestions for improvement 10 Improving performance by improving quality process 10 Challenges faced by the company 11 References 12 Bibliography 14 Introduction The key focus of a business is its customers. A business survives because of its market. Therefore to maintain the customer base, the business needs to present quality product & service to the market. The market is full of substitutes, so whenever a product or service deteriorates its quality the customer shifts to the other available options. In order to retain the customers & market share, the marketer emphasizes on excellence & improvement of the quality of products & services offered. (Kapoor, Hughes & Pride, 2011, p.10) There is a difference between the quality analysis of a product & a service. Products are tangible in nature & hence one brand can be compared easily with any other brand offering the similar benefits. Things are different for services. Services are intangible & hence its evaluation is based to a large extent on the people providing the service. The goods used in delivering the service is also an important parameter for measuring the efficiency of a service. Our topic of discussion is based on the product or service excellence of a company. We have chosen British Airways as the company about which we will carry on the discussion. Since it is a service firm, therefore we will focus on the service quality & service excellence features. Service quality can be achieved by two approaches- Reactive – In this approach quality is not regarded as a basis for differentiation or competition. Here the emphasis is more on the reduction of annoyance of customers rather than improvement of service quality for providing them satisfaction. Proactive – This approach focuses on quality as the primary basis for differentiation. Here the customers are highly valued & for providing them satisfaction, the company puts emphasis on improving the quality of service. (Mohanty & Lakhe, 2001) Company Background British Airways is the largest among other airline companies in terms of sizes of the fleets and the second largest in passenger carriage. It is based near the London Heathrow Airport & is the leading airline in the United Kingdom. Previously The British Airways Board was formed in the year 1971 and the task of the board was to control British European Airways & British Overseas Airways Corporation, the two nationalized airline corporations. In 1974, British Airways came into existence with the merger of two state-owned airlines namely British Overseas Airways Corporation & British European Airways. British Airways was formed with the aim of creating a worldwide network & also for achieving economies of scale. The company had around 50000 staffs & nearly 215 aircraft. Cultural differences between the airlines caused issues relating to class of the people. (Alkhafaji, 2001, p. 243) It underwent massive losses during the Middle East oil crisis. But as it had the government’s support, the company didn’t feel any urge to improve or adapt new policies to make up the losses. Customers were neglected & were provided with poor services. The management failed to take any remedial steps & in spite of having large number of aircrafts & excellent engineers, the company failed to get the customer’s support. In the 1980s, a survey said that 33% of the passengers didn’t prefer to travel by British Airways. During that time the company faced very little competition on its route & the Heathrow airport provided some of its best slots to the British Airways. It had major share of the market. With the appointment of Margaret Thatcher as the Prime Minister of UK in 1979, the things started to change rapidly. She introduced privatization of the national firms & British Airways was made the responsibility of a successful industrialist Lord King, who was appointed as the CEO of the organization. Lord King applied various strategies to improve the productivity of the company. In 1983, Colin Marshall was appointed by Lord King as the new CEO. Marshall had a service background & he realized that to survive competition the firm should meet the market needs. This strategy was totally new & it did not suit the culture of the company. He also realized that British Airways can never run on a low operating cost & strict margins, hence he put more emphasis on the personal part of the service & re-focused the entire firm on the customers. For this goal to be accomplished it was necessary on the staff’s part to get involved into the vision of the company by heart & soul (Lundy & Cowling, 1996, pp. 353-354) Soon in 1986, The CEO of British Airways declared in their mission statement that they would be putting more & more emphasis on the customer service. He appointed a new management team which had flexible thoughts unlike the previous ones whose traditional thinking was very much limited. The company was reborn with new infrastructure, reduced number of employees, introduction of uniforms & new marketing information. They rebuild their objectives, management, sales & put focus on their reputation & competition. Control system & terminal facilities were re-build with huge investments. Computerized reservation & competitive pricing structure was introduced. Around 60% of the aircrafts got replaced. Some of these were parts of the Total Quality Management which was then, a very new concept to the management. On this very point the British Airways adopted new strategies & for applying the new strategies they invested a lot. (Doganis, 2006, p.283) Meanwhile in the early 90s, a shared booking information system was introduced which helped the passengers of all airlines. British Airlines was accused of providing false information to the passengers to shift them from a competitor’s flight to their own flight. Due to this incident, the company was fined 3 million pounds & they had to pay 610,000 pounds for rectifying the damages that took place due to their unethical practices. (Gregory, 2010) Again, the new style of management created great amount of conflict between the employees & the employers. The employees were having problem to change their attitude, culture, thoughts etc. according to the demand of the management. They always had a feeling of pride for working for the company, but they never worked with trust & respect for the management. On the other hand, the management always doubted their employees. Due to this never ending conflict, year 1995 onwards experienced some industrial disputes among various departments of the company. Now the company was totally submerged in losses & damages & it needed an immediate recovery to gain back its markets. The airlines carried on its business by selling off some of its assets. The price of its shares clearly reflected the market’s lack of trust on them. In 1997, the company came up with new strategies once again where they introduced training program for the development of the staffs which included question answer sessions & seminars. It was a quite expensive session though very few feedbacks turned out to be positive. The company restructured the salary of the cabin crew which paved the way for strong grievance among the employees; because they were told that their payments were not going to reduce & only minor changes would happen. Though later on, the company was found diverting from their agreed terms which brought hostile reactions from the staffs. The company also encouraged its passengers to use their online service for booking & reservation. However customers were found lodging complaints that the systems didn’t work properly & require lots & lots of phone calls. (Rawlins, 2008, p.194-201) The company had to enter the Common Use Terminal Equipment (CUTE) service as many of the airports serviced by them shifted to this service. Around 150 terminals served by the British Airways opted for CUTE & then the company decided to start its own CUTE system. (Belliotti, 2008, p.66) The airlines maintained the traditions of Britain yet it contained openness & friendliness towards other cultures. It invested a lot on the physical part of the airline service which means every tangible product associated with it was taken care of. It introduced various articles representing the various countries like a Japanese porcelain model, Chinese calligraphy, frescoes from South Africa etc. Now the airlines saw customers from various places & three out of five customers belonged to places other than UK. By the end of 2000, the airlines predicted higher profits. But this profit was expected not due to higher revenues but due to savings done by cutting down the excess things around. At the turn of 2002-2003, the vision of the company indicated that it now wants to be profitable, by offering full range of services & wide network of connections to the airlines. The vision included the achievement of 10% profits & that too by improving their image. It gives more & more importance to the reputation of a firm & its professionalism. Today it’s been considered as the most high quality aviation company. They were the first to start branding & loyalty programs. Also they introduced revolving seats which turns into a complete flat bed in the first class. They came up with the concept that just boarding the flight is not the trip. The trip includes the clearance & waiting time also which should be pleasing for the passengers. Therefore they came up with their own self service kiosks by IBM where their staffs wearing British Airlines uniforms helped the passengers in clearance within little time. The passengers were offered with touch screen monitors for check-in & selecting seats of their choice without having to form a cue near the helpdesk. Now the passengers felt that they are taken good care of by the airlines. This boosted confidence & trust among them. (Hall, Jones & Raffo, 2007, p.125) Operation of the company’s quality processes Previously the company operated very reluctantly without any aim of further progression or prosperity. The senior management of the firm decided to launch a Total Quality Management program for the improvement of the company’s performance. They mainly focused on customer satisfaction, reputation, profitability & team work. The TQM team worked according to the following stages- 1. Analyzing the current status of the firm & creating a report based on it 2. Informing every department about the decision of TQM & asking for their cooperation 3. Facing the outcomes of the analysis with a positive attitude 4. Educating all the staffs within the domain of TQM & allowing the changes to take place 5. Work practices, policies & procedures should be changed according to the newly introduced changes 6. Starting the quality improvement process 7. Evaluating the progress 8. Encouraging a consistent participation of all level of employees After restructuring the company policies for several times, the British Airways learnt the value of a good quality process. The entire process is now customer oriented & the management’s continuous effort is on making the employees dedicatedly serve the customers. It decided to introduce various changes into the culture & working of the firm which included- Strong customer focus Excellent service Renovating the tangible products used in offering the service Getting more open to foreign cultures Introducing self help kiosks Reduced the number of employees as well as number of hierarchical departments Reduced the salaries of the employees Rebuilt their objectives, management, sales & put focus on their reputation Computerized reservation & competitive pricing structure was introduced Invested lot of time & money in designing new strategies Introduction of a new management team Introduced training program for the development of the staffs Started branding & loyalty programs Introduced revolving seats which turns into a complete flat bed in the first class Developed hostile relations with the employees Focused on computerization of their services Put more emphasis on the company’s image Arrival & departure was made on accurate time Dynamic leadership was introduced CEO having marketing background was appointed The management style was changed to “service oriented” from “militaristic” (Harigopal, 2006,p.53-55) All these changes were introduced for the betterment of the company but some changes were not accepted by the employees & some were irritating for the customers. For example when computerized reservation system was introduced, the customers found it inconvenient as the servers were always down & they had to make lots of phone calls for confirming about their reservation, where most of the phone calls were received by inexperienced staffs who could help the customer with the required information. Also many employees found it difficult to face the changes that management decided to introduce. These changes even modified their salary structure & lay off many employees. The firm took the help of a two way audit where an external agency was hired for the purpose of gathering knowledge about the consumer’s perception regarding the services offered by the firm & also for knowing the mindset of the staffs of the company who are responsible for meeting the customers. This audit revealed a lot of weak points of the management in relation to customer service & human resource management. The management structure was also changed from divisional to functional. It made some of the managers to face the customers directly & to be accountable for the performance of the junior level staffs. The company has started outsourcing various customer research services to countries like India where they can get ample labors at cheaper rates. Hence it’s an important cost saving strategy of the firm. Suggestions for improvement The company has already tried & tested several methods for upgrading themselves among which some were failures & some proved to be successful. Total Quality Management can further improve its performance by- Allowing employees to work as team as well as individual to serve the customer better Providing employee benefits Customer based strategy to improve the performance of the firm on a daily base Proper segmentation of the market to understand the customer’s preference Ensuring “zero defect” products & services to be offered Optimum use of the resources available Reducing liabilities Finding ways for cost cutting Introducing better technology (Pike & Barnes, 1995, p.25) Improving performance by improving quality process Customers expect quality from the service provider & those expectations can be met by providing performance on which the customers can rely upon. When a product or service gets defective, it results in wastage of material & cost. This in turn results in the dissatisfaction of customers. Quality control tool is implemented to provide better end products to the customer. For getting better end result, the service is monitored at every stage from manufacturing till delivery. It is a process in which the whole firm gets involved so that any mistake committed by someone is seen as a mistake of the whole company & not of an individual. The main objective should be to prevent errors than to rectify them. For this purpose various quality management tools can be used namely Total Quality Management, Six Sigma, Just In Time etc. These tools make the work of the management easier by providing training to the employees regarding various functions like production, sales, marketing, promotion, customer service, accounting etc. (Gitman & McDaniel, 2008, p.273-274) Challenges faced by the company Just before privatization, the company earned a negative image in the minds of the customers with their poor service quality & therefore, it’s a huge threat for the company to replace that image with a positive one. Also the ticket prices are higher & this could also result in the reduction in market share of the firm. The hostile relations between the management & the employees, is again a challenge faced by the firm. These challenges can be overcome with efficient service quality, improved training program & introduction of efficient human resource team. It can be done by following- 1. Quality Planning 2. Quality Control 3. Quality Improvement (Nigam, 2005,p.42) References Alkhafaji, A.F. 2001. Corporate Transformation and Restructuring: A Strategic Approach. [Online] USA: Greenwood Publishing Group. Available at: http://books.google.co.in [Accessed 20 May, 2013] Lundy, O. & Cowling, A.G. 1996. Strategic Human Resource Management. [Online] London: Routledge. Available at : http://books.google.co.in [Accessed 20 May, 2013] Doganis, R. 2006, The Airline business. [Online] USA: Routledge. Available at: http://books.google.co.in [Accessed 20 May, 2013] Rawlins, R. A. 2008, Total Quality Management. [Online] UK: Author House. Available at: http://books.google.co.in [Accessed 20 May, 2013] Hall, D., Jones, R & Raffo, C. 2007. Business Studies. [Online] UK: Pearson Education Ltd. Available at: http://books.google.co.in [Accessed 20 May, 2013] Mohanty, R.P. & Lakhe, R.R. 2001. TQM in the Service Sector. [Online] India: Jaico Publishing House. Available at: http://books.google.co.in [Accessed 20 May, 2013] Pike,J & Barnes,R. 1995, TQM in Action: A Practical Approach to Continuous Performance Improvement. [Online] London: Chapman & Hall. Available at: http://books.google.co.in [Accessed 20 May, 2013] Harigopal, K. 2006, Management of Organizational Change:Leveraging Transformation. [Online] India: SAGE. Available at: http://books.google.co.in [Accessed 20 May, 2013] Gitman, L.J. & McDaniel, C.D. 2008, The Future of Business: The Essentials [Online] USA: Cengage Learning. Available at: http://books.google.co.in [Accessed 20 May, 2013] Nigam, S. 2005, Total Quality Management: An Integrated Approach [Online] India: Excel Books India. Available at: http://books.google.co.in [Accessed 20 May, 2013] Kapoor,J.R. Hughes, R.J. & Pride,W., 2011, Business[Online] USA: Cengage Learning. Available at: http://books.google.co.in [Accessed 20 May, 2013] Belliotti, R. 2008, Common use facilities and equipment at airports [Online] Washington D.C: Transportation Research Board. Available at: http://books.google.co.in [Accessed 20 May, 2013] Gregory, M. 2010, Dirty Tricks: British Airways' Secret War Against Virgin Atlantic [Online] London: Random House. Available at: http://books.google.co.in [Accessed 20 May, 2013] Bibliography Asher, M. & Kanji, G.K. 1996. 100 Methods for Total Quality Management [Online] London: SAGE. Available at: http://books.google.co.in [Accessed 20 May, 2013] Morrell, P. S. 2007. Airline finance [Online] USA: Ashgate Publishing, Ltd. Available at: http://books.google.co.in [Accessed 20 May, 2013] Armstrong, M. 2000. Strategic Human Resource Management: A Guide to Action. [Online] London: Kogan Page Publishers. Available at: http://books.google.co.in [Accessed 20 May, 2013]   Read More