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  • 1. Organization Resource Management Post-Graduate Diploma in Business Management (ABE) Closing Service Gaps in a B2B Service Firm A Case Study on Ace Dragon Media Management Co., Ltd Submitted by Phone Su Soe (Mr.) Myanmar Human Resources Institute 1st June 2010 Word Count - 2200 1    
  • 2.   Contents Page Personal Statement Executive Summary 1. Introduction 1 2. Company Profile 2 3. Methodology 2 4. Literature Review 3 4.1.SWOT Analysis 3 4.2.The Service Gap Model 4 4.3.The Service Marketing Triangle 5 4.4.Business Process Reengineering 6 5. Analysis and Findings 7 5.1. SWOT analysis 7 5.1.1. Strengths 7 5.1.2. Weaknesses 7 5.1.3. Opportunities 8 5.1.4. Threats 8 5.2. Service Gaps Analysis 9 6. Recommendations 10 6.1. Managing Organisational Resources 10 6.2. Closing Gap 1 12 6.3. Closing Gap 2 12 6.4. Closing Gap 3 13 6.5. Closing Gap 4 13 7. Conclusion 14 References 15Appendix 1. Services of Ace Dragon Exhibit 4.1.SWOT Analysis 3 4.2.The Service Gap Model 4 4.3.The Service Marketing Triangle 5 4.4.Business Process Reengineering 6 6. Recommendations to Close the Service Gaps 11 2    
  • 3. Personal Statement Post graduate diploma in business management course fills some colours tomy objective, “to become a leader who is a major change agent and who bringsabout changes to achieve competitive advantages and the sustainabledevelopment of my organization and my country, Myanmar (Burma) bydeveloping ideal and empowering people in dynamic changing environment”. Organisational Resource Management module enables me to be more attunedto the existing resources within our organisation and to be aware of how theseresources can be managed to create values to satisfy our customer requirements,increase shareholder value and to satisfy other stakeholders for sustainabledevelopment in dynamic changing environment. Special thanks to my teachers, Dr. Ohnmar Myint for her lectures and kindsupervising for the whole subject, Mr. Aye Kyaw (Principal cum MD, MyanmarHuman Resource Institute) for his kind support, Mr. Aung Chit Khin (Principal cumMD, Strategy First Institute) for his guidance, Ms. Htet Htet Aung (Suntec) for hersharing and support, and thank to Ace Dragon, Mr. Su Tin (Managing Director),Ms. Khin Thet Maw (Executive Director), Ms. Htway Htway Phyu (GeneralManager) and all employees. Finally, I thank to my parents who always encourageme to get MBA and wish me to become a successful businessman. This assignment is dedicated to my organisation and not submitted to anyassociation or institute for any degree before. Ace Dragon allowed using companydata for educational purpose only and it is confidential. 3    
  • 4. Executive Summary Nowadays, market environment is changing and turbulence. Marketfragmentation, hyper competition and disintermediation i.e. suppliers and customersdirect contact to each other, lack of media freedom causes challenges for AceDragon. Ace Dragon was a successful media management company for its mediaadvertising and IEC production. But it had weaknesses such as lack of printing andpublishing machines, lack of standard operation procedures (SOP), cannot deliveron promised services and cannot leverage the senior managers’ expertise inoperations, poor internal communication and operationalisation of strategies. Thiswill prevent Ace Dragon to get market share in this competitive environment. By reviewing literatures; SWOT analysis, Service Gap Model, ServiceMarketing Triangle and Business Process Reengineering, the research was carriedfor this paper. Recommendations were provided both for the whole organisation andfor each function; marketing, human resource and operation which may fit to thehybrid business strategy of Ace Dragon to solve the problems by managingorganisational resources effectively and efficiently. As a media management agency, Ace Dragon has to differentiate among theagencies by offering innovative services and IEC and sales promotion products withcompetitive price. Organisation resources must be managed; promote and invest inhuman resource, information technology and reengineer its different operationprocesses according to its hybrid business strategy. Finally, Ace Dragon is believedto be changed by actions according to vision in order to get competitive edge andsustainable growth in more competitive and turbulence environment in the nearfuture. 4    
  • 5. 1. Introduction The core objectives of any businesses are to achieve good returns oninvestment and to do so as long as possible. Nowadays, many companies becomeshort-term and lack of future strategy. Especially in Myanmar, the country is full ofuncertainties and challenges for businesses. Ace Dragon is an Information, Education, Communication (IEC),Advertising & Media Management Co., Ltd which was successful for its mediaadvertising and IEC production. But nowadays, market environment is changingand turbulence. Market fragmentation, hyper competition and disintermediation i.e.suppliers and customers direct contact to each other, lack of media freedom causeschallenges for Ace Dragon. When Ace Dragon was established in 1998, there were few competitors andsuppliers in the market. Nowadays, about 237 advertising agencies, underAdvertising Agencies, Counselors & Services and 28 media agencies under MediaServices – Multi-media heading in Yangon Directory. (http://www.myanmar-yellowpages.com/yellow_pages). The competitive environment is dramaticallychanging. This assignment focuses on closing service gaps of Ace Dragon by reflectinghuman resource management, marketing management, and operation managementtheories, specifically by using the service gaps model. Advise strategicrecommendations which include a business process reengineering exercise for AceDragon. The effective management of organisation resources will minimize threatsin turbulence environment and will help Ace Dragon to get competitive advantagesand sustainable development. 1    
  • 6. 2. Company Profile Ace Dragon Information, Education, Communication (IEC), Advertising &Media Management Co., Ltd. was established in 1998 in Yangon, Myanmar by agroup of experienced media professionals to provide customised mediamanagement services to business organisations for promotional activities, and IECmaterials and emergency kits creation and production services to non profitorganisations. Two partners, Managing Director (MD) and Executive Director (ED)steer the company. The company currently has about 50 employees with flatorganisation structure. The company is now reengineering after 10 years. The services of Ace Dragon were to organise the products with innovativeideas according to the customers’ requirements. Its only has creative team andmedia, advertising and marketing professionals which is the core competence ofAce Dragon. According to the general manager, unique selling points were 24 hoursservice, fast and best quality creative services and products, and create value addedIEC and sales promotion materials (IEC, POP, Printing and Production foradvertising, etc) with competitive price. It could be doubt that unique selling pointswere robust enough for competitive advantages and sustainable developments? Arethey relevant to the needs of customers and difficult for competitors to imitate?3. Methodology In this assignment, a case-study method was adopted and information wascollected through in-depth interviews to understand the issues thoroughly. Non-financial performance of Ace Dragon was analysed. The primary purpose is toreport the senior management about challenges and actions required to improvecompetitiveness of the organization for the future. The chief executive officer, theexecutive director, the general manager, line managers and front line employeeswere interviewed for this assignment. Under the permission of the executivedirector, a two-hour discussion session was organised with employees to get theirperception on the organisation and their expectation from organisation. 2    
  • 7. 4. Literature Review4.1. SWOT analysis A scan of the internal and external environment is an important part of thestrategic planning process. Environmental factors internal to the firm usually can beclassified as strengths (S) or weaknesses (W), and those external to the firm can beclassified as opportunities (O) or threats (T). The SWOT analysis providesinformation that is helpful in matching the firms resources and capabilities to thecompetitive environment in which it operates. As such, it is instrumental in strategyformulation and selection. The following diagram shows how a SWOT analysis fitsinto an environmental scan: Exhibit 4.1 – SWOT Analysis Framework Source: http://www.quickmba.com/strategy/swot/ 3    
  • 8. 4.2. Service Gap Model Service gap model is used in service providing organisations to find out thereason for customers’ dissatisfactions i.e. differences between expected services andperceived services (gap 5) because of misunderstanding expectations (gap 1), wrongspecification (gap 2), failure to deliver (gap 3) and over promising (gap 4). Exhibit 4.2 – Service Gap Model (Parasuraman, Zeithaml, Berry 1985) 4    
  • 9. 4.3. The Service Marketing Triangle Gronroos (1984) argued that services require external, internal and interactivemarketing. The company has to communicate not only to its external customers butalso to its internal customers of employee. Because employees are the people whowill directly provide services to the customers and the quality of service will bedecrease and cause customer dissatisfaction because of weak in internal marketing.   Exhibit 4.3 – Three Types of Marketing in Service Industries (cited in Kotler, 2010, p.401) 5    
  • 10. 4.4. Business Process Re-engineering Hammer and Champy (1993) defined re-engineering as ‘[t]he fundamentalrethinking and radical redesign of business processes to achieve dramaticimprovements in critical, contemporary measures of performance such as cost,quality, service and speed.’ BPR is about the proper reengineering method ofimplementation within a company for better returns, Exhibit 4.4 – Business Process Reengineering Cycle Source: http://www.nickmutt.com 6    
  • 11. 5. Analysis and Findings Know your enemy and know yourself – your victory will be painless. Know the weather and the field – your victory will be complete. Sun Tzu, the Art of War  5.1. SWOT Analysis  5.1.1. Strengths • Media professionals who have over 15 year’s experiences. • Customer loyalty • Government social networks and international social networks. According to the general manager, USP were • 24 hours service, fast and best quality creative services and products. • Create value added IEC and sales promotion materials with competitive price.5.1.2. Weakness • No printing and publishing machines • Cannot deliver on promised services and • Cannot leverage the senior managers’ expertise in operations. • Poor internal communication and operationalisation of strategies. • No written standard operation procedures (SOP). • Tacit knowledge reduces when trained personnel quit – lack of explicit knowledge. 7    
  • 12. 5.1.3. Opportunities • Myanmar is one of the ASEAN member countries - ASEAN Free Trade Agreements may bring about increase business activities. • Market liberalization, deregulation and privatization. • Increase talent pool from increasing management schools • High technology and internet access. • Increasing number of NGOs.5.1.4. Threats • Hyper competition from entrants. • Disintermediation in the industry i.e. suppliers and customers direct contact to each other. • Customer organisations demand fragmentation. • Lack of media freedom i.e. censorship from different ministries and government organisations. • Knowledge worker shortage. • Situated in one of the least developing countries, Myanmar with high risks and uncertainties. According to SWOT analysis, Ace Dragon must deliver better servicequality, tangible and distinct value to survive and achieve competitive edge to gethigher customer satisfaction. Service gaps model is used to deliver service qualityand to iron out flaws in the system. 8    
  • 13. 5.2. Service Gaps Analysis As a service providing agency, Ace Dragon has to consider some limitationstrigged by the service characteristics such as lack of ownership, high perceivedrisks, difficulty in pricing, required high involvement of customers, competences ofservice providers, service quality variability and evaluation of service, etc. According to the service gap model, Ace Dragon’s delivered services are notwhat its customers expect. There have been delays and discrepancies in the servicescurrently delivered. The customers have been sometimes upset due to thedifferences between what they are expected and what they experienced. Therefore,there exists Gap 5. • Gap 1: Customers’ requirements are identified during the sales process. Senior management also know the customer expectations well according to their professional experiences. Therefore, the service Gap 1 does not exist. • Gap 2: Ace Dragon management does not clarify the goals and specify the service quality levels clearly to the operational level staff. The management does not consider the capacity of employees when specifying the steps required. There are no-written procedures for standard services and thus employees especially operation staffs do not understand what is required of them. Therefore, Gap 2 exists. • Gap 3: The employees do not have enough competences to deliver the services because of role ambiguity, poor employee job fit, weak in information system, poor supervision, trainings and control systems. Therefore, Gap 3 exists • Gap 4: Ace Dragon’s external communications handled mainly by the sales representatives do not match the services quality levels specified by senior management due to weakness in internal communication. The quality levels are already weakened by Gap 2 and 3. Therefore, external communications sometimes become overpromises to the customers, Gap 4 exists. 9    
  • 14. 6. Recommendations6.1 Managing Organisational Resources In order to close the above service gaps especially gap 5, all the businessactivities such as marketing, human resource, operation and information technologymust be integrated to manage their allocated organisational resources according tothe business strategy. There different models for each department to manageorganisational resources including marketing mix (7Ps). As a service organisation,additional three Ps; people, process and physical evidence have to be managedeffectively. People must be managed effectively because competent employees canmanage other organisational resources effectively and efficiently by HR planning,Human Resource Development, Knowledge Management, PerformanceManagement, Employee Relation and Quality Management. Effective HP modelssuch as high performance working and management models, high commitment,involvement and engagement models. Process includes procedures and information systems which are important forsmooth operation of different organisation departments and functions such ashuman resource department, marketing department, operation department andfinance and accounting department, etc. By means of business processreengineering the company can reduce costs by reduction of non-value addedactivities and smoothing its internal operations within and between the departments.Some advantages of information technology include; • bringing down barriers of linguistic and geographic boundaries and share information quickly and efficiently, • cheaper, quicker and more efficient communication, • computerise the business process thus streamlining businesses to make them extremely cost effective, 10    
  • 15. • bridging the cultural gap, • more time for delivering your products and services worldwide and • Creation of new jobs, etc. Physical evidence is important to mention the company image and its qualityproduct or service for customer emotional satisfaction before, during and afterpurchasing. This is especially useful in service delivering companies because of fiveservice characteristics such as lack of ownership. Exhibit 6 – Recommendations to Close the Service Gaps Marketing Human Resource OperationsGap 1 Market research Recruitment and selection Encourage interaction Marketing Information Induction Staff feedback System Training and Development Customer feedbackGap 2 Service process High Involvement Standardised services Develop (BPR) Management Model (HIMM) Develop (BPR) Set Key Performance Quality related goals Indicators (KPIs)Gap 3 Internal Marketing Recruitment and selection Follow Standard operating Clear job description & procedures job specification Technology Training and Development Operation efficiency Employee Relation Quality Control Performance Appraisal RewardGap 4 Service Marketing Triangle Performance Management Operation efficiency Manage Customer Reward Quality Control expectations Research and Monitor Communications Integrated Marketing Communications (IMC) 11    
  • 16. Following are the strategies to manage organisational resources for eachfunction to follow in order to close service gaps to get service quality attributes;reliability, responsiveness, assurance, empathy and tangibles, to improve customersatisfaction profitability.6.2. Closing Gap 1 • Although gap 1 does not exist now, Ace Dragon has to prepare for the future potential gap. Not only senior management, but also employees must be capable to understand the future customers’ expectations. • Senior management can better understand customer expectations through market research, customers’ feedback, suggestions, complaints and feedback from front-line staffs. • Incorporating IT – such as database systems, in marketing information system could greatly improve marketing decisions • HR must recruit and select competent managers and staffs, provide good induction and trainings for customer service and relation.6.3. Closing Gap 2 • Specify standard media management services that reflect customers’ expectations and set quality related goals. • Develop Business Process Reengineering with cooperation between marketing and operation. • Take employee suggestions & contribution, especially customer facing staff by using high involvement management model. • Set standard operating procedures for specified services and using advanced technology to reduce human error. 12    
  • 17. 6.4. Closing Gap 3 • Promote internal communications i.e. set, communicate and reinforce customer-oriented service standards for all employees. • Start from recruitment and selection, HR should recruit with service in mind and clarify role of every employees. • Endorse Internal marketing i.e. employees as customers and empower employees. • Practice high involvement management model to create climate in which a continuing dialogue. • Conduct trainings and development for employees and get better employee relation to retain the competent employees. • Make performance appraisal and reward for their best service provision. • Encourage to follow standard operating procedures and build capacity of employees to use high technology. • Develop operation efficiency and make quality control.6.5. Closing Gap 4 • Improve internal and external communications according to service marketing triangle. • Manage customers’ expectations through integrated marketing communication. • Research and monitor communications and take appropriate action to customers’ feedback. • Practising performance management and reward to meet the customer expectation caused by external communication. • Improve operational efficiency and quality control for the customers’ experiences to match with their expectations. 13    
  • 18. 7. Conclusion Previous achievement does not grantee the future success. The previous andcurrent core competences may even become core rigidities. The question is how itshould face the change by taking opportunities and minimizing threats as macroenvironment is uncontrollable and changing dynamically. Unless Ace Dragon isproactive to get the competitive advantages, it will be forced to change by theturbulent environment. How it is performing now will decide where it will be in thefuture. The effective management of resources according to business strategy leadsto competitive edge, sustainably and the future success of the company. Therefore,the cooperation, commitment and participation of different management levels anddepartmental integration are essential for the effective management oforganisational resources. Ace Dragon has to be flexible enough to face the change with strong strategyand structure. Resources are the backbone of the organisation for survival andgrowth. As a service organisation, it has to close the service gaps to improvecustomer satisfaction and to increase shareholders’ wealth by following therecommendations to manage system, staff and capital, organisation resourcesaccording to its hybrid strategy of differentiation and cost-leadership by cooperationamong departments and different management levels for competitive advantagesand sustainability of the company. 14    
  • 19. References1. Doyle, Peter, and Philip Stern. 4th edition. Marketing Management and Strategy (2006). Prentice Hall.2. Heizer, J., and Render, B. Operation Management (2006), 8th edition, Pearson International Edition, Pearson Education.3. John, G., Scholes, K., and Wittington, R. Exploring Corporate Strategy: Texts and Cases (2008). Prentice Hall.4. Kotler, P., and Armstrong, G. Marketing an Introduction (2005), 7th edition. Pearson Education International. Prentice Hall.5. Kotler, P., and Armstrong, G. Principles of Marketing (2010), 13th edition (Global Edition). Pearson Education International, Prentice Hall.6. Kotler, P., and Keller, K. Marketing Management (2008). Pearson.7. Kotler, P., and Keller, K.L. Marketing Management (2006), 12th edition. Pearson Education International. Prentice Hall.8. Lucas, R., Lupton, B., and Mathieson, H. Human Resource Management in an International Context (2007). CIPD.9. Marchington, M., and Wilkinson, A. Human Resource Management at Work (2005). CIPD.10. Parasuranam, A., Valarie A. Zeithaml, and Leonard L. Berry, Delivering Quality Service and Balancing Customer Expectations (New York: Free Press, 1990).11. Slack, Nigel, Stuart Chambers, Robert Johnston. Operation Management (2007), 5th edition, Prentice Hall.12. Business Management, ABE study manuals13. Human Resource Management and Development, ABE study manuals14. Marketing Management, ABE study manuals15. http://www.acedragon-myanmar.com/16. http://www.myanmar-yellowpages.com/yellow_pages17. http://www.nickmutt.com18. http://www.quickmba.com/strategy/swot/ 15