Managing Customers and Quality - Essay Example

Report TMA 05 MANAGING S AND QUALITY JE Director of Operations .. 10/03/07 1 Introduction Need to outline: General environment Mission Preliminary objectives (SMART) The ultimate objective of this report is to propose strategies to change the marketing mix of the services provided by JE Engineering (JE) to meet changing customer expectations. These proposed strategies are the result of planned and directed research into our current situation, which is discussed in the first part of the report. JE, an American owned organisation, is one of the world's largest and most diverse providers of professional technical services. With annual revenues approaching 8 billion it offers a range of support services to industrial, commercial, and government clients across multiple markets. Services include scientific and specialty consulting as well as all aspects of engineering, construction, operations and maintenance. To maintain its success in existing markets and to enter new markets, JE needs to re-evaluate its current marketing mix. This report will discuss the current situation in this regard and redefine JE's objectives due to changes in clients' needs and expectations. To achieve this, the external and internal environment of the company is examined for potential influences that could lead to changes within the organization that will result in customer expectations being fulfilled. The services provided by JE and it's positioning in the present market is also looked at. The resulting strengths and weaknesses in addition to the opportunities and threats will be identified to ultimately provide strategies to compete globally and take advantage of existing opportunities. These objectives are SMART as per table 1. 2 Environment Near/ far organisational influences. Audit of organisation's environment (both internal & external). Customer/ client expectations (and how to go about changing these). Concepts to be used (minimum): Porters 'five forces' Greenley's four key elements of competitor analysis STEEP model As a broad-based technical professional consulting firm, JE offer a complete range of services to help our clients maintain a competitive edge in their respective markets. From feasibility studies to operations and maintenance (O&M), we customize our services to meet clients' business and project goals. Our global network of technical experts work under a boundary less, seamless philosophy so that clients' receive the best, most economical project or program solution, worldwide. JE offer its services worldwide therefore more prone to be affected by external influences. It works in different social set-ups and so it needs to understand different culture and society. Technological innovations and its inclusion in services of JE play a very crucial role in providing best of services. Services provided by JE have to be economically prudent. Economic conditions of different countries in which JE operating as well as countries economic policies play a crucial role in JE success. Presently environmental factors are the major cause for concern in every country and almost for every project to be started. So JE policies and its commitment for health, safety and environment keep it in front of others. Finally the political situation and political decision-making plays an important role in almost every part of the world and it affects JE'S policies also. Working in global set-up JE has to deal with different political situation and ability to deal such situations decides the growth of the organisation. Basically external and internal environment and influences for any organisation could be appropriately discussed with the help of Porter's Model (Johnson and Scholes, 2006). Michael Porter's Five Forces Model, which is described below: Porter explains that there are five forces that determine industry attractiveness and long-run industry profitability. These five "competitive forces" are - The threat of entry of new competitors (new entrants) - The threat of substitutes - The bargaining power of buyers - The bargaining power of suppliers - The degree of rivalry between existing competitors Greenlay analysed the four elements which put hindrances in planning i.e. absence of the initial idea, organizational 'mindset', ignorance and anti-planning personnel. To analyse competitors' position and factors, which have, potential to affects the said organisation is porter's five forces analysis. On the basis of above concept we will analyse JE. The business JE operate in is very fragmented; no one competitor has significant market share. Even then JE is facing stiff competitions globally from its competitors such as Ashland, Granite Construction, Sterling Construction and many other smaller companies. The main rival company, which reaches to JE's level in revenue generation, is Ashland with almost one-third of employee strength in comparison to JE total employee strength of 31,700. The profit margin for JE is 4.3% in comparison to Ashland's 3.1%. Gross margins over the past 5-year period for JE stand around 13.5% whereas for Ashland it stands around 17.0%. It is quite evident from the above statistics that in the long run Ashland will earn more than JE. Subsequently, Ashland will give stiffer competition to JE in future. Other competitors who have recently entered the market, such as the Washington Group International, may pose stiff challenges and competition to JE in future. Services provided by JE in different diversified areas may face competition from newer companies, which are entering in numbers. JE is facing fierce competition from all competitors in the European and American markets. In this way we can easily understand that customer's (organizations that avail the services of JE) have lots of choice and substitutes available in the market in each area of operations. Its competitors in the market have matched JE's whole services range. Due to increased knowledge of customers and the expansion of communication technology, customers can easily compare the services, which are provided by different service providers. Customers may prefer a certain service providing company to perform their jobs based on cost effectiveness, past experiences, expertise knowledge in certain areas and experience of working in specific geographical locations in particular. These conditions of the market tremendously enhance the bargaining power of customers. In the current market, the old national based approach has virtually disappeared as services are being sold in all parts of the world. The main forces that have driven this change is firstly; the virtual disappearance of national boundaries, squeezed out by the international giants and secondly; the standardization of markets across the international arena, pushed by regulatory forces at regional level and fuelled by even more-intense global communications. So worldwide suppliers of manpower especially for technically prudent experts and consultants may be in short supply and results in increased barraging power for suppliers. This trend applies as much to JE. The rivalry among existing competitors is increasing on a daily basis. Each competitor competes for its market share of the services they are providing. New services are being offered, including special features to complete projects well in time and to cut costs. JE needs to keep abreast in the industry with a focus on safety, reliability, maintainability, and a commitment to lowering costs. 3 Existing Marketing Mix Marketing mix of engineering service provided by organisation. Audit of this marketing mix. Concepts to be used (minimum): Four elements of marketing mix (four C's) Marketing-mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market (Kotter and Schlesinger, 1979). Marketing mix decisions influence trade channels as well as final consumers. Robert lauterborn (1990) suggested that sellers four Ps corresponds to customers four Cs i.e. customer solution, customer cost, convenience and communication. Winning companies are those that meet customer needs economically and conveniently and with effective communication. Now we will discuss JE on the basis of above concepts. We at JE provide our customers a whole range of solutions in whole range of services. Through its strategic diversification, JE believe that its long-stated growth objective of 15 percent per year at the bottom line is quite realistic. JE attribute this successful growth and expansion to its unique business model-a relationship-based approach with approximately 65 percent of its work derived from long-term relationships. This differs dramatically from the conventional industry model that relies heavily on discrete and transactional projects. Working in tandem with our clients rather than as adversaries, our relationship model supports their continued growth, improved profitability, and market advantage in brutally competitive industries. This in turn reinforces the value of our business model and ensures our continued growth and success. Two important philosophies support our business model: a multi domestic approach and a boundary less approach. In our multi domestic approach we work in many countries from locally staffed offices that share a common set of values and a single vision, while maintaining one-on-one contact with individual clients. We communicate with our clients regularly and are able to understand their needs properly. This provides customized service suited to the locale. To better serve our clients, we position ourselves in countries where they plan to invest in the future. Our global diversity enables us to provide those clients an established local presence and strong business knowledge, reducing risk and ensuring project success. Our model is only successful when we are committed to superior performance at every level of the organization, and our clients trust us to guard their interests as our own. This trust comes when our people consistently identify, address, and satisfy our clients' business and project needs. Quality for JE means fulfilling client needs. Every client has unique needs, which demand fulfilment for their business success. We at JE are focused on understanding these unique needs, and translating them into our project delivery and execution process with the goal of contributing significantly to our clients' success. The core value is also our fundamental business strategy: we focus on forging strong, long-term relationships with our clients, as we consider sound client relationships the most important contributor to our success. We cement these relationships by providing superior customer value and by continuously improving our performance. By improving our performance we provide our customers the better services, which is cost effective and competitive in the market. We provide services to the utmost convenience of the client. In this way we completely adhere to the 4 Cs concepts. We are providing services and technological solutions to governments, which needs utmost care of confidentiality, cost effectiveness and conveniently. Things are changing. National security concerns relating to long-term operations in Iraq, Afghanistan, the Korean Peninsula, and the Pacific Rim led to increasing pressure on defence programs. Although Congress shifts to Democratic leadership in 2007, we expect continuing bi-partisan support for both the U.S. Department of Defence (DoD) and NASA 2007 budgets. We continue to support our clients with systems engineering, research and development, design and analysis, testing and evaluation, space flight hardware development, information technology and logistics support services, and advanced test facility operations and maintenance. Our focus remains on delivering enhanced defensive systems ranging from force protection equipment to smart munitions and sensor systems that provide real-time intelligence to our military. While our DoD support operations continue to meet the demand for high-level technical and engineering support services in these areas, they are also expanding to support new defence opportunities with the Ministries of Defence in Australia and the U.K. Similarly, as the vision for NASA's Constellation Program crystallizes, we are leveraging our unique expertise as NASA's primary services support contractor to support system level integration for complex components of the Crew Exploration Vehicle, Orion, and the Crew Launch Vehicle-the backbone of our U.S. space exploration initiative. JE has successfully provided its customer's/clients the valued services and solutions at reasonable cost according to their own specifications. JE is conveniently reaching out to its customers/clients and communicates with them as well as keeping good and durable relationship with its suppliers. JE is an organization, which meet its customer needs, economically and conveniently and with effective communication and becoming successful in a highly competitive market up till now. 4 SWOT Analysis Findings of internal audit - strengths/ weaknesses. Opportunities/ threats of external environment. Concepts to be used (minimum): SWOT analysis of service provided Competition in the market for technical service providers especially in Western Europe and America is volatile and fierce. Lots of services providers with various expertise and strategies are in the market results more competitiveness in the market. Every service provider is trying to provide valued services to its clients. Main focus of the services is on time and cost with quality. In this scenario, JE is also facing similar type of situation but the company have certain strength, which makes it successful and to remain competitive in the market. The main strength of JE is its fundamental business strategy which fuels steady financial growth by building long-term client relationships and aggressively controlling costs. With more than 55 years in the industry, we have attracted and retained clients by providing superior customer value-in fact, over 90 percent of our work is repeat business from loyal clients. This strategy yields cost advantages, predictable revenue streams, and consistent earnings growth. JE is one of the world's largest and most diverse providers of professional technical services. It creates an environment where employees meet fresh, exciting challenges and experience the satisfaction of a job well done. JE's environment is flexible to change and open to innovation. At JE, every employee contributes to value-added performance. People are our greatest asset and, therefore, giving them a safe and healthy workplace is essential. Our Health, Safety, and Environment (HSE) process ensures that employees at all levels are involved in daily safety decisions, and incorporate proactive methods of loss prevention. The quality function is also an integral part of our line organization. Locally, our offices apply standard operating procedures, work instructions, and other best practices to achieve results that delight our clients. Training and continuing education to its employees to enhance their knowledge and expertise, standardized work procedure and virtual office platform that creates a cohesive global workforce, award recognition programs that drives performance leadership and help employees achieve their highest potential and a stringent safety program that safeguards employees and clients alike. Apart from these strengths JE have certain weaknesses when we compare it with overall industry standards. Its gross margin for 5 years period is now 13.5% whereas industry gross margins stood at 23.7%. Its operating margins are half of the industry of 8.3%. Similarly revenue per employee and net income per employee stood very less in comparison to industry standards. This shows that gap in labour productivity is the main area of concern for JE. It shows its relative weakness to its competitors. However, JE is certainly not facing immediate threats from its competitors due to its size and level of diversification. But in future when other service providers will enter into the market JE have to enhance its productivity and per employee revenue and income has to be increased otherwise it would face threats from its potential customers. JE has to take care of the areas in which it is providing services like automobile sector where slump is evident. Similarly the areas where current market trends as well as external conditions do not favour JE, it has to identify carefully considering all the external and internal factors and take care of those areas. JE have enormous opportunities to grow and grow faster. Growth in the developing countries and presence of JE in these countries provides JE an opportunity to grow continuously. So keeping emphasis on its strengths, enhancing productivity of employees, taking advantages of its global presence and expertise and taking advantages of opportunities JE can meet its client's needs as well as its own growth. 5 Refined Objectives Meeting changing customer expectations Concepts to be used (minimum): Refined Objectives (SMART) - Based on preliminary objectives as stated in the introduction and on the results of the SWOT analysis undertaken in part 3. We can say with some confidence that "the marketplace isn't what it used to be." It is changing radically as a result of major forces such as technological advances, globalisation and deregulation. These forces have created new behaviours and challenges. Customers increasingly expect higher quality and services and some customisation. They can obtain extensive product information so that they can shop more intelligently. They are showing greater price sensitivity in their search for value. Given these changes companies are doing a lot of soul-searching and adjusting in a number of ways. It includes reengineering, outsourcing, e-commerce, benchmarking, forming alliances, suppliers-partnership relationship, market centred both global and local and finally decentralised. So in the above perspective JE has to redefine its objectives. Since 1947, JE commitment to "being there" for its clients has resulted in tremendous growth and change-in its scope of services, geographic locations, and markets. JE has been working in various segments such as Aerospace and Defence, Automotive and Industrial, Buildings, Chemicals and Basic Resources, Consumer And Forest Products, Environmental Programs, Infrastructure, Oil And Gas, Pharmaceuticals And Biotechnology, Refining And Technology. So organization has to set different objectives for different sectors according to their needs and customers expectations. JE's global network includes more than 60 major offices in over 20 countries. They have operations in North America, the United Kingdom, mainland Europe, India, Australia, and Asia. Markets in Asia, including China, are experiencing faster growth and JE has an opportunity to expand its operations in these emerging countries. Though JE has an office in India but it needs to expand beyond and especially in China where the opportunities for expansion lies. Diversification in JE has been done enormously and it has to take care of its employees having experience in different field. JE has to create an environment where it retains its employees to meet fresh, exciting challenges and experience the satisfaction of a job well done. Our clients' needs drive our business, so we grow in pace with their growth. Indeed, the neck-and-neck global marketplace demands growth. And profitable growth is what our entire stakeholder groups-client, employee, and shareholder desire most from us. Our goal is to grow our business by 15 percent, every year. To fulfil the objective to grow globally JE has to rely on customer relationship marketing by managing customer lifetime value. JE has to move towards a focus on building customer share by offering a larger variety of services to existing customers and training employee in cross selling. Using target marketing by analysing and keeping customer databases will be the major objectives for JE. Integrated marketing communications and using channel partners to expand operations will be the aim for JE to achieve its goal. Every employee has to work as marketer and must be customer-focused will be the ultimate objective for JE. 6 Strategies Strategies to change marketing mix to respond to changing customer expectations. Discussions with customers have highlighted the main areas where JE has to make strategic changes. To meet changing customer expectations and needs is a daunting task for any company. The world is becoming a global village and the Internet and E-commerce are playing a vital role in shaping customers expectations. The Internet allows for a more accurate assessment of demands and kinds of services offered. The use of technological innovations and communication technologies put JE way ahead of its competitors and put them at advantageous position. To develop the value system based on commitment to meeting people's needs whether they are client, shareholder, or employee place the JE ahead of other competitors. JE customize its services to meet business and project goals. JE global network of technical experts work under a boundary less, seamless philosophy so that they receive the best, most economical project or program solution, worldwide. JE has to deploy significant Health, Safety and Environment (HSE) professional resources worldwide to actively share best practices among all operations and immediately mitigate any potential hazards. Through our unique cycle of assessing, planning, training, monitoring, and adjusting, JE has to continuously improve its HSE management. Our quality policy states, "We, the employees of JE are dedicated to providing our clients with a competitive advantage through a continuous process of quality advancement in all areas of performance." Quality for JE means fulfilling client needs. Every client has unique needs, which demand fulfilment for their business success. We at JE are focused on understanding these unique needs, and translating them into our project delivery and execution process with the goal of contributing significantly to our clients' success. People deliver the work using the processes, and we select and invest in great people. So providing training and education to employees, to train them to work in multicultural environment enhance their productivity, which is the main concern for JE. Productivity per employee and profit per employee in the cause of concern for JE and it has to specifically take care of this aspect. In the long run where competition within service providers will become fierce the competitive advantages like skilled workforce, expertise knowledge, financial prudence, innovative ideas and technologies and flexibility and adoption to change will play a major role in surviving for the organizations. Consolidation of companies, clients and service providers is set to accelerate due to the use of Internet and business-to-business procurement to design, produce, assemble, distribute and service. Competitors are pushing their services, which are more innovative, modern and cost effective. Ever changing scenario in the global arena necessarily emphasizes companies to have global vision and should be ready to perform under challenging conditions. Though JE is performing globally but the main jobs it is executing in Europe and America. So it has to expand its services globally in true sense. As we are seeing developing countries are coming up very fast and most of the opportunities lies there. JE has to try and expand in these countries very fast. It has to adhere to Global Company Policy, Global Quality Manual and Global Standard Operating Procedures. In addition, it needs to communicate policies, procedures and requirements for activities that impact on quality performance. It has to integrate standard operating procedures and best practices for continuous improvement and value delivery. It has to use project tools such as work process maps, internal project reviews, focused client expectation and satisfaction surveys, and JE Value Enhancing Practices to both deliver successful, repeatable results, and to create new opportunities for innovation and enhanced value delivery. JE has to rely on its existing strengths and use of advanced planning tools such as our proven Charrette process, computer modelling, and sustainable design, we help our clients achieve cost and schedule certainty and enjoy tailored building solutions. It should focus on value engineering tools on achieving predictable, repeatable project results, lowering risk, and freeing capital to advance product innovation. JE's support for multiple partnerships by leveraging it's manufacturing process and project execution expertise, minimizing lifecycle costs, and delivering competitive advantage through speed to market. JE should be flexible and adaptable. In the present market scenario where conditions, external as well as internal, are so fluid that organizations has to be flexible and adaptable and constantly pushed to a higher level of performance, continuously innovate and improve to meet out the customer expectations. 7 Conclusion Finally we came to the conclusion that a combination of technology, globalisation and deregulation is influencing markers and consumers in a variety of ways. The changing needs and expectations of the customers forces JE to change accordingly and made adjustments in response to changes brought by these forces. JE has been able to redefine its objective in the changing conditions and requirements externally and internally as well and able to frame its policies according to its customer's needs and expectations. In the process of redefining its objectives, JE analysed its existing policies and work plans and remain flexible to change accordingly. 8 References Johnson, G. and Scholes, K. (2006). Exploring corporate strategy, 7th edition, Pearson Education Ltd London. Lennertz, B. (2003) 'New Urbanism: Comprehensive Report & Best Practices Guide', 3rd Edition, Ithaca: New Urban Publications. Kotter, J.P. and Schlesinger, L.A. (1979) 'Choosing Strategies for Change', Harvard Business Review, March/ April, pp.10614. Lauterborn, R. (1990) "New marketing litany 4 P phase; C-words take over,"advertising Age, p.26. Lewin, K. (1951) 'Field Theory in Social Science', London, Harper & Row. Lorenz, C. (1985) 'Why People Resist Change', Financial Times, 29 May Tyler, S. (2004) The Manager's Good Study Guide, New Edition, Glasgow, Bath Colourbooks. Handy, C. (1988) Understanding Voluntary Organisations, Harmondsworth, Pelican. De Bono, E. (1982) Lateral Thinking for Management, Harmondsworth, Penguin. Fradd, E.H. (1988) 'Achieving change in the clinical area: supporting innovation', Senior Nurse, Volume 8, No.12, pp. 19-21. ************************************************************************************************** Table-1 The most well known method for setting objectives is the S.M.A.R.T. way. S.M.A.R.T refers to the acronym that describes the key characteristics of meaningful objectives, which are Specific (concrete, detailed, well defined), Measurable (numbers, quantity, comparison), Achievable (feasible, actionable), Realistic (considering resources) and Time-Bound (a defined time line). Specific Specific objectives are clear and well defined. This helps both the performer and the manager, as the performer knows what is expected of them and the manager is able to monitor and assess actual performance against the specific objectives. Specific objectives may well include a scope description, which includes details of what is not included. Measurable Progress towards objectives often needs to be to be monitored whilst work is under way. It is also very useful to know when that work has been done and the objectives are completed. A measurable objective achieves this end. Achievable When giving objectives, the person may not be able to achieve it for various reasons, including a lack of skill, not having enough resources (computers, tools, etc.), not having access to key people and not having management support. Achievable objectives ensure that everything is in place and that if the person does not reach the goals they cannot reasonably point the finger elsewhere. Relevant Objectives should also add useful value within the context where they are being set, being aligned with strategies and higher goals. Timely Descriptions of objectives should also include timescales of what is required by when. This may also include details of delivery, stating (if relevant) where objectives are to be completed. Giving a time scale adds appropriate sense of urgency and ensures that the objectives do not dribble out over an unreasonably long timescale. Read More