Service Marketing - Andrew Breweries Limited - Case Study Example

Service Marketing: Causes of Failure in Service Delivery, an Accounting Service Perspective Name: Unit: Professor: Submission Date: Service Marketing: Causes of Failure in Service Delivery, an Accounting Service Perspective Introduction Grant solutions company Limited offers a range of variable services. The core services are accounting, and audit and assurance. Other supplementary services offered by the company include tax services, financial and investment advisory, financial consultancy services, and enterprise development services. It is clear that the firm offers competitive services. Thus, it has serious competitors offering similar services. Its competitors include KPMG Australia, PWC Australia, Ernest & Young, Grant Thornton Australia, BDO, and Deloitte among others. The customer base for these firms is varied. The customers range from those seeking accounting, audit and assurance services to those seeking financial advisory. Thus, their customers include sole proprietors, partnerships, cooperative societies, private and public companies, and corporations. These customers require high professional ethics and high professional duty of care. Cause and Effect Analysis Andrew Breweries Limited complained about delayed submission of accounting and audit reports. The company also complained about material misstatements in the financial statements and audit reports. The delay and financial misstatements impacted negatively on its financial status. This was as a result of poor service delivery by its service provider, the Grant Solutions Limited company. Several factors have been identified that cause poor performance of service providers and customer complaints (Herrera, Goldschmidt & Hoffman. 2004 p.246). Some of these factors that relate to accounting and audit service providers, and especially Grant Solutions Limited, are shown in the fishbone diagram below. The factors have been classified into two broad categories, the organizational factors and employee factors. The organizational factors include heavy workload, lack of enough training and development, and system and equipment failure. The employee factors include inappropriate planning to execute work delegated, incompetence and slowness in work. These factors are explained in detail after the fishbone diagram. Figure 1: The Fishbone Diagram: Cause and Effect Analysis Organizational factors Heavy Workload Training& Development Systems and Equipment Delayed reportingand financial Misstatements Employee Factors Inappropriate Planning Incompetence Problems Slownessin Work Explanation of the Factors in the Fishbone Diagram Organizational Factors The heavy workload is associated with fatigue and stress. This may make an employee incapable of concentrating and focusing on finer details (Buchnan, Debyer, Jaina, Kelliher, Moore, Parry, &Pilbean. 2013 P.7). This may cause errors and material misstatements in financial statements. Grant Solutions Limited might have delegated a lot of work to one or a few employees leading to their poor service delivery. Training and development enhance employees’ skills and experience. If employees are not well trained, they may lack the necessary skills to handle certain jobs (Maxwell, Watson & Quail. 2004 p.156). This may make their service delivery inefficient. This might be the case of Grant Solutions employees. For quality service delivery, one must acquire certain skill levels and prior experience that must be continuously learned (Cohen & Levinthal. 2001 p.131). Another organizational cause of failure in service delivery is the systems and equipment failure. It is true that the modern technology has made work easier in many areas. Software has been developed to handle accounting and auditing services. If systems and equipment fail due to poor installation or maintenance, they cause an overall failure in service delivery (Goldstein, Johnston, Duffy & Rao. 2002 P.122). Employee Factors Among employee factors causing failure in service delivery is inappropriate planning. Failure to plan is a good plan to fail in any undertaking (Bitner, Booms & Tetreault.1990 P.76). The employee delegated to prepare Andrew Breweries Limited financial statements by Grant Solutions Limited might have inappropriately planned the service execution. This might have caused the unnecessary delays in the complaint letter. Another employee factor is incompetence. Lack of expertise in the particular area of interest may cause failure in service delivery (Mbecke.2014 P.266). Therefore, it is paramount that Grant Solutions Limited trains its employees to increase their competence and expertise. Slowness and disinterest of the employee may also cause service delivery failure (Johnston.1995 P.58). Slowness and disinterest maybe as a result of individual preoccupation with personal affairs. It may also be caused by distractions such as emotional and psychological stress such as the case of the Grants Solutions Limited employee explained in the response letter. Discussion The cause and effect analysis raises issues of great concern in the area of quality service delivery and services marketing that apply not only to the accounting and audit firms but also to all service providers. The service providers such as Grant Solutions Limited need to consider both the short term and long term implications of the quality of the services they offer. These implications may be detrimental or beneficial both to the service provider and the receiver of the services. If a firm offers quality services, it does not only satisfy its customers but also retains and ensures their loyalty (Singh & Ranchod.2004 P. 136, Boshoff & Gray. 2004 P.29, Petrick.2009 P.398). Reliable service guarantees also attract customers and retain them (Kandampully & Butler.2001 P. 116). On the other hand, poor services may cause financial losses like in the case of Andrew Breweries Limited. This lowers profitability and causes customer dissatisfaction since customer expectations are not met. Discontentment makes the beneficiary of the service provided lose interest in the service provider and, thus, leads to the lower customer base (Sun & Shibo.2005 P. 436). Another important issue to note here is the channel of communication in an organization. Communication is important in ensuring sharing of information as well as the airing of grievances. Thus, a firm should set up efficient and effective channels of communication both internally and externally. In addition to this, a firm should provide emotional intelligence management to its workforce. Emotional and psychological support reduces stress and ensures workers concentrate on their work without distractions. Finally, employee empowerment through training and development is key to ensuring quality service delivery. This coupled with appropriate technology go a long way in ensuring effective, efficient and timely delivery of quality service (Demirel, Yoldas & Diranogly.2009. P.357). The service environment should also be made to be conducive to avoid unnecessary distractions. Analysis of Grant Solutions’ Response Grant Solutions Limited responded to Andrew Breweries Limited’s complaint by first apologizing for the inconveniences caused by delayed reporting and errors in the reports. It went further to pledge further resolutions it has resolved to undertake to avoid any future failures in service delivery. Finally, it promised to cut down its service charges in its next service offer to Andrew Breweries Limited. The response was fair and utilized distributive justice strategies. Distributive justice involves just share of the losses incurred. The Grant resolutions Limited company undertook to share in the losses incurred and, therefore, applied distributive justice principles of equity, equality, fairness and need (Odera, Chepkwony, Lagat, Korir & Mumbo.2012 p.91). The company’s act of agreeing to share in the losses fairly and putting in place measures to ensure no future service delivery failures reflect the idea of fairness associated with procedural justice. The company also treated the complaint with dignity and respect. The response was immediate, respectful and satisfactory. These are the principles of interactional justice in complaint resolution. These subsets of justice theory (distributive justice, procedural justice, and interactional justice) are paramount in ensuring fairness in complaint resolution. The principles ensure recovery of services and satisfaction as well as retention of customers (Odera, O., Chepkwony, Lagat, Korir & Mumbo.2012 p.94). Conclusion Service failure is mostly caused by organizational and employee factors. Organizational factors include the nature of the organization’s workload, failure to train and equip employees with the necessary skills and expertise, poor communication channels, and lack of appropriate systems and equipment. Individual factors include lack of proper planning, incompetence, misplaced priorities and slowness in work. To minimize service failure, service providers should adopt various best practices. They should delegate work appropriately, matching skills and expertise. They should also establish proper communication channels to facilitate smooth flow of information. Further, they should train and empower employees with the necessary skills in the area of their specialization. Finally, the service providers should acquire modern technological systems and equipment to keep the pace of the contemporary technological dynamics. This will ensure the firm remains competitive and ensure customer satisfaction and retention. References Bitner, M.J., Booms, B.H., & Tetreault, M.S. 1990. The Service Encounter: Diagnosing Favorable and Unfavorable Incidents, Journal of Marketing, 54(3), 71-84. Boshoff, C., & Gray, B. 2004. The Relationship between Service Quality, Customer Satisfaction and Buying Intentions in the Private Sector. South African Journal of Business Management, 35(4), 27-37. Buchanan, D.A., Denyer, D., Jaina, J., Kelliher, C., Moore, C., Parry, E. & Pilbean, C. 2013. How do they manage? A Qualitative Study of the Realities of Middle and Frontline Management Work. Health Services and Delivery Research, 1(4), 1-268. Cohen, W.M. & Levinthal, D.A. 2001. Absorptive Capacity: A new Perspective on Learning and Innovation. Administrative Science Quarterly, 34(4), 128-152. Demirel, Y., Yoldas, M.A. & Divanoglu, S.U. 2009. The Determinants of Service Quality Satisfiers and Dissatisfiers. International Journal of Service Industry Management, 6(5), 353-371. Goldstein, S.M., Johnston, R., Duffy, J. & Rao, J. 2002. The Service Concept: The Missing Link in Service Design Research? Journal of Operations Management, 20(2), 121-134. Herrera, B. G. C., Goldschmidt, N. & Hoffman, K.D. 2004. Customer and Employee Views of Critical Service Incidents. Journal of Services Marketing, 18(4), 241-254. Johnston, R. 1995. The Determinants of Service Quality: Satisfiers and Dissatisfiers. International Journal of Service Industry Management, 6(5), 53-71. Kandampully, J. & Butler, L. 2001. Service Guarantees: A strategic Mechanism to Minimize Customers’ Perceived Risk in Service Organizations. Managing Service Quarterly, 11(1), 112-121. Maxwell, G., Watson, S., & Quail, S.2004. Quality Service in the International Hotel Sector: A Catalyst for Strategic Human Resource Development? Journal of European Industrial Training, 28(4), 159-182. Mbecke, Z.M.P. 2014.Resolving the Service Delivery Dilemma in South Africa through a Cohesive Service Delivery Theory. Problems and Perspectives in Management, 12(4), 265-276. Odera, O., Chepkwony, J., Lagat, C., Korir, M.K. & Mumbo, H.M. 2012.Effects of Distributive Justice Complaints Resolution Strategies on Customer Satisfaction in Kenya’s Banking Industry. European Journal of Business and Social Sciences, 1(6), 87-96. Petrick, J.F. 2009. The Role of Quality, Value, and Satisfaction in Predicting Cruise Passengers’ Behavioral Intentions. Journal of Travel Research, 42, 397-400. Singh, S. &Ranchod, A. 2004. Market Orientation and Customer Satisfaction: Evidence from British Machine Tool Industry. Industrial Marketing Management, 33(2), 135-144. Sun, B. &Shibo, L. 2005. Learning and Acting upon Customer Information- With Empirical Application to the Service Allocations with off-shore Centres. Marketing Science, 24(3), 430-443. Appendices Appendix A: Complaint Letter Andrew Cooper Breweries Ltd, 104 George Street, Norwood, SA. Australia. Email: info@acb.com Telephone: +612-7291-2231 12thOctober, 2015 Grant Solutions Limited, 383 Kent Street, Sydney NSW 2000 Australia. Dear Sir/Madam, RE: UNEXPECTED DETERIORATION OF QUALITY SERVICE DELIVERY I would like to appreciate the long-standing reputation of your quality service delivery to our company. However, there has been some discontentment in the quality of your work in the recent past. It has also been noted with a lot of concern that there are unwarranted delays in your service execution contrary to our previous experience with your company. Various errors have also been noted. On 1st August, 2015 our company engaged your company for the preparation of financial statements and audit report for the accounting period ended 31st July, 2015. The process was expected to take a month as agreed in our terms of service. However, it took your company two months, submitting the report on 2nd October, 2015. This did not only contravene our terms of service but also delayed our decision-making process. This is likely to impact negatively on our net profit for the current accounting period. In addition to delayed submission of financial and audit reports, the financial statements contained gross material misstatements. In most cases, assets were overstated while liabilities were understated. These errors gave a misleading net profit due to material misstatements in the balance sheet items. Thus, taxation and statutory commitments were misleading. Further, the financial statements did not fully depict the full details of financial transactions. This is in contravention of the provisions of the International Accounting Standards (IAS1) on presentation of financial statements. This error also violated the accounting principle of full disclosure. Thus, it was difficult to interpret the contents of the financial statements. The delays, errors and material misstatements have impacted negatively on our company’s financial well-being. Besides delayed decision-making process and unnecessarily high taxation, the company had to incur extra costs to outsource emergency accounting and auditing services. Our company recommends that you hire high qualified accounting and auditing staff or train your current staff appropriately. This will help in addressing delays and minimizing accounting errors. It also recommends that all the material asset accounts should be recorded separately. Any asset that occupies more than five percent of total assets should be recorded separately to increase transparency and clarity. This will help in identifying errors if any exists. I look forward to receiving your response and clear explanation of these matters. I request that you respond to these matters in two weeks’ time. Yours sincerely, Andrew Cooper Breweries Ltd, Internal Audit Officer Appendix B: Response Letter Grant Solutions Limited, 383Kent Street, Sydney NSW 2000 Australia. Email: info@gsl.gt.com Telephone: +612-8191-2600 14thOctober, 2015 Andrew Cooper Breweries Ltd, 104 George Street Norwood, SA. Australia. Dear Sir/Madam, RE: REGRET OF THE UNEXPECTED DETERIORATION OF QUALITY SERVICE DELIVERY We have noted with a lot of concern that the quality of our service to your firm has deteriorated in the recent past. Please find it appropriate to accept my sincere apologies for the loss and inconveniences caused. After undertaking a thorough investigation into the causes of the delays and financial misstatements, we have noted with regret that the officer in charge was suffering from personal family hardships. The officer was, therefore, incapacitated both emotionally and psychologically and, thus, unable to execute his full mandate in this matter. We have, however, undertaken serious measures to rectify the situation and assure you of the best service in the future. We have also noted and implemented your recommendations. We have established a system of on-the- job training in our company. We have also outsourced accounting and audit experts to train our staff on best practices, legal and International Accounting Standards (IASs). We have also established as tress management facility in our firm to counsel and deal with psychological issues in our firm. Once again, our firm apologizes for the loss and inconveniences caused. You are an invaluable client, and we would do anything possible to retain our strong relationship. We will charge you 50% of our service fee in our next service. We also assure you of quality service. Yours Sincerely, Grant Solutions Limited, Chief Accounting and Auditing Officer Read More