CPU COLLEGE

Graduate Program

Master of Business Administration

Individual Assignment of Operations
Management
Section 8

NAME Id No

1.Firehiwot Takele EMBA/943/14

SUBMITTED TO DR.

Hailemichael Mulie(PhD)

Nov 11, 2022

Addis Ababa, Ethiopia

Case Study: A Bank Manager
The managing director of a bank believes that improved customer service is the best way for us
to differentiate ourselves from competitors and attract new customers. We can offer our
customers better service by reducing waiting time in teller lines from an average of six minutes
to an average of three.

By opening for business at 8:30 instead of 9:00, and by remaining open for an additional hour
beyond our current closing time, we will be better able to accommodate the busy schedules of
our customers. These changes will enhance our bank's image as the most customer-friendly bank
in town and give us the edge over our competition.

Critically evaluate the argument of the bank manager, does it work? Justify.

Answer

What is Service Quality?

The term Service Quality is an association of two different words; „service‟ and quality. Service
means “any activity or benefit that one party can offer to another that is essentially intangible
and does not result in the ownership of anything”.

Quality has come to be recognized as a strategic tool for attaining operational efficiency and
better performance of business.

Service quality means the ability of a service provider to satisfy customer in an efficient manner
through which he can better the performance of business.

In the service sector too „quality‟ is an important element for the success of business. It is
because of the realization of its positive link with profits, increased market share, customer
satisfaction.

Several earlier studies and authors pointed out that quality concept in service are different from
the concept prevalent in the goods sector.

The reasons for such a treatment are inherent features of services like intangibility, inseparability
from the provider, heterogeneous etc. Hence there is a distinct frame work for quality explication
and measurement.

DIMENSIONS OF SERVICE QUALITY

The concept 'service quality' is not an independent term, means; its formation depends upon
several factors related to service and service firms. These factors are

Reliability

Assurance Service
expectation
Received
Customer
Tangibility service
satisfactio
quality
n
Service
Empathy
performanc
e
Responsivene
ss

Reliability: is defined as the ability to perform the promised service dependably and accurately.
In broad sense reliability means, service firms' promises about delivery, service provisions,
problem resolutions and pricing. Customers like to do business with those firms, who keep their
promises. So it is an important element in the service quality perception by the customer and his
loyalty. Hence the service firms need to be aware of customer expectation of reliability. In the
case of banking services, the reliability dimension includes - regularity, attitude towards
complaints, keep customers informed, consistency, procedures etc.
Responsiveness: is the willingness to help customers and to provide prompt service. This
dimension focuses in the attitude and promptness in dealing with customer requests, questions,
complaints and problems. It also focuses on punctuality, presence, and professional commitment
etc., of the employees or staff. It can be calculated on the length of time customers wait for
assistance, answers to questions etc. The conditions of responsiveness can be improved by
continuously view the process of service delivery and employees attitude towards requests of
customers.
Assurance: The third dimension of service quality is the Assurance dimension. It can be defined
as employee's knowledge, courtesy and the ability of the firm and its employees to inspire trust
and confidence in their customers. This dimension is important in banking, insurance services
because customers feel uncertain about their ability to evaluate outcome. In some situations like
insurance, stock broking services firms try to build trust and loyalty between key contact persons
like insurance agents, brokers etc and individual customers. In banking services "personal
banker" plays the role of key contact person. This dimension focuses on job knowledge and skill,
accuracy, courtesy etc of employees and security ensured by the firm.
Empathy: Another dimension of service quality is the Empathy dimension. It is defined as the
caring, individualized attention provides to the customers by their banks or service firms. This
dimension try to convey the meaning through personalized or individualized services that
customers are unique and special to the firm. The focus of this dimension is on variety of
services that satisfies different needs of customers, individualized or personalized services etc. In
this case the service providers need to know customers personal needs or wants and preferences.
Tangibility: The fifth dimension of service quality is the Tangibility which is defined as the
appearance of physical facilities, equipments, communication materials and technology. All
these provide enough hints to customers about the quality of service of the firm. Also, this
dimension enhances the image of the firm. Hence tangibility dimension is very important to
firms and they need to invest heavily in arranging physical facilities.

Analysis
based on the previously mentioned dimensions of service quality we can analyze the issue
forwarded hence forth The manager of The bank recommends that the best way for the bank to
attract new customers and differentiate itself from its competitors is to improve its service to
customers specifically by reducing waiting time in teller lines, opening for business 30 minutes
earlier and closing an hour later.

These improvements, it is argued, will give the bank the edge over its competitors and make the
institution appear more customer-friendly.

For the most part this recommendation is well-reasoned. A few concerns must be addressed,
however.

First, the first issue to be addressed is a premise that waiting time and operation hours are
considered as customer service.  To be known as customer-friendly, faster service and more
convenient operation hours are not enough.  As a bank, for example, friendly behavior to
customers with a good manner is important because most customers go to a bank to see its
consultants.  Imagine if a staff looks angry while the bank provides quick operation.  There are
more aspects to be considered.

Also, the author relies on the idea that customer service contributes the best to make the bank
stronger over competition.  That is not the case.  Customers do not expect the bank to treat them
nicely but to generate profits on their assets.  Customers will go away to another one if yield rate
is very low No matter how friendly the bank is.  

For instance, there is a phenomenon that many customers change their main bank to an internet
banking corporation, where higher yield is available but no consultation service, from an
ordinary bank, where friendly customer service is always available but low yield rate.  The
author should not forget what the bank exists for.

Second, the author assumes that the bank's competitors are similar to the bank in all respects
other than the ones listed. In fact, the bank's competitors may be more conveniently located to
customers or offer other services or products on more attractive terms than the bank. If so, the
bank may not gain the edge it seeks merely by enhancing certain services.

Thirdly, the author assumes that the proposed improvements will sufficiently distinguish the
bank from its competitors. This is not necessarily the case.

The bank's competitors may already offer or may plan to offer essentially the same customer-
service features as those the bank proposes for itself. If so, the bank may not gain the edge it
seeks merely by enhancing these services.

Fourthly, the author assumes that the bank can offer these improved services without sacrificing
any other current features that attract customers. In fact, the bank may have to cut back other
services or offer accounts on less attractive terms, all to compensate for the additional costs
related to employee's motivation and working condition need to be considered.  

This argument is based on the premise that staffs would provide as friendly customer service as
the bank expects.  

However, motivation towards work would be dramatically decreased if operation hour suddenly
gets longer without additional welfare.  They will get tired more easily so that quality of service
will be lower as well.  

The author must analyze how to get all employees to follow a policy of customer-friendly
service otherwise its service will get even worse. By rendering its other features less attractive to
customers, the bank may not attain the competitive edge it seeks.

In conclusion, the bank’s plan for attracting new customers and differentiating itself from its
competitors is only modestly convincing. While improvements in customer service generally
tend to enhance competitiveness, it is questionable whether the specific improvements advocated
in the recommendation are broad enough to be effective.