Nefficient After Sale Service Performance At Samsung.doc

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
Trƣơng Hồng Chuyên
INEFFICIENT AFTER-SALE SERVICE
PERFORMANCE AT SAMSUNG
SYSTEM AIR CONDITIONER
DEPARTMENT
MASTER OF BUSINESS ADMINISTRATION

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
Trƣơng Hồng Chuyên
INEFFICIENT AFTER-SALE SERVICE
PERFORMANCE AT SAMSUNG
SYSTEM AIR CONDITIONER
DEPARTMENT
MASTER OF BUSINESS ADMINISTRATION
SUPERVISOR: DR. TRẦN PHƢƠNG THẢO

Inefficient after-sale service performance at Samsung system air conditioner department 1
Table of Contents
Executive summary ............................................................................................................3
CHAPTER 1: PROBLEM IDENTIFICATION..............................................................4
1.1. Company overview..................................................................................................4
1.2. Problem mess...........................................................................................................6
1.2.1. Symptom..................................................................................................................6
1.2.2. Situation analysis.....................................................................................................8
1.2.3. Initial cause-effect map ........................................................................................ 10
1.2.4. Updated cause-effect map .................................................................................... 11
1.3. Problem identification .......................................................................................... 14
1.3.1. Possible problems................................................................................................. 14
1.3.2. Main problem validation ...................................................................................... 15
1.3.3. Main problem definitions and measurements....................................................... 16
1.3.4. Consequences of the problem............................................................................... 18
CHAPTER 2: ALTERNATIVE SOLUTION............................................................... 21
2.1. Cause validation ................................................................................................... 21
2.1.1. Lack of service and product training.................................................................... 21
2.1.2. Lack of human resource number .......................................................................... 22
2.1.3. Shortage of technical capability of the service team............................................ 23
2.2. Final cause-effect map.......................................................................................... 27
2.3. Alternative solutions............................................................................................. 28
2.3.1. Internalizing.......................................................................................................... 28
2.3.2. Outsourcing .......................................................................................................... 30

2.3.3. Partnering.............................................................................................................. 31
2.4. Solution selection ................................................................................................. 32
2.5. Action plan in the organization ............................................................................ 34
2.5.1. Recruit technical engineers................................................................................... 34
2.5.2. Select and sign contract with dealer service centers ............................................ 36
2.6. Action plan............................................................................................................ 37
CHAPTER 3: SUPPORTING INFORMATION ......................................................... 40
3.1. Interview guide..................................................................................................... 40
3.2. Transcript.............................................................................................................. 46
3.3. Data for the existence of inefficient after-sale service performance.................... 64
References......................................................................................................................... 67
Appendix........................................................................................................................... 73

Executive summary
The intensely competing market called for the shift from primary product offer
to more customized solution package.5,6
After-sale service played an equally
important role in the value chain of the company45
to enhance customer value,46
which eventually benefited the organization in higher competitive advantage,14
long-
term customer relationships, and sales effectiveness.6
The objective of the research
was to identify the central problem happening at the Samsung system air conditioner
department, to explore the causes and effects of the issue on the performance of the
company, and to provide the direction for a solution.
In this study, the research method comprised of literature review and interviews
with different informants (the head of the department, the manager and the technical
engineer in the service team, and two customers). The findings from the interviews
suggested that the company encountered inefficient after-sale service performance,
which affected the competitiveness of the end-to-end service solution to attract a
higher number of large projects, and eventually on the sales effectiveness of the
department.
Based on the main cause, the alternatives for the shortage of human resource
number included internalizing, outsourcing, and partnering options. An action plan for
the 14-month project of improving the efficiency of after-sale performance of all three
regions was developed, which would cost about 71,000 USD. By doubling the number
of internal engineers and dealer service centers, the expected result of the project was
to reduce the average time responding to service requests by 50%. From financial
perspective, the outcome of the project would expect to increase sales and profit for
end-to-end service solution by 390,000 USD and 319,000 USD respectively.

CHAPTER 1: PROBLEM IDENTIFICATION
1.1. Company overview
Headquartered in Seoul, Korea, Samsung was one of the largest conglomerates
in Korea. Since its establishment in 1938, Samsung expanded its business from a small
trading company into numerous fields including food processing, insurance, securities,
retail, electronics, construction, and shipping. After the founder passed away, Samsung
was divided into four business groups: Samsung, Shinsegae, CJ, and Hansol. Since the
1990s, Samsung Group focused its activities in electronics, mobile phones, and
semiconductors on a global scale. Among many subsidiaries of Samsung, Samsung
Electronics was the largest electronics company based on revenue and the fourth
largest brand in the world in 2012.
Since its arrival in Vietnam in 1996, Samsung contributed significantly to the
Vietnamese economy regarding job creation, GDP growth, and export volume. By
2018, Samsung invested total 17 billion USD in Vietnam, contributed 25% to
Vietnam’s total exports and created 110,000 jobs. Samsung had four factories, namely
Samsung Electronics Vietnam (SEV), Samsung Display Vietnam (SDV) in Bac Ninh
province, Samsung Electronics Vietnam Thai Nguyen (SEVT) in Thai Nguyen
province, and Samsung Electronics HCMC CE Complex (SEHC) in Ho Chi Minh
City. These factories were responsible for manufacturing electronic devices,
communication equipment, and display panels. These products were exported to 52
countries, which generated 61 billion USD in revenue and 6 billion USD in profit
equivalent to 30% of the global revenue and 16% of the global net profit of Samsung.
In addition to major factories, located in Ho Chi Minh City, Vietnam, Samsung
Vina Electronics (SAVINA) was one of the most critical business entities of Samsung,
which was responsible for all sales and marketing activities of Samsung’s products and
services in Vietnam. The company followed the business structure of the headquarter
and included two major business divisions: consumer electronics (CE) and information
technology and mobile communications (IM). CE division included audio and visual,
digital appliances, system air conditioner, remote and microphone, and display units
while IM division consisted of mobile and network units (Chart 1 – Appendix).

Besides, in order to support the operation of the company, there were customer
service, marketing, management support, product inventory, human resources, general
administration, and strategic sourcing teams (Chart 1 – Appendix).
System air conditioner (SAC) department belonged to the consumer electronics
division. Hence, the head of SAC department reported to the director of the CE
division and managed five business functions including sales, product management,
business development, customer service, and admin. Product management was
responsible for inventory management, pricing, ordering, and marketing activities.
Business development was responsible for system design drawing, design software
training provided to partners and university students as well as relationship
establishment with technical departments of partners. Customer service was
responsible for system installation, training, repair, and maintenance. Admin was
responsible for administrative tasks. There were total four managers and 22 employees
(Chart 2 – Appendix). Except for project sales, business development and admin teams
having only staffs, other teams had a manager and at least one staff. All teams in the
SAC department were expected to cooperate well with each other and commit towards
the goal of growing SAC revenue and profit.
The product portfolio of air conditioners consisted of room air conditioners
(RAC) and system air conditioners (SAC). Based on the product type, RAC was
usually seen hanging on the wall with one indoor unit and one outdoor unit, so it was
best suitable for a room. On the other hand, SAC was a system that connected multiple
indoor and outdoor units. It included technical solutions such as commercial air
conditioners (CAC), free joint multi-air conditioners (FJM), digital variable multi-air
conditioners (DVM), heating, ventilation and air conditioning (HVAC), which was
suitable for residential houses with multiple rooms, small to medium-sized commercial
buildings, or high-rise buildings. Between the two product types, SAC contributed the
higher share of 95% to the total sales compared to 5% of RAC (Table 7 – Appendix).
Based on the customer type, the company utilized a distribution network to sell to
retailers and business customers such as contractors, installers and investors of
construction projects including but not limited to residential houses, luxury
apartments, hotels, office buildings, shopping malls, retail stores, restaurants, galleries.

To reach its customers, SAC department utilized a sales force comprising of
two sales managers (the head of SAC department and channel sales manager) and 12
sales reps. Within 12 sales reps, two-thirds of them work in the project team and the
rest worked in the channel team. The significant difference between two groups was
that channel sales reps had to move customers to buy through distribution with a fixed
price scheme, while project sales reps sold directly to customers with more flexible
price scheme depending on the project value. Project team sold to projects worth
50,000 USD and above while the channel team sold to project worth less than 50,000
USD. However, sometimes the divider to distinguish the project value between two
units could be unclear, so both teams worked closely with each other to ensure that
there were no overlapping accounts.
1.2. Problem mess
1.2.1. Symptom
Firstly, Samsung SAC faced small market share compared to its competitors.
Market share of Samsung AC (5%) was lower than key competitors including Daikin
(25%), Panasonic (25%) and LG (7%). Daikin was the market leader because of its
specialization in one business of air conditioner. In Vietnam, Japanese brands such as
Daikin and Panasonic gained popularity not only because of product efficiency but
also attentive after-sale service network.41
For example, Daikin had a plan to invest
nearly 90 million USD on building the training center and showroom in Ho Chi Minh
City in order to seek about 10,000 technicians from universities, colleges and retailers
for their installation, maintenance and repair service by 2020.41
It was in accordance
with their expansion plan to increase the number of store to 2,000 and repair center to
25 by 2020 while meeting 900 million USD by 2022 which doubled from 2017.41
Table 1: Vietnam AC market share (2017)
Samsung 5%
LG 7%
Panasonic 25%
Daikin 25%
Other brands 38%
Source: Nikkei Asian Review41
, internal information

Secondly, Samsung SAC experienced low sales. From 2015 to 2017, Samsung
SAC sales experienced a slower growth rate than that the whole company, its largest
competitor – Daikin as well as the global, Asia, Vietnam AC markets.
Table 2: CAGR of Samsung SAC, Samsung Vina Electronics, Daikin, global, Asia and Vietnam AC
markets (2015 – 2017)
Samsung SAC 13%
Samsung Vina Electronics 25%
Daikin 30%
Global AC market 2.5%
Asia AC market 34.3%
Vietnam AC market 14.64%
Source: Nikkei Asian Review, TechSci research, Samsung business report41-44
The forecast of 2018 revealed that total sales would be lower than 2017 result.
The target was set at the beginning of the fiscal year based on history sales. Based on
the target, each sales person was assigned with sales quota. Sales forecast was
conducted and reviewed quarterly based on sales opportunities in the pipelines of the
sales team. The management compared sales forecast with the target to evaluate sales
performance and develop sales plan. Based on the sales forecast, there would be a gap
of 13% in the total sales. Specifically, captive sales would be 19% higher than the
target, but local and channel sales would be 11% and 42% lower than the target
respectively.
Table 3: Sales forecast vs. target (2018)
Unit: million USD
2018 Forecast 2018 Target Gap
Captive 5.7 4.8 19%
Local 10.8 12.2 -11%
Channel 3.5 6 -42%
Total 20 23 -13%
Source: internal sales report
Samsung SAC experienced low sales in channel and local project. From 2015
to 2017, the average captive sales had the highest contribution of 50% to the total

sales, while local and channel sales had smaller contribution of one third and one sixth
to the total sales respectively.
Table 4: Sales by destination to total sales (2015 – 2017)
Unit: million USD
2015 2016 2017 Average % Average
Captive 11.1 11.2 10.2 10.8 51%
Local 5.2 7 8.9 7 33%
Channel 2.4 2.7 4.6 3.2 15%
Total 18.7 20.9 23.7 21.1 100%
Source: internal sales report
Thirdly, Samsung SAC experienced an increased number of after-sale service
complaints. In the last nine months of 2018, 63% of 19,000 customer calls to the call
center of the company was after-sale service requests. Among 12,000 requests, about
13% of them were after-sale service requests for SAC, which doubled that of 2017.
Besides, the recorded customer complaints revealed that the highest number of
complaints about after-sale service came from the largest captive projects (300 cases)
and the largest local projects (180 cases).
Table 5: Number of after-sale service requests and after-sale service complaints (01/2018 – 09/2018)
2017 01/2018 – 09/2018 % Change
Number of after-sale
10,600 12,000 13.2%
service requests
750 1,500 100%
service request (SAC)
service complaints (captive 175 300 71.4%
projects)
service complaints (local 100 180 80%
projects)
Source: internal meeting
1.2.2. Situation analysis

From the symptoms, Samsung SAC potentially faced low sales, especially in
channel and local project sales, and the increased number of after-sale service
complaints. According to the interview with the head of the department, Samsung
SAC had small market share due to low sales volume. Sales volume depended on
project customers, so lack of large projects led to low sales volume. The ability to win
the large projects depended on the competitive capacity of the brand in contracting
bidding. However, that the head admitted that the team faced difficulty to attract large
projects and attract large distributors to produce high sales volume due to less
competitive price, undifferentiated product, and inefficient after-sale service
performance.
Firstly, the head shared that Samsung SAC was unable to compete on price with
strong competitors who could do anything to offer the lowest price as possible. The
price of SAC was usually not publicly seen due to the dependence on various
requirements of technical aspects related to the construction project such as the length
of the pipelines needed, the height, and the design of the construction... The pricing
proposal was carefully prepared and submitted to the contractors for participating in
the formal contract bidding. However, the head admitted that price of Samsung SAC
was among the highest in the market. From an informal conversation with a sales rep,
taking a 5-HP air conditioner, for example, the price of Samsung product was
equivalent to Daikin, which followed by Mitsubishi, Toshiba, Sharp, Panasonic, and
LG. The sales rep explained that Panasonic was still a weak brand in larger SAC, so
the price was somewhat higher than LG who started to become a stronger player in the
SAC market.
Secondly, the head shared that other competitors caught up with the latest
technology available in the market for designing and developing their products.
Although the headquarter invested a lot in R&D to build differentiated products mostly
based on the design and energy efficiency, the head with his experience dealing with
contractors revealed that contractors usually did not think about the final electricity bill
of the investors (energy efficiency), so the sales team often found it difficult to
emphasize the product benefit based on the energy efficiency. From an informal
conversation with a sales rep, he shared that unlike competitors, Samsung did not carry

non-inverter line anymore, but price-sensitive customers still had high demand. The
inverter technology was the latest development in the AC industry where the
temperature could be continuously regulated. As a result, the product operation had
less noise, lower operating cost, and fewer breakdowns at the exchange of higher
price. Hence, the differentiation initiative based on the energy efficiency of Samsung
encountered reluctance from customers whose focus was on price.
Finally, the head had high concern for inefficient after-sale service
performance, which caused higher chances of product defects and led to increased
customer complaints. The head with his long-time experience in the equipment supply
industry revealed that it was difficult for Samsung SAC to compete with other
competitors on just price and product. Since the beginning of 2018, Samsung started to
offer end-to-end service solution separately from product price, which took care from
installation to warranty of products. While many contractors mostly concerned about
the cost in the first place, investors were more interested in product efficiency, which
assured their high investment. Large sales volume depended on a few key customer
accounts, but there was increased number of customer complaints about the
dissatisfaction with frequent product breakdowns. Hence, the situation of inefficient
after-sale service performance, especially slow repair and low involvement in
installation and maintenance, did not only affect current customers but also contributed
to uncompetitive capacity of Samsung SAC in bidding for large project contracts.
1.2.3. Initial cause-effect map

Potential problems
Less competitive
price
Undifferentiated
product
Inefficient after-sale
service performance
Slow repair
Low
involvement in
installation and
maintenance
Lack of large
projects
Difficult to
attract new
distributors
Frequent
product
breakdowns
Symptoms
Small
market
Low sales share
Increased
customer
complaints
1.2.4. Updated cause-effect map
In the industrial context, solution included the integration of product, service and knowledge that not only solve the strategic customer problem but also added value for the customer in use.1-5 The role of manufacturers used to be inactive when sales ended, but rationale needs for economic value, customer requirements and competition called for the integration of services into the core product.6 There was a rising
trend for manufacturers to adopt “servitization” practices to bundle service and product and sold with the value-based price (premium charge), which provided higher value for customers and increased firm performance such as sales growth. Proactive solutions
could be offered through the identification and diagnose of problems that customers
might not fully aware, hence provided higher competitive advantage and business
opportunity for the firm.6,7,12
Hence, the integration of product and service as a
7-11

solution which aimed to solve customer problem and sold at premium price affected
the competitive advantage and sales performance of the firm.
After-sale service was part of solution selling,13
which had positive
relationships with competitive advantage, sales growth of the company, and customer
purchase decision.14
Economic quality, technical quality and functional quality related
to customer trust in service supplier.15
Economic quality regarded to the customer
perception of the value of service attributes, service performance and the outcome of
using the service with regards to goal and purpose of customer usage.16
The perceived
value could go further than past customer experience to how supplier would fulfill
customer service expectations in the future.17,18
Overall service quality included
technical quality and functional quality. Technical quality referred to the actual service
performance that met and even exceeded customer expectation.15
Functional quality
referred to the responsiveness in the execution of service delivery including efficient
handling of repair requests, customer respectfulness, and quick refurbishment.15
Besides, customer satisfaction was the emotional feeling of customers about the
service provider,19
which affected repeat purchase as well as sales and profit
associated with the acquisition of new customer.20
Hence, increased complaints about
products defects reflected customer dissatisfaction with actual service performance
provided by the firm. The inefficient after-sale service performance was reflected
through slow service response including slow repair and low involvement in the
installation and maintenance.

Potential problems
Less competitive
price
Undifferentiated
product
Less
competitive
capacity
Lack of large
projects
Difficult to
attract new
distributors
Symptoms
Small
market share
Low sales
Inefficient
after-sale service
performance
Slow service
response
Slow repair
Low
involvement in
installation and
maintenance
Frequent
product
breakdowns
Increased
customer
complaints

1.3. Problem identification
1.3.1. Possible problems
 Unable to differentiate products from competitors
Other competitors followed similar available technology in the industry. The R&D
in the headquarter invested in differentiating products with energy efficiency and design.
However, there was reluctance from customers whose focus was on price, especially
contractors. Moreover, the head revealed normal technicians were more familiar with
Daikin technical design, so unfamiliarity with technical design of Samsung SAC led to
improper installation and repair. Consequently, higher chance of product breakdowns
happened. The manager revealed that 80% of products defects caused by improper
installation. The manager believed that costs associated with diagnosing and repair for the
product breakdown could be extremely costly for both customers and the company.
Hence, without technical support after the sale, even with the differentiation efforts of
Samsung through good design and energy efficiency, medium to large and complex
projects could still be exposed to the risk of frequent product breakdowns caused by
improper installation and repair.
 Less competitive price
Price of Samsung SAC was among the highest in the market. The head shared that
Samsung targeted at premium and high customer segments. Besides, the head revealed
causes to high price including high import price (60%), high tax including import, special
consumption and value-added taxes (40%), overhead cost (14-23%), and discount for
distributors (25-50%). The head shared that overhead cost included all salary, travel, and
related expenses, which was in an acceptable range compared to other departments in the
company. Besides, the head believed that the discount rate for distributors was
competitive compared to other competitors, but the distributors always used their discount
to lower the listing price to match with the market price. Less competitive price was
mostly concerned with high import price and tax for imported SAC from Korea, which

was determined by the headquarter and the current commercial policy in Vietnam. Hence,
it would be difficult for Samsung to compete on price with competitors who targeted at
low customer segments, imported SAC from ASEAN countries, or produced SAC in
Vietnam, benefiting from low or no import price and tax.
 Inefficient after-sales service performance
The head shared that Samsung SAC was one of the pioneers in Vietnam market,
but he admitted that the after-sale service did not receive enough attention as the service
team was small compared to other departments and the competitors. The head shared that
before 2018, after-sale service was mainly done by outsourced partners. The manager
revealed that improper installation and repair provided by outsourced partners caused not
only difficulty but also high cost in the diagnosis and resolve of the issues. The manager
believed that Samsung used to be in a passive position to help reinforce the customer
confidence in the brand when the product breakdown happened. With the introduction of
end-to-end service solution, the manager expected to increase involvement from Samsung
in providing efficient after-sale service for customers. However, the existing situation of
improper installation and repair caused the frustration in the management, employees and
customers to retain current customers and expand selling end-to-end service solution to
new customers.
1.3.2. Main problem validation
It became increasingly and equally challenging for manufacturers to differentiate
from rivals based on low price and to maintain superior position based on technology, so
the development of service strategy acquired attention as it provided the manufacturer
with competitive advantage and differentiation opportunities.21
In the context of the
company, due to less competitive price and undifferentiated product compared to other
competitors, it would be wiser to focus on after-sale service as a game changer in the
competitive market. Firstly, it was uneasy to lower the price due to high price and tax
associated with imported SAC from Korea. Secondly, the company was unable to

differentiate the product due to the latest available technology in the industry in addition
to unfamiliar product design with normal technicians. Thirdly, inefficient after-sale
service performance increased cost of repair. Unlike other consumer products such as TV
or cellphones, cost to repair a system was much higher than cost to repair a unit of
consumer product.
The trade-offs to make an impact on price or changing the product design would be
out of the control of the department. On the other hand, improving after-sale service
performance would add valuable benefits for the company and customers towards
achieving strategic sales growth. After-sale service which aimed at increase product
efficiency helped reinforce customer trust and enhance customer retention, which
increased new sales opportunities with both current and new customer.26
Moreover, the
development of efficient after-sale service performance followed the strategic plan of
service expansion where the head and the manager had specific controls over it.
Therefore, it would be meaningful to focus on the inefficient after-sale service
performance as a central problem of the research.
1.3.3. Main problem definitions and measurements
After-sale service could be defined as various activities taking place after product
purchase and provided customers with continuous support during their product usage. The
value of after-sale service was to prevent and reduce potential problems happening with
the product, which enhanced satisfying customer experience. After-sale service included
the set of activities which occurred after the product purchase and devoted to supporting
customers in their product usage and disposal.6,22
After-sale service were activities that
firms engaged after the product purchase to minimize possible product problems and
maximize the value for the customer in their consumption.23
Delivery, installation, and
warranty were part of after-sale service.24
It was possible to evaluate the efficiency of after-sale service performance based
on the activity level with a focus on drivers of performance such as responsiveness and

quality. Besides, it was useful to compare between the goal and actual performance with
regards to financial outcomes and customer-related outcomes to evaluate the effectiveness
of after-sale service activities. After-sale service associated with five peculiar
characteristics.25,26
Firstly, as a business, the development of after-sale service
considered the balance between profit and customer satisfaction, customer loyalty as well
as both short-term and long-term investment.25
Secondly, as a nature of service, after-sale
service generated profit and customer retention through the contribution of both front and
back-office activities in addition to human resources, proximity to customers, indirect
cost, and service level such as quality and timeliness.25
Thirdly, as a process, after-sale
service consisted of different activities to maintain product quality and reliability in order
to enhance customer satisfaction.25
Hence, the efficiency of after-sale services depended
on activity level where each activity consumed resource and delivered functionality to
customers.25
Fourthly, as an organizational unit, after-sale service performance needed to
be monitored by the manager through key performance indicators in order to understand
the gap between goal and actual outcome.25
The key performance indicator for after-sale
service needed to consider financial results such as cost, revenue and profit as well as
driver of performance such as responsiveness and quality.25
Finally, from a network
perspective, after-sale service was characterized by other participants in the value chain
such as dealers, suppliers, service centers, and customers.25
The service manager measured and controlled the after-sale service performance
through the KPI with the focus on the speed (how fast) and quality (frequency of product
breakdown) of service. The manager utilized the number of service turnaround day for
after-sale service to evaluate the after-sale service level of Samsung SAC department.
From the internal meeting presented by the service manager (Section 3.3 – Supporting
information), most of the after-sale service complaints revealed customer dissatisfaction
with frequent product breakdowns and long time of service completion. About 8% of
1,500 after-sale service jobs had the service turnaround day exceeding 20 days, which
was about three times the average number of service turnaround day for SAC and about

seven times the average number of service turnaround day for RAC. These cases
belonged to medium and large projects with the contract value from 50,000 USD and
above. The service turnaround day indicated how long it took the service team to get back
to the customer after the first checkup and how long it took the service team to complete
the service job. Hence, the existence of long service completion indicated slow service
response, which led to an increasing number of after-sale service complaints.
1.3.4. Consequences of the problem
In the situation of global competition and reduced profit for original products,
after-sale service for durable products provided source of profit and competitive
advantage.6,27
In the manufacturing industry of machine and equipment, product margin
could drop to about 2%, while sales of after-sale service and spare parts could be three
times the initial purchase and its margin could be more than 10%.28
The head shared that
inefficient after-sale service performance did not only affect the source of SAC revenue
but also source of after-sale service revenue. An informal interview with the technical
engineer revealed that cost of all spare parts to build an SAC could be two to three times
higher than the price of an original product. Depending on project size, sales of end-to-
end service solution could be 10% to 20% SAC sales. Normal warranty period was two
years, spare part and service was offered at no extra cost for customers. After warranty
period, price of addition warranty coverage could be up to 65% of product price.
Service performance played a vital role in determining customer trust, which
influenced customer retention.15
Customer retention was essential to facilitate the
effectiveness of solution selling.13
Maintaining close relationships with customers
enhanced customer knowledge which led to increased customer loyalty, so customers
voluntarily seek suppliers instead of suppliers chasing after them.13
In the case of the
continuous purchase, customer satisfaction influenced customer’s trust, loyalty, retention,
and word-of-mouth.19
Customer satisfaction affected repeat purchase as well as sales and
profit associated with the acquisition of new customer.19
It was better to provide

customers with no service failure than successful service recovery29
because customers
could be satisfied with the recovery but might not forget the bad experience with service
failure.30
The manager believed that the purpose of the service team was to assure
customer with their purchase decision. For the old and current customers, after-sale
service performance played an important role in retaining customers and winning back
their trust in service, which affected repeat purchase. The manager believed that what
mattered most to customers was prompt service could be performed when product
breakdown happened, in the shortest amount of time as possible and no failures would
occur in the future. For new customers, it was expected that an excellent after-sale service
would attract more project customers. Besides, brand image influenced and was
influenced by after-sale service.31
The head thought that dissatisfied customers spread the
rumors about lousy service experience with others, which affected negatively to the brand
image.
In B2B context, customer trust was stronger predictor of customer retention than
customer satisfaction, so firms needed to go beyond satisfaction (emotional feeling of
customers about service provider) and build trust (customer confidence in the reliability
and integrity of service provider).15,32,33
After-sale service did not only maximize
customer value over the whole product life cycle,34
but also enhanced customer
confidence and supplier creditability.35
Both of the partner and the customer agreed that
their confidence to sell or to buy was influenced by the company’s after-sale service
performance. The distributor believed that the after-sale support such as training and
response to service requests both in and out of warranty played an important role in
determining the consulting information that distributors gave to customers when selling
Samsung SAC. Hence, customers could make easier buying decision based on the selling
consultancy of the distributor. Similarly, the customer shared that his past experience with
the company’s after-sale service affected their confidence in choosing the brand for their
future projects. The customer revealed that for contract bidding, the committee depended
on three criteria including price, product quality, and after-sale service in order to give

score to a brand. As there was a clear difference in price, but it was harder to tell the
difference in the product quality and after-sale service, the customer depended on external
information from the group of engineers from other factories. Therefore, the inefficient
after-sale service performance affected sales effectiveness of the department including
both tangible values (sales, profit, repeat purchase) and intangible values (brand image,
competitive advantage, customer satisfaction, customer trust, customer loyalty, customer
retention).

CHAPTER 2: ALTERNATIVE SOLUTION
2.1. Cause validation
2.1.1. Lack of service and product training
To identify the cause, the head and the manager identified the most crucial after-
sale service items within the company context in accordance with the SAC industry. The
firm could strategize its after-sale service as the provider of predefined and standardized
services (inspection, repair, spare part, helpline, training), the provider of customer
support (extensive maintenance to improve the product efficiency and effectiveness) or
become a development partner (co-created solution with customers regarding design and
construction service).36
After that, five-item measurement scale from “poor” to
“excellent”26
was adapted for the head’s subjective evaluation of the after-sale service
performance of the SAC department compared to the key competitor.
In the context of the company, training, delivery, installation, and warranty were
identified as critical after-sale service items with regards to the SAC industry. Both of the
head and the manager generally evaluated that the current after-sale service performance
of the SAC department was less competitive than competitors and needed improvement.
The head shared that training on product setup and usage for customers was proper. The
manager shared that the number of training per person exceeded the expectation, but only
met half of the goal of training for installation and repair service. The head shared that the
delivery process included product ordering and shipping. The order took about one and a
half months and products could be shipped in two weeks. The head shared that there were
no issue with the delivery, but he thought that the standard shipping package was less
competitive than competitors. For example, the competitor could offer the shipping truck
and crane for orders with high sales volume.
Both of the head and the manager had strong concern for slow repair and low
support for installation and maintenance. There was an increased number of customer
complains for warranty service from medium and large projects, especially key account

customers. Besides, the company did not involve in the installation of all projects, while
maintenance was only given to some specific large projects. Therefore, the head and the
manager evaluated that repair and maintenance service had the worst performance
followed by installation, training and delivery respectively.
Table 6: Critical after-sale service activities and importance (within the industry),
and management’s self-evaluation on after-sale service performance (compared with
key competitor) of Samsung SAC
Activities Importance Evaluation
Training Extremely important Fair
Delivery Extremely important Good
Installation Extremely important Fair
Maintenance Extremely important Poor
Repair Extremely important Poor
Source: interview with the head and the manager
2.1.2. Lack of human resource number
The performance of after-sale service was determined by human resource fit,
which referred to the extent to which trained and skilled employees were used for the
production and delivery of service. 36
The head, the manager, and the engineer agreed
that the number of technical engineer was not enough for the expansion plan (Table 8 –
Appendix). There was lack of engineer in the Central. Besides, current two engineers
located in the North and the South could not cover increased after-sale service demand in
the regions. The technical engineer clarified that the service team were overloaded with
an increased number of service requests. There were an average of 300 medium to large
projects per year, 150 projects in the South, 120 projects in the North, and 30 projects in
the Central (Table 10 – Appendix). The engineer revealed that he had on average five to
seven projects to take care of every week and the systems needed repair after about one to
two months. However, the typical duration of a service job took at least three to five days
for small projects and at least one month for large projects. Hence, the engineer admitted

that with the current number of personnel, it was impossible to respond to increased
number of repair requests for larger number and bigger size of projects, not even
mentioned the responsibility to be involved more in installation phase for every project to
ensure proper installation and providing training to all outsourced service partners.
Due to the geographical distance, the firm had contract with both dependent
(authorized service center) and independent (dealer service centers) service providers who
were knowledgeable about customer’s culture and values, as extended arms.37
The head,
the manager and the engineer agreed that agreed that the number of dealer service center
was not enough to cover the market (Table 9 – Appendix). The engineer shared that 50
authorized service centers across the country capable of repairing SAC, but they were also
responsible for servicing all product lines of Samsung and not directly contracted by the
SAC department, so there was less priority on the support for SAC. Besides, there was
lack of dealer service centers directly contracted by the SAC department in many areas of
three regions such as Southeast, Thai Nguyen, Da Nang and Nha Trang... The current
dealer service centers were unable to cover increased service demand in the regions. The
manager explained that distributor’s branches could possibly be assigned in performing
installation service. However, the profit of repairing service was so small that branches
could not be assigned. Hence, the manager believed that there was lack of dealer service
center in unoccupied locations with large demand for repair service.
2.1.3. Shortage of technical capability of the service team
The head, the manager, and the engineer agreed that there was lack of sufficient
level of technical capability of outsourced service partners. The head shared that normal
technicians were not familiar with technical design of Samsung SAC. As a result,
improper installation and repair provided by independent installers or contractors
happened due to lack of experience with and technical knowledge of the system design,
which caused higher possibility of the product breakdown. The manager revealed that
improper installation and repair caused not only difficulty but also high cost in the

diagnosis and resolve of the issues. Without registration to end-to-end service solution,
there was low involvement of Samsung technical engineers in the installation phase. The
manager shared that he found out 80% of product defects caused by improper installation.
The manager revealed that most of the customer complaints reflected their dissatisfaction
with product breakdowns and a long time of service completion. Although many parties
exercised after-sale service, the manager admitted that Samsung still held the primary
responsibility because customers perceived the product breakdown as the consequence of
lousy product quality and would not trust the brand for their future purchase. The
engineer revealed that part of the job responsibility of Samsung engineer was to provide
training to increase technical capability for outsourced service partners. However, due to
increased service demand with limited number of personnel, the engineers were unable to
conduct more training as expected. Both the manager and the engineer agreed that the
technicians from outsourced service partners were not well equipped with practical and
advanced knowledge and skills for installing and repairing different types of SAC.
To sum up, there were three main reasons contributing to the difficulty in
performing after-sale service of Samsung SAC. Firstly, there was lack of service and
product training. Samsung SAC did not offer installation service to all customers except
registration to end-to-end service solution. Samsung SAC did not offer maintenance at the
moment. The basic training on installation and repair was offered, but there were lack of
training on practical and advanced knowledge and skills of different SAC types.
Secondly, there was a shortage in the human resource number. There were not enough
technical engineers, so the current engineers struggled with their tight schedule to provide
service to the increased number and size of customers. Besides, there were not enough
service partners ready to serve customers across the country. Thirdly, there was a shortage
of technical capability of technicians in authorized service centers and dealer service
centers.
From the analysis above, it could be seen that the company was moving from the
provider of basic repair service at no extra cost to customers to become a trusted provider

of end-to-end service solution with premium charge in order to compete with the competitors.
Manufacturers in B2B business could evolve its service strategy from just essential services
such as repair and training to more complex functions such as maintenance and construction
design.47
In addition to direct service, the company could utilize authorized service and
outsourced service with specific capacity and capability to provide more efficient and flexible
service to customers.37,47
However, lack of service and product training, lack of human
resource number, and shortage of technical capability of the service team contributed to the
situation of inefficient after-sale service performance at Samsung SAC department. There
was a higher chance of product breakdown caused by low involvement in installation and
maintenance in addition to slow repair, which contributed to increased customer complaints.
Risks could arise when service partners had insufficient knowledge about product
requirements or acquisition of unoriginal spare parts, which would increase the product
failure and decrease customer satisfaction.48
As a consequence, ignorance of these real
causes would further limit the potential of Samsung SAC in selling not only its products but
also end-to-end service solution.
Among three potential causes, the main cause would be lack of human resource
number. In order to offer more service and product training as well as increasing technical
capability for the service team, the department would need human resource responsible
for providing these services. Actual service performance depended on human resource,38
so the firm’s investment in human resource capital was critical to create sustained
competitive advantage.49
Without increasing the number of technical engineers, the
current number of engineers would not be able to handle more number of service requests
or provide more technical training to improve technical capability of outsourced partners.
The firm was responsible for strengthening the technical competence of service partners
through training programs.50
Without increasing the number of outsourced partners, the
current number of outsourced partners would not be able to provide service to distant
locations, especially in repair service. Therefore, the alternative solution would focus on

increasing the number of human resource number necessary for performing after-sale
service.

2.2. Final cause-effect map
Potential causes
Lack of service
and product
training
Main cause
Lack of human
resource
number
Shortage of
technical
capability of the
service team
Main problem
Inefficient
after-sale service
performance
Symptoms
 Low sales
 Small market share
 Increased customer complaints
Consequences
 Increased customer dissatisfaction

 Increased negative word-of-mouth

 Increased customer distrust

 Reduced customer loyalty

 Reduced customer retention

 Reduced competitive advantage

2.3. Alternative solutions
The manager could adopt internalizing, outsourcing or partnering in order to
increase the number of human resource for the service team of Samsung SAC.
Internalizing meant utilizing internal workforce.21
Outsourcing service meant utilizing
dependent service and independent service as extended arms to provide better support for
customers.37
Partnering meant sharing responsibilities between the firm and its
partners.21
When the manufacturer decided to intensify and specify its service strategy, it
took the collaborative approach with potential partners to obtain the advantages of service
implementation cost, resources and skills.21
Consequently, the firm focused on its core
business and utilized a network of partners38,39
to gain competitive advantage in the field
of service.21
Whether to use internalizing, outsourcing or partnering depended on
benchmarking the resource, competence and cost of each option.40
Therefore, the
manager would need to consider these aspects before selecting the solution best suitable
for the situation of the department.
2.3.1. Internalizing
Internalizing meant using internal workforce. Currently, the SAC department
utilized an internal workforce consisting of service manager and a technical engineer who
located in the South and a technical engineer who located in the North for after-sale
service (Table 8 – Appendix). The advantages of internalizing approach included human
resource management, customer benefit and quality control. Firstly, the engineers were
managed directly by the SAC department, so the manager could be active to recruit and
select engineers, train and develop their expertise as well as measure and improve their
performance. Secondly, the engineers had job responsibility and job performance
evaluation based on performing service for Samsung SAC customers, so the focus was
fully on these customers. Thirdly, the manager could control service quality better by
having enough engineers to do site inspection, training and consultancy. On the other
hand, internalizing approach faced disadvantages of headcount limit, high costs and

capacity utilization risk. Firstly, the service team belonged to the SAC department, so
increased headcount would increase overhead cost of the department to an unacceptable
rate. Secondly, hiring more engineers would increase labor and management costs.
Engineers still needed to visit projects within their area, so travel cost would increase.
Consequently, increased labor and travel cost led to increased service cost provided by
engineers. Currently, service cost provided by the engineers was two to three times higher
than fixed cost provided by outsourced partners. Thirdly, there was risk of capacity
utilization when all of the engineers were not fully utilized but the full salary was still
paid during low season of service demand.
The manager could use internal or external recruitment to hire additional
engineers. Supposed there were 1,500 service requests over the last nine months, so there
would be 2,000 service requests in a year. Supposed an engineer could attend three
service requests per week, the manager would need to hire nine more engineers. Because
the engineers would perform service by themselves, there were at least three visits to each
of 300 projects including one time for site inspection and two times for repair. Because
the increased number of engineers would cover all regions, travel cost would be from 0.2
to one million per visit. Supposed 30% of projects located in Ho Chi Minh City, 20% of
projects located in the South and outside Ho Chi Minh City, 40% of projects located in
the North and 10% of projects located in the Central. Internal recruitment method could
be internal advertisement or employee referral for internal candidates. External
recruitment method could be using job agency, advertisement on newspaper and job sites
or employee referral for external candidates. The costs of recruitment and selection would
be within 50 million VND. Labor cost would be about 37 million VND per person
including salary and benefits in addition to travel, training and management costs totaling
5,854 million VND per year. The external recruitment using employee referral would
save about 45 million VND, so total cost of internalizing option would be about 5,856
million VND.

2.3.2. Outsourcing
Outsourcing approach meant outsource company’s service to external trusted
partners. Currently, the department utilized 50 authorized service centers capable of
repairing SAC out of total 200 centers established by Samsung. Besides, the department
utilized 5 out of 21 distributors qualified as dealer service centers. The advantages of
using outsource included resource and infrastructure, customer benefit, low risk of
capacity utilization and low costs. Firstly, outsourced partners had service as their core
business, had high market coverage because of multiple operations in different locations,
offered a wide range of service and managed spare parts, so the department benefited
from their expertise and resources. Secondly, outsourced partners were more proximal to
customers due to high market coverage and focused on Samsung customers due to
contracts with Samsung. Thirdly, there was lower risk of capacity utilization during slow
seasons of service demand because partnership did not incur additional labor cost.
Fourthly, service cost was lower because of using fix service fees scheme and
management cost was lower due to indirect management of human resource. However,
there were disadvantages of quality control, customer benefits and human resource
management. Firstly, there was lack of internal engineers to do training, site inspection
and consultancy in order to control the service quality provided by outsourced partners.
Secondly, outsourced partners provided service to different customers of different brands
or different product lines, so there was lack of main focus on Samsung SAC customers.
Thirdly, the manager had no direct control over the human resource of outsourced
partners, so it was difficult to control the number and expertise of technicians necessary in
performing certain service. Actually, SAC department could not increase the number of
authorized service centers used for SAC because they did not sign contract with the
department and were assigned from the beginning by Samsung.
The cost of using outsource mainly involved with management, training and travel
costs. Supposed 5 current dealer service centers and 50 authorized service centers each
could cover 30% service and technical engineers could cover 40% service, then at least 16

more current dealer service centers would need to be added. The manager would still need
to do site inspection once for each of 300 projects. Because the manager worked in Ho
Chi Minh City, the travel cost would be 0.2 to five million VND per visit. In order to
increase technical capability for outsourced service partners, supposed the manager would
use both training workshop and on-the job training. Training workshops would be held
twice a year for three regions at about 20 million VND per workshop. Because service
was outsourced entirely to service partners, the manager would need to increase on-the-
job training to at least twice for each of 300 projects. Cost of partnership management
would be about one million VND per month per partner. Cost of selecting, reviewing and
signing contract with new partner would be 0.5 million VND per partner. Total cost of
outsourcing would be about 3,208 million VND per year, which was slightly higher than
half of the cost of internalizing (5,856 million VND).
2.3.3. Partnering
Partnering meant using both internal and outsourced workforce. Currently, Samsung
had established policy for service partner. In order to become dealer service centers, they
needed to be established distributors with good run rate (sales and buys record) and had
suitable technical capability. The department utilized internal service team along with 50
authorized service centers and 5 dealer service centers. The advantages of partnering
approach included shared responsibility, reduced risk, resource and infrastructure, low costs
and market development. Firstly, internal service team was responsible for receiving and
delegating service jobs, managing partnership and doing quality control (site inspection,
training and consultancy). Authorized service centers were mainly responsible for spare parts
management and servicing Samsung project customers. Dealer service centers were
responsible for their direct customers and spare parts sales. Hence, the department could
delegate service job between different parties during high season of service demand.
Secondly, the risk of capacity utilization could be reduced during low season of service
demand. Outsourced partners had different customer priorities, so partnering reduced the risk
of customer benefit. Internal engineers helped to

maintain the quality of outsourced partners. Thirdly, the department still benefited from
resource and infrastructure of outsourced partners. Fourthly, service, management and
travel costs would be low due to the usage of fixed service fee scheme, small number of
directly managed human resource and less need to travel frequently across the country.
The cost of partnering involved with training, management and travel costs.
Partnering would be similar to internalizing and outsourcing, but considering shared
responsibilities, the number of dealer service centers and technical engineers needed
would be lower than the above options. Supposed five current dealer service centers and
50 authorized service centers each could cover 30% service and technical engineers could
cover 40% service. Based on the historical data in Table 8, 9 and 10 – Appendix, the
manager would need to increase at least two more technical engineers (one in the South
and one in the Central) and six more dealer service centers (two in the South, two in the
North and two in the Central). The engineer would still need to provide at least one site
inspection and one repair for each of 300 projects. Increasing the number of engineers
would cover all regions, so the travel cost would be 0.2 to one million VND per visit. In
order to increase technical capability for 61 service partners, supposed the manager would
use both training workshop and on-the-job training. Supposed training workshop would
be held twice a year for three regions, while on-the-job training would be provided at
least once to each of 300 projects. The costs of hiring two engineers including labor,
training, travel, management, recruitment and selection costs would be about 1,599 to
1,614 million VND depending on internal or external recruitment method. The cost of
adding six more dealer service centers including selecting, reviewing and signing contract
as well as managing partnership costs would be 219 million VND. The cost of training 61
service partners including training and travel costs would be 364 million VND. The total
cost of partnering option would be 2,182 million VND, which was slightly higher than
one third of the cost of internalizing (5,856 million VND) and slightly higher than two
third of the cost of outsourcing (3,208 million VND).
2.4. Solution selection

From the analysis above and interviews with the head and the manager, it
suggested that the department would follow partnering option. Firstly, among three
options of increasing the number of human resource, partnering had the lowest cost, the
most advanatges and the least disadvanatages. The cost of partnering was about two third
of the cost of outsourcing and about half of the cost of internalizing. In the short-term,
partnering helped reduce costs significantly for the department, especially when the
service team still belonged to the SAC department and faced headcount limit. In the long-
term, if the market enlarged and service team became an independent business operation,
it could increase internalizing so that the manager had more direct control over the
number and expertise of the human resource. Secondly, there was existing resource and
infrastructure including 50 authorized service centers and five dealer service centers, so
the department could take advantage of this availability. Thirdly, partnering was
consistent with the strategic directions in the vision of Samsung towards 2020 (Creativity,
Partnership and Great People).
To confirm this solution, Mr. Quang, the head of the SAC department said that
“We mainly faced with limited resource to do it. We did not have enough people and
sufficient technical capability to delegate service jobs in order to deal with increased
number of service requests. I thought that service team expansion was required, so the
service manager and I were working on building the foundation for the service team. We
were looking forward to recruiting more qualified technical engineers and expanding
service partnership with our distributors to increase service coverage for the country.”
(Interview 3 – Supporting information)
Mr. Duong, the service manager said that “As I recognized the gap in our after-sale
service performance and within my position, I would do the best to grow our after-sale
service to serve customer needs better. I thought that the first important step was to build
a strong foundation for our after-sale service team by adding more technical engineers
and more service partners.” (Interview 5 – Supporting information)

Mr. Vinh, the technical engineer said that “I saw that our technical support was
less competitive than competitors. Daikin had a strong workforce for their professional
service. I used to work for Mitsubishi for two years before joining Samsung, so I knew
that Mitsubishi also had larger service team about 20 engineers and worked as an
independent operation with their self-controlled finance. Therefore, I hoped that our
service team would grow firmly in the future to better serve our customers.” (Interview 4
– Supporting information)
In Vietnam, Samsung increasingly focused on developing sustainable partnership
with local suppliers which benefited both the manufacturer and the supplier in higher
quality supply chain. Because of these reasons, it was essential for the manager to further
strengthen partnership with service partners towards the goal of efficient after-sale service
performance.
2.5. Action plan in the organization
To solve the shortage of human resource, there were two points that the manager
should follow:
 Recruit technical engineers

 Select and sign contract with dealer service centers
2.5.1. Recruit technical engineers
The manager needed to increase the number of internal engineers. Internal
engineers were necessary because they were responsible for site inspection of all projects
to ensure proper installation and repair performed by outsourced partners. Moreover, they
had experience and skill with Samsung SAC, so they were responsible for increasing
technical capability of outsourced partners through training. Firstly, there was lack of
technical engineer in the Central as the current two internal engineers located in Ho Chi
Minh City and Hanoi (Table 8 – Appendix). Secondly, the current number of engineers
could not be able to carry increased responsibility towards customers and partners. One

engineer could be responsible for after-sale service of around 10 million USD sales
volume. The productivity of current engineer could only meet about 14.4% of the total
service request for SAC, which did not count increased responsibilities for site inspection,
training, consultancy and administrative tasks. Secondly, half of the number of projects
located in the South, 40% of projects located in the North and one tenth of projects
located in the Central. The sales volume larger than 100,000 USD concentrated the most
in the South and followed by the North and the Central respectively. From the current
situation, the manager would need to increase one engineer for the South and one
engineer for the Central.
The manager could adopt both internal and external recruitment method. Employee
referral had the lowest cost in both cases of internal and external recruitment. Engineer
and technicians working in other departments and teams could also be introduced directly
to the manager through employee referral. Otherwise, the manager revealed that technical
engineers personally knew other skilled and experienced engineers who were currently
working in other companies, so employee referral worked best as desired candidate could
be introduced quickly and effectively. After recruitment and selection, the new hires
needed to be equipped with intense training including both training workshop and on-the-
job training so that they could be on the ground as soon as possible. Besides ongoing
technical training, new hires would be oriented in two to three weeks about the finance,
the company, product lines, work management system (SAP and Salesforce), mail, and
Code of Conduct in order to help them be familiar with their new position and working
environment.
Most of the cost for interviewing and selecting two engineers would be included in
the salary of the service manager. The cost of flying to interview candidates in the Central
would be 5 million VND. The compensation including salary and benefits for one
engineer would be 37 million VND per month. The cost of managing one engineer would
be 4 million VND per person per month. The cost of 5 training workshops provided by
expert from the headquarter would be 40 million VND per workshop including per diem

and after-party event. Travelling cost with experienced engineers for on-the-job training
would be about 0.2 to 3 million VND per trip depending on project location. The cost of
orientation would be 10 million VND per person. Total cost of recruiting two technical
engineers would be 1,395 million VND.
2.5.2. Select and sign contract with dealer service centers
The manager needed to increase the number of dealer service centers. Currently,
there was lack of dealer service centers in the Southeast, Thai Nguyen, Da Nang, and Nha
Trang (Table 9 – Appendix). Secondly, the current number of dealer service centers could
not cover enough service in their area (Table 9 – Appendix). The current number of dealer
service centers covered about 30% service, authorized service centers covered about 30%
service and technical engineers covered about 40% service. Thirdly, half of the number of
projects located in the South, 40% of projects located in the North and one tenth of
proejcts located in the Central. The sales volume larger than 100,000 USD concentrated
the most in the South and followed by the North and the Central respectively. Hence, to
increase the service coverage for dealer service centers, the manager would need to
increase six more service dealers (two in the South, two in the North and one in the
Central).
In order to increase the number of dealer service centers, the manager would
follow Samsung policy for service partner. Firstly, the manager would select and verify
the capacity profile of six distributors from the list of 16 potential distributors including
technical, financial, human resource, and sales history. There were seven potential
distributors in the South, three potential distributors in the North and six potential
distributors in the Central. The verification process would require two rounds from the
SAC department and Samsung service center. Secondly, after selection and verification,
the manager and qualified service partners would review and sign one-year service
contract. For example, the service partner would negotiate the service fee scheme in the
comparison with the market. Thirdly, the manager would organize orientation for new

service partners to welcome and provide them with necessary information about after-sale
service. The content of training for new dealer service centers was essential to help them
to be able to perform service efficiently, including operation of service system (open,
close and manage service jobs), forecast and bank guarantee for spare parts, accounting
and acceptance procedures, service contracts, serial numbers and product lines for
warranty as well as training on installation and repair. It would take about two to three
months for the verification and four to five months for the implementation, so it would
take at least half a year for new dealer service centers to be able to start performing
service.
It would take at least three times for meeting with six potential distributors in three
regions for selection and verification process. The manager could arrange to meet two
distributors in the same region to save travel cost. The first two meetings would be 10
million VND per trip including per diem and business meal with partners. The third
meeting for verification would be three million per trip. It would take at least two times
for reviewing and signing contract with new partners, which would cost 10 million VND
per trip including per diem and business meal with partners. Orientation for new partners
on service system, procedures, and technical capability would take at least three times and
would cost 5 million VND per visit. Managing dealer service center would be one million
VND per partner per month. Total cost of selecting and signing contract with six dealer
service centers would be 246 million VND.
2.6. Action plan
The action plan was developed for two parts: recruiting two technical engineers
(one in Ho Chi Minh and one in Da Nang) and selecting and signing contract with six
more dealer service centers (one in Ho Chi Minh City, one in the Southeast, one in Hanoi,
one in Thai Nguyen, one in Da Nang, and one in Nha Trang). The plan would take place
in 14 months from November, 2018 to December, 2019. Total cost needed for the plan
would be 1.65 billion VND (approximately 71,000 USD).

In order to evaluate effectiveness of solution, the manager would measure the
average service turnaround day for three regions during the implementation period
compared to previous year. Supposed the number of service request would increase at a
lower rate of 1.5 times in 2019 due to more involvement from technical engineers in site
inspection, so the average number of service request would be 250 per month. The
expected outcome would be increased service response including first time visit and
turnaround day for all three regions by 50% from 6 to 8 days to 3 to 4 days. From the
financial perspective, the management would expect to increase sales for end-to-end
service solution from current three projects to 52 projects having sales volume at least
50,000 USD (Section 3.3 – Supporting information), which would generate at least 15%
of SAC sales or 390,000 USD. The profit for taking this project would be 319,000 USD
by subtracting the cost of 71,000 USD from the sales of 390,000 USD. The expected
profit would contribute about 1.6% of the total revenue of the SAC department (20
million USD).
Action Time
Cost
(Unit: million VND)
1. Recruit 2 technical engineers
Use employee referral to find 2
desired internal/ external November - December, 2018 0
candidate
Interview and select 2 qualified
December - January, 2018 5
candidates
Announce selection result and
December - January, 2018 0
sign contract with new engineers
Orient new engineers on
January, 2018 20
company policy and procedures
Travel with other engineers to
project sites for on-the-job January, 2018 186
training

Attend training workshop by
January - December, 2018 200
expert from headquarter
Pay salary January - December, 2018 888
Manage new engineer January - December, 2018 96
Subtotal 1,395
2. Select and sign contract with 6 dealer service centers
Select and verify capacity profile
of 6 potential distributors in 3 January - December, 2018 69
regions
Review and sign contract with
January - December, 2018 60
new dealer service centers
Orient new dealer service dealer
on service policy and service January - December, 2018 45
performance requirements
Manage partnership January - December, 2018 72
Subtotal 246
Total 1,641

CHAPTER 3: SUPPORTING INFORMATION
3.1. Interview guide
Interview 1
- Informant: Mr. Quang
- Position: the head of Samsung SAC department
- Job tenure: 3.5 years
- Time: after office hour
- Date: July 7, 2018
- Place: Samsung office
- Purpose: to explore causes of low sales volume
I.Introduction
Thank you for your time. As we discussed earlier, the purpose of this interview
was to find out the causes of low sales volume. Your information would be only used in
my MBA thesis and would be kept confidential. Could you please introduce a little bit
about yourself and experience?
II. Main questions
1. I was informed that Samsung SAC currently faced with low sales and might not be
able to meet the target this year. What were the reasons for low sales volume?
2. Did you agree that low sales volume led to low contribution to distributor’s
revenue and a considerable number of discontinued distributors? Did you agree
that low sales volume led to small market share?
3. What was the most challenging issue in your department at the moment?
4. What was your plan to help deal with the situation?
III. Close and
thanks Interview 2

- Date: August 5, 2018
- Place: a coffee shop
- Purpose: follow-up to gain a better understanding of possible problems and
identify the central issue that affected low sales
I. Introduction
Thank you for your time. As discussed earlier, I would like to have a follow-up
with you to gain a better understanding of possible problems and identify the central issue
that affected low sales volume.
II. Main questions
1. Could you help me to understand more about the issue with high price and
undifferentiated technology of your product? What were the price structure and
product characteristics?
2. I found that switching barriers such as time and cost associated with changing the
supplier also affected customer retention. Could you explain the switching barriers
in the context of your company?
3. What were the critical after-sale service activities in your department with regards
to the SAC industry?
4. How did you evaluate the after-sale service performance of your department? If
possible, I would like you to compare with your key competitor.
5. Based on the scale from one to five where one was poor and five was excellent,
how did you rate the performance of each after-sale activity?
III. Close and
thanks Interview 3

- Purpose: follow-up to explore the importance of the central problem on the
performance of the company
I. Introduction
Thank you for your time. As discussed earlier, I would like to have a follow-up
with you to explore the importance of the central problem on the performance of the
company.
II. Main questions
1. What were impacts of the inefficient after-sale service performance on your
company performance? Prompt: sales, profit, competitive advantage, brand image,
customer satisfaction, customer loyalty, customer retention, repeat purchase.
2. What were reasons for the inefficient after-sale service performance in the context
of your company? Why did it happen? Could you give an example? Prompt:
employee expertise, service process and standards, outsourced service.
III. Close and
thanks Interview 4
- Informant: Mr. Vinh
- Position: technical engineer (service team)
- Job tenure: 4 years
- Place: phone interview

- Purpose: to clarify some causes of the central problem from the interview with the
head
I. Introduction
1. Thank you for your time. As discussed earlier, the purpose of this interview was to
find out the causes of the inefficient after-sale service performance. Your provided
information would only be used in my MBA thesis and would be kept confidential.
Could you please introduce a little bit about yourself and experience?
2. What were your daily job tasks?
II.Main questions
1. What were the challenges that you faced when performing after-sale service?
Prompt: human resource expertise, service process and standards, outsourced
service.
2. Which aspect of after-sale service performance did you think needed
improvement? How?
3. Was there anything else you would like to share?
III. Close and
thanks Interview 5
- Informant: Mr. Duong
- Position: customer service manager
- Job tenure: 1 year
- Time: lunch time
- Date: September 21, 2018
- Place: coffee shop
- Purpose: to gain a better understanding of the objectives and plan for after-sale
service operation of Samsung SAC department
I. Introduction

Thank you for your time. As discussed earlier, the purpose of this interview was to
help me gain a better understanding of the objectives and plan of after-sale service at
Samsung SAC. Your provided information would be only used in my MBA thesis and
would be kept confidential. Could you please introduce a little bit about yourself and
experience?
II. Main questions
1. What were the objectives of the after-sale service at Samsung SAC?
2. What was your plan to achieve these objectives?
3. What were the challenges that your team face when implementing the plan?
service.
4. What aspects of the after-sale service performance did you expect to improve?
service.
5. Was there anything else you would like to share?
III. Close and
thanks Interview 6
- Informant: Mr. Thong
- Position: project management engineer in customer’s company
- Purpose: to understand the impact of after-sale service performance on the
customer’s confidence to buy

I. Introduction
Thank you for your time. I was introduced to contact you from Mr. Dat who was
the salesman of Samsung SAC. The purpose of this interview was to help me understand
from the customer viewpoint, the impact of after-sale service performance provided by
Samsung SAC on your confidence to buy. Your provided information would be only used
in my MBA thesis and would be kept confidential.
II. Main questions
1. Could you share with me about your latest experience with after-sale service
provided by Samsung SAC?
2. What was your evaluation for the after-sale service performance provided by
Samsung SAC?
3. How did the after-sale service performance provided by Samsung SAC affect your
confidence to buy?
4. Were you confident to continue to buy or suggest this brand to your friend and
family?
III. Close and
thanks Interview 7
- Informant: Mr. Trung
- Position: sales manager of Samsung SAC distributor
- Purpose: to understand the impact of after-sale service performance on the
customer’s confidence to sell

I. Introduction
Thank you for your time. I was introduced to contact you from Mr. Dat who was
the salesman of Samsung SAC. The purpose of this interview was to help me understand
from the customer viewpoint, the impact of after-sale service performance provided by
Samsung SAC on your confidence to sell. Your provided information would be only used
in my MBA thesis and would be kept confidential.
II. Main questions
1. What types of after-service did you receive from Samsung SAC? Prompt: training,
installation, delivery, service response, warranty service
2. What was your evaluation about the after-sale service performance provided by
Samsung SAC?
3. How did the after-sale service performance provided by Samsung affect your
confidence to sell?
III. Close and thanks
3.2. Transcript
1. Interview 1
- Date: July 7, 2018
- Place: Samsung office
- Purpose: to explore causes of low sales volume
Interviewer: Thank you for your time. As we discussed earlier, the purpose of this
interview was to find out the causes of low sales volume. Your information would be only

used in my MBA thesis and would be kept confidential. Could you please introduce a
little bit about yourself and experience?
Interviewee: I worked here for 3.5 years. Before that, I had the same experience working
for Phillips Electronics for about ten years. You knew its light bulbs, right?
Interviewer: Yes. I thought the brand was trendy for its high quality. Thanks for your
introduction. I noticed that the department faced low sales and might not be able to meet
the target this year. What were the reasons for low sales?
Interviewee: I thought we hold less competitiveness in distribution sales compared to the
major competitors such as Daikin, Mitsubishi or LG... Our distributors carried these
brands as well, so we were unable to push them to sell more of our products.
Interviewer: What were the reasons for this less competitiveness?
Interviewee: So basically, both channel and project sales shared the similar nature as
they all needed project customers to gain high sales volume. However, we only depended
on a few key account customers with high potential sales volume. These customers were
profitable as long as they expanded their business operation.
Interviewer: Why did the sales team face the difficulty to increase the number of these
high potential customers?
Interviewee: Well, first was the high price in the market and the second was the
challenge to distinguish our technology from the others. Moreover, the bigger the
customers, the higher the demand they negotiate for the lowest price as possible. We
witnessed our distributors cut down their discount to win the customer account from
competitors. As you could guess, they were not satisfied, and we also lost profit on the
deal.
Interviewer: With that particular difficulty, how did you manage to overcome it?

Interviewee: I was now in a dilemma situation where the headquarter urged a 20% total
sales growth and 80% sales growth in local projects annually. If we did not achieve the
target, it would not only affect my job position but also other employees. Our sales
depended on winning project contracts, but I recognized that our capacity profile was not
competitive enough, so we lost many projects to competitors. I witnessed an increased
trend in the industry for an end-to-end service solution, you knew, everything from
installation to maintenance. Previously we did not offer these services, so customers had
to seek elsewhere or if the customer contacted us, we could only give some advice and
reliable addresses for them to reach out by themselves. As you could see, customers got
stressed about finding the right supplier of after-sale service for their SAC.
Interviewer: The solution seemed like a new competitive advantage for SAC. What was
the difficulty that you faced when implementing it?
Interviewee: What made me awake at night was the inefficient performance of our after-
sale service. Last week I got criticize from the top for the complaints from two of our key
customers who contributed to 80% of the revenue because of a long delay for their repair
request. We usually received complaints about service delay, but this was abnormal, this
was our key customer account.
Interviewer: It sounded terrible. Could you share more about this issue?
Interviewee: I thought that after the first check on the situation of the customer, the
service team was slow in getting back with the customer to solve the problem completely,
so the customer was angry at the delay. There was more than just customer complaint. I
heard the rumors in the industry for our bad after-sale service. I think it was getting harder
for us to deal with new distributors because they lost trust in our after-sale service.
Interviewer: Did you agree that low sales volume led to low contribution to distributor’s
revenue and a considerable number of discontinued distributors? Did you agree that low
sales volume led to small market share?

Interviewee: Yes. Undoubtedly, the most concern for any partner was revenue and profit.
If one brand’s contribution to their revenue and profit were low, they would not want to
continue the partnership. Besides, Samsung SAC still did not have the ability to cover all
the market, so our market share was small.
Interviewer: What was the most critical challenge that your department was facing with?
Interviewee: In the past year, we strived to expand SAC service to compete with the
market. My most significant concern at the moment was how to develop a competitive
and robust service team to gain customer trust and attract larger project customers.
Interviewer: Thank you for your sharing.
Interviewee: You are welcome.
2. Interview 2
- Purpose: follow-up to gain a better understanding of possible problems and
identify the central issue that affected low sales
Interviewer: Thank you for your time. Were you going to play golf after a coffee?
Interviewee: Yes. My favorite golf place was just around the corner. So how was the
progress so far?
Interviewer: Thank you for asking. As discussed earlier, I would like to have a follow-up
with you to gain a better understanding of possible problems and identify the central issue
that affected low sales volume.

Nefficient After Sale Service Performance At Samsung.doc

Nefficient After Sale Service Performance At Samsung.doc

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