Banque Saudi Fransi Outline of Overall Strategy - Research Paper Example

 Investigation of Implementing Customer Focus as a one of the TQM pillars at the Saudi Fransi Bank in the Saudi Arabia Capital Table of Contents Table of Contents 1 Introduction 2 Aims and Objectives 2 Brief Review of Previous Research 3 Outline of Overall Strategy 4 Underlying Assumptions 6 Methodology and Methods to be Used 8 Origin of the Samples to be Studied 9 Data Collection Methods 9 How Results will be Analysed 9 Critical Discussion of Proposals 10 Explanation of the Rationale for Proposed Methods 12 Possible Alternative to Proposed Methods 12 Realistic Estimate of the Potential Value of Research 12 Difficulties and Uncertainties 12 Possible Ethical Issues 13 Plan for Research 13 References 14 Appendix A -Ethics in Questionnaire (Mkemarketplace, 2010) 17 General Statement Overview of corporate beliefs, or corporate statement 17 of commitment to ethical behavior, actions, and decisions. 17 Introduction Banque Saudi Fransi (BSF) is a Saudi Arabian Company, which is affiliated with Crédit Agricole, CIB, France. BSF was established by Royal Decree No. M/23 on June 4, 1977. It is a full service commercial bank serving the local and international clients. It is the leading bank in the kingdom of Saudi Arabia. A New Corporate Identity program is underway in its 72 branches and 321 ATM machines. Customers enjoy efficient international banking services for trade and fund transfers through a network of correspondent banks, and support from CALYON, the international network of one of the ten largest banks in the world. Products and services offered by the bank include trade finance, contract finance, structured finance, Islamic finance, advisory services, and correspondent banking. TQM has been defined as: "a philosophy and style of management that gives everyone in an organization responsibility for delivering quality to the customer. Total quality management views each task in the organization as a process that is in a customer/supplier relationship with the next process. The objective at each stage is to define and meet the customer's requirements in order to maximize the satisfaction of the final consumer at the lowest possible cost." Customer focus has been defined as: "an organizational orientation toward satisfying the needs of potential and actual customers. Customer focus is considered to be one of the keys to business success. Achieving customer focus involves ensuring that the whole organization, and not just frontline service staff, puts its customers first. All activities, from the planning of a new product to its production, marketing, and after-sales care, should be built around the customer" (BNET, 2010). Aims and Objectives A study on implementation of TQM in Banque Saudi Fransi has been envisaged. The aim of the study is the investigation of implementing customer focus as a one of the TQM pillars at the Saudi Fransi Bank in the Saudi Arabia Capital. The objectives are: 1. to investigate implementation of customer focus as one of the TQM pillars in the bank; 2. to develop a strategy for implementation of TQM; and 3. recommend guidelines for good practices. The focus is on the bank`s service for all existing and potential customers. Brief Review of Previous Research Previous research conducted on application of TQM in banks has been reviewed by Naeem et al. (2008). In the review, Rahman and Siddiqui conducted a survey in banks to determine the application of TQM in their departments. The findings indicate that top management support is the most important factor on which TQM implementation benefits rely on. The link between this research and this research is that this research aims to study implementation of TQM for improving its customer focus, and the previous research forms a basis for this research. Samat and Saad conducted a survey on implementation of TQM tenets such as employee empowerment; effective communication; customer entered strategies; and continuous improvement. It was found that application of principles of TQM can result in high levels of service quality. This research supports this research as the principles of TQM will have to be applied for achieving customer satisfaction. Molina, Martin-Consuegra, and Esteban sampled 204 banks to determine the relationship between relational benefits and customer satisfaction. They found that from the set of social benefits, benefits including treatment benefits and confidence benefits result in confidence benefits have a positive effect on customer satisfaction with their banks. This research has implications for the findings from the current research about customer expectations. Sufian investigated technical, pure technical and scale efficiencies in a surver. It was found that efficiency of banking increased dramatically by implementation of TQM. This research supports the current research. Siddiqui and Rahman conducted a questionnaire survey of managers and quantitatively analyzed the data to determine whether TQM philosophy is based on top management commitment; benchmarking for problem solving; etc. It was found that TQM and IS can be fruitful for improving the quality of products and services offered to end customers. This research supports the current research, and the findings have implications for the implementation of TQM at BSF. Khalid Al-Marri collected data from 250 banks in UAE to examine the critical success factors of TQM implementation in UAE banking sector. It was found that critical success factors for implementation of TQM include management support; strategy; recognition; and reward. This research supports the present research, and has implications for current research. Outline of Overall Strategy The traditional belief was that banks are in the finance sector, and not the service sector. The focus earlier was on competing in terms of financial prowess such as asset base; amount of loans released; and cash flow. However, as banks depend on customer satisfaction for business they have been classified as service companies. Front line personnel are responsible for interaction with the customers, which leads customers to decide as to whether come back or shift to the next-door competitor (Al-Shobaki et al., 2010). Feigenbaum has defined Total Quality Management (TQM) as “An efficient system that aims to achieve total quality through the combined effort of all employees within the organization in order to produce a product or service that will meet the needs and expectations of the customer with minimum cost.” TQM has met with phenomenal success in the industrial sector. TQM is being applied to service organizations in terms of their customer orientation such as banks, hotels, hospitals, and education. Application of TQM in the service sector requires a determination of how to evaluate the quality of service. Cost, flexibility, acquirability, totality, and response time are some factors that could be applied for BSF services (Al-Shobaki et al., 2010). Naeem et al. (2008) investigated the level of implementation of TQM in commercial banks. The main offices of commercial banks were contacted and asked about the level of implementation at the introductory, middle, final or fully implemented stage. In the study, the majority of banks were at introductory stages, while about one fifth were fully implemented. The study highlights the level of efforts by management, and the initiatives undertaken by them with regard to quality management. Al-Shobaki et al. (2010) found that there is a strong correlation between application of TQM on the financial capability and return of a given organization. It takes about four to eight years before any effects are visible for an organization`s nature or business. Winners of Swedish quality awards had financial performance exceeded most of their competitors on several indices. The banking sector plays an important role in Saudi Arabia`s economy. The government has placed a great emphasis on the development of banking organizations with the belief that they will be able to finance projects and deal with incoming capital investment. The amount of work done to measure and control quality in the banking sector has been relatively limited. Limited research has been conducted to measure quality in the banking sector. Customer point of view has been considered benchmark for the implementation of TQM. The studies found that there is a big gap between the level of service expected by the customer and the level of service expected by customers. Some areas for consideration include quality of service; time frame for implementation of quality improvement schemes; obstacles in the implementation of TQM; and provision of subjective measures such as response time; profit and cost of service that indicate improvements in performance when TQM is applied (Al-Shobaki et al., 2010). The strategy for this study is to develop a method for implementation of TQM at BSF. Underlying Assumptions Figure 1. TQM Model (Al-Shobaki et al., 2010) Continuous improvement in production and operation in banks can result from achievement of customer satisfaction. A model has been presented that is comprised of building blocks including requirements; actions; and results. Basic requirements form the building blocks for initial implementation of TQM (see figure 1 above). Requirements include approval of the philosophy; commitment toward the philosophy; and availability of critical information required for implementation and measurement of performance. Actions are activities required for implementation of the organizational philosophy; participation and involvement of upper management during implementation, and structural organizational change required for implementation in terms of responsibilities, departments and management levels (Al-Shobaki et al., 2010). Customer expectations for banking services have been listed in the table below. Table 1. Customer Expectations (Al-Shobaki et al., 2010) Sl # Customer Expectations 1. ATM services help to save time and facilitate services 2. Provision of ATM services by the bank 3. Documentation used by the bank management is accurate 4. The bank makes use of modern techniques and equipment 5. The management of the bank is reliable 6. The employees of the bank are trustworthy 7. The appearance of the bank is compatible with services offered 8. The management of the bank provides personalized care 9. The bank has a continuous improvement in its financial services quality 10. The employees of the bank are highly qualified 11. The management of the bank provides individualized care to the customers 12. The economic counsellors of the bank have high experience 13. The importance of quality has been introduced by the bank 14. The management considers suggestions and comments of customers on the quality of their financial services 15. Financial services provided by the bank are of high quality and cost 16. The loans provided by the bank are lower than other banks 17. Customers do not have intermediate services from bank employees 18. The services provided by the bank are better than other bank services 19. The working times of the bank are suitable for all customers According to Al-Shobaki et al. (2010), results from implementation of TQM in banks include customer satisfaction and financial development. Financial development indicators include profitability and productivity. Profitability is the degree of organizational success for achieving predetermined objectives, or the degree of organizational success in distribution of resources for achieving highest income from investments. A quantitative measure for profitability is given by: Profitability = Net Income After Tax / Total Assets. Productivity is the quantity of necessary resources required for the production of one unit from the total production. It is given by: Productivity = Total Deposits at the End of Year / Total Number of Employees. The continuous improvement concept has been embedded in the model. This allows banks that intend to apply the model measure their performance for comparison with the competitor`s performance. Banks can get feedback about the level of required improvement, and necessary action required for achieving better results. Methodology and Methods to be Used Methods to be used for the study include survey; interviews; and review of documents. These include interviews with professionals and specialists; questionnaire based survey of executives; and analysis of documents. A survey would be conducted to measure each level of readiness and implementation of the three basic building blocks. The results from the implementation of TQM in banks would be measured. This includes measurement of customer satisfaction by using a questionnaire that will evaluate their level of satisfaction from services provided by the bank; financial development including profitability and productivity would be measured from the data provided by the bank (Al-Shobaki et al., 2010). Requirements and actions needed for the implementation of TQM philosophy would be measured by the questionnaire by bank employees and management. The questionnaire would be used to investigate requirements of TQM including approval of philosophy; commitment towards philosophy; and documentation and information. Also, actions required for achieving implementation of TQM implementation would be assessed (Al-Shobaki et al., 2010). A minimum of 30 samples have been considered adequate for the study. Origin of the Samples to be Studied Participants of the study will include staff, management personal, professionals, and consultants. Respondents will be interviewed or provided with a questionnaire for participating in the study. The respondents will be based in the banking industry. The survey tools will be forwarded to a large number of participants, and a minimum of 100 participants will be targeted. Participants will be briefed about the study, before completing the survey or interviews. It will be ensured that participants have a minimum level of competency for participating in the study. The samples will be reviewed to ensure that they are complete. Improperly filled questionnaires will be discarded. Data Collection Methods Data collection methods include questionnaires; recording of interviews; and documents from the bank. Questionnaires in paper format and electronic format will be distributed to respondents. Interviews will be arranged in pre designated areas, and the transcript will be recorded. Copies of documents from respective departments in the bank will be retrieved for the research. How Results will be Analysed Questionnaires will be analyzed qualitatively and quantitatively. Three sets of data or information will be collected. The first set of data includes questionnaires that will be used for surveys. Completed questionnaires will be collected. The questionnaires will be analyzed for completeness. Respondents will be given an opportunity to complete them. The questionnaires will be analyzed as groups. Groups include staff; management; industry professionals; and specialists. Data from each group will be analyzed. The second set of data includes interviews. Management, professionals, and industry experts will be interviewed. Interview transcripts will be analyzed for determination of themes from codes. The existence of common themes across interviews will be examined. The third set of data includes company reports. Management reports on customer satisfaction reviews and programs would be collected. More explanation about How Results will be Analysed Results from the questionnaire will be analyzed as a group. The data will be analyzed quantitatively. Descriptive statistics will be used to analyze findings for each of the groups, and the findings across groups will be analyzed. Questions, where respondents provide ratings on a scale, the average of ratings for the group will be determined. This will be followed by ranking the findings based on averages. Findings from the interviews will be reviewed to determine themes. Ratings on a scale will be analyzed as described earlier. Management reports will be reviewed qualitatively to determine factors, trends, and initiatives undertaken by the management. Findings from each of the above methods will be compared. Quantitative analysis will be used for analysis and conclusions. Critical Discussion of Proposals According to Heckl et al. (2010), quality management methodologies are suitable for continuous process improvement efforts. As there is pressure to reduce costs, exploit market opportunities; and satisfy customers. The cost-benefit ratio of 1 to 4.3. Insufficient data quality and data quantity, lack of resources, and missing support from top management support are associated with lack of success. According to Caemmerer et al. (2010), the customer feedback mechanisms at organizational and business level should be better integrated. There is a need for stronger involvement of middle management in the design and implementation of mechanisms. According to Zhao et al. (2010), there is a significant relationship between trust and perceived risk, and both are crucial in the use of e-banking services. Ueno (2010) found that the management of service quality is influenced by recruitment and selection; training; teamwork; empowerment; performance appraisals and reward; communication and culture of the organization. According to Ho and Lin (2010), dimensions for the measurement of service quality of internet banking include web design; assurance; preferential treatment; and provision of information. According to Sit et al. (2009) in the service sector leadership, customer focus, information and analysis; and human resource focus have significant and positive association with customer service. Al-Hawari et al. (2008) found that the quality of traditional service quality factors have positively influenced customer retention. Trasorras et al. (2009) found that service and customer retention; quality and customer retention; image and customer retention; price and customer retention; and value and customer retention are related. The relationship is significant between value and satisfaction; value and loyalty effect; and satisfaction and loyalty on the retention of customers. According to Loonam and O'Loughlin (2008), traditional service quality attributes are redundant, and e-dimensions such as web usability; trust; access and information quality service recovery and flexibility are important for the provision of e-banking services. The key factor was process quality. According to Bellou and Andronikidis (2008), employees improve their general performance, and are more likely to co-operate when there is an internal service quality. Reliability and access are critical for displaying of role-prescribed customer behaviour. According to Al-Marri et al. (2007), factors critical to TQM implementation success include management support; strategy; continuous improvement; benchmarking; customer focus; quality department; quality systems; human resources management; recognition and reward; problem analysis; quality services; design of services; services culture and social responsibility. O'Connor and Cheung (2007) found that early adoption of product and customer accounting practices can influence bank performance. Performance can be enhanced if customer accounting practices are used to a greater extent in banks that adopted a greater range of products. Osarenkhoe and Bennani (2007) found that relationships represent a strategic approach to buyer-seller exchange. This can be successful when there is commitment from top management; systematic cross-functional communication; and customary loyalty programs that are mandatory. Components of TQM content and TQM process should vary based on organization`s degree of interdependence. The output uncertainty is expressed in terms of service quality. The degree of success of TQM in service organizations depends on the fit among interdependence and the content and process of the strategy. According to Yiu et al. (2007), the rapid development of internet and e-business has stimulated banking and financial sectors for encouraging customers bank online. The use of e-banking by customers depends on perceived usefulness; perceived ease of use; perceived risk and personal innovativeness in IT; and potential impacts. Explanation of the Rationale for Proposed Methods It has been established from the review of relevant literature that application of TQM can enhance customer satisfaction, and banking performance. A strategic approach is required for the implementation. Key factors that have been identified in the critical review of pervious research would be ascertained by conducting surveys; interview; and company documents. Based on the findings, a strategy for implementation of TQM as indicated in the aims would be developed. Possible Alternative to Proposed Methods Possible alternatives to proposed methods include hiring consultants for the implementation; using case studies to develop an implementation plan; or a trial or error approach to implementation. Realistic Estimate of the Potential Value of Research The research is expected to be of direct benefit to Saudi Fransi Bank, and the findings could benefit other studies. Since, TQM implementation is catching up in banks in Saudi Arabia, the strategy could be directly implemented by other banks in the region. Difficulties and Uncertainties Difficulties can arise from lack of co-operation from respondents; or arise from lack of proper awareness of the study and potential benefits by participants. Improper briefing before executing the study may cause respondents to not fully participate in the study. The level of knowledge or awareness of respondents would influence the results. According to Al-Shobaki et al. (2010), other studies have been aimed at identifying the relationship between TQM principles and the performance of banks. However, more research is required where both customer and employee viewpoints should be considered. The application of TQM should consider customer, employee and manager`s point of view. Possible Ethical Issues The study will recruit voluntary participants. Personal information about respondents will not be divulged, and findings from the study would be analyzed as a group. Guidelines as suggested by Asai et al. (2003) would be used in the development of the questionnaire. Plan for Research The research has been planned in several stages. The stages of the research have been illustrated in table 2. Table 2. Plan for Research Stage Activity Period Deliverable One Submission of research proposal 05-15-2010 Research Proposal Two Review of relevant literature 06-15-2010 to 06-30-2010 Literature Review Three Development of study; Drawing up of sample and research questionnaire. 07-01-2010 to 07-15-2010 Study tools (Questionnaire; Interviews; Documentary Analysis) Four Conduct study 07-15-2010 to 09-30-2010 Results Five Analysis of results; Development of conclusions and recommendations 10-01-2010 to 10-15-2010 Findings; Conclusions and Recommendations Six Development of dissertation (first draft) 10-16-2010 to 11-14-2010 Dissertation draft Seven Development of dissertation (final copy) 11-15-2010 to 11-30-2010 Dissertation References Al-Hawari, M., Ward, T. & Newby, L. (2009). The relationship between service quality and retention within the automated and traditional contexts of retail banking. Journal of Service Management. 20(4): 445-472. Al-Marri, K., Moneim, A., Ahmed, B. & Zairi, M. (2007). Excellence in service: an empirical study of the UAE banking sector. Source: International Journal of Quality & Reliability Management. 24(2): 164-176. Al-Shobaki, S., Fouad, R., & Al-Bashir, A. (2010). The Implementation of Total Quality Management (TQM) for The Banking Sector in Jordan. Jordan Journal of Mechanical and Industrial Engineering. 4(2):304 - 313. Asai, A., Nakayama, T. & Naito, M. (2003). Ethics in questionnaire-based research. Eubios Journal of Asian and International Bioethics. 13:147-151. NET. (2010). TOtal Quality Management. Available: http://dictionary.bnet.com/definition/Total+Quality+Management.html. Last Accessed 13 May 2010. Bellou, V. & Andronikidis, A. (2008). The impact of internal service quality on customer service behaviour: Evidence from the banking sector. International Journal of Quality & Reliability Management. 25(9): 943-954. Caemmerer, B. & Wilson, A. (2010). Customer feedback mechanisms and organisational learning in service operations. International Journal of Operations & Production Management. 30(3): 288-311. Heckl, D., Moormann, J.; & Rosemann, M. (2010). Uptake and Success Factors of Six Sigma in the Financial Services Industry. usiness Process Management Journal. 16(3). Available online at emeraldinsight.com. Ho, C. & Lin, W. (2010). Measuring the service qualityof internet banking: scale development and validation. 22(1):5-24. Loonam, M. & O'Loughlin, D. (2008). Exploring e-service quality: a study of Irish online banking. Marketing Intelligence & Planning. 26(7):759-780. Mkemarketplace. (2010). Ethics Questionnaire. Available: http://www.mkemarketplace.com/shrm/content/HRs_Role_in_Creating_Ethical_Culture.doc.Last accessed 12 May 2010. Naeem, H., Saif, I. & Qasim, S. (2008). Total Quality Management – A Recommended Strategy For The Pakistani Banking Sector. International Business & Economics Research Journal. 7(11): 49-54. O'Connor, N. & Cheung, C. (2007). Product/service adoption strategies and bank customer accounting in Hong Kong. Pacific Accounting Review. 19(1): 31-46. Osarenkhoe, A. & Bennani, A. (2007). An exploratory study of implementation of customer relationship management strategy. Business Process Management Journal. 13(1): 139-164. Saudi Fransi Bank. (2010). Saudi Fransi Bank. Available: http://www.alfransi.com. Last accessed 12 May 2010. Sit, W., Ooi, K., Lin, B. & Chong, A. (2009). TQM and customer satisfaction in Malaysia's service sector. Industrial Management & Data Systems. 109(7):957-975. Trasorras, R., Weinstein, A. & Abratt, R. (2009). Value, satisfaction, loyalty and retention in professional services. Marketing Intelligence & Planning. 27(5):615-632. Ueno, A. (2010). What are the fundamental features supporting service quality? Journal of Services Marketing. 24(1):74-86. Yiu, C., Grant, K. & Edgar, D. (2007). Factors affecting the adoption of Internet Banking in Hong Kong—implications for the banking sector. International Journal of Information Management. 27(5):336-351. Zhao, A., Koenig-Lewis, N. Hanmer-Lloyd, S. & Ward, P. (2010). Adoption of internet banking services in China: is it all about trust? : International Journal of Bank Marketing. 28 (1): 7-26. Appendix A -Ethics in Questionnaire (Mkemarketplace, 2010) “Content typically included: General Statement Overview of corporate beliefs, or corporate statement of commitment to ethical behavior, actions, and decisions. Employment Belief statement regarding expectations of fair employment practices, respect for fellow employees, harassment free work environment, diversity initiatives, and anti-discrimination. Antitrust Expectation of adherence to all antitrust laws, including price fixing and open competition. Insider Trading Expectation that employees follow all legal requirements involving disclosure of financial or other key information. Drugs & Alcohol Belief statement in providing a work environment free of drugs and alcohol. Conflicts of Interest Statement prohibiting involvement with any business activity that conflicts with the company business. Confidential Information Statement prohibiting disclosing trade secrets, customer lists, pricing data, or financial reports which assists a competitor. Political Contributions Corporate philosophy stating all political contributions require careful analysis and legal review. Technology/Internet Use Corporate policy stating that all company owned computer systems and communication equipment must be used for legitimate business use only, and that employees can expect no right to privacy if misused. Gifts & Entertainment Corporate statement regarding gifts of nominal value only are acceptable, and that such gifts must not influence business decisions or judgments. Workplace Violence Statement committing to a safe work environment, and prohibiting weapons on work premises at all times. Foreign Corrupt Practices Act Expectation of compliance with FCPA, including forbidding of bribery and other unethical practices. Legal Compliance Expectation of compliance with all laws and regulations.” Read More