Service Management

Business

Quiz 3 :

New Service Development

Quiz 3 :

New Service Development

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Like many entrepreneurs, Jeffrey Bezos, founder of Amazon.com had an idea, did his homework, and developed a new service. Amazon.com opened its virtual doors in July 1995. Since then, the retailer has served millions of customers worldwide and, in the fourth quarter of 2011, generated more than $17 billion in net sales, which represents an increase of 35 percent more than that of the equivalent quarter the previous year. 11 Many people regard Amazon.com as the "golden child" of the Internet. Unlike many entrepreneurs, however, Bezos was not content with just gaining market share for his initial concept. Nearly 25 years after opening its doors, Amazon.com still is developing new services. The young CEO started Amazon with the intention of establishing a strong brand name that he could leverage into other products. He marketed books first, because he believed they were ideal cyberspace products. Customers do not need much physical interaction with the product or with a salesperson to purchase books. Books, therefore, are well suited to marketing over the web. A key success factor for Amazon.com is that it captures market share and fosters brand loyalty by focusing on customer needs. Bezos believes that paying too much attention to shortterm gains means forgetting about long-term customer satisfactions. This long-term customer focus comes at a price, however. Despite impressive sales growth, Amazon did not turn a profit quickly, but that didn't stop it from becoming a dominant force in online retailing. In addition to books, the Amazon website now includes products and services such as electronics, music, software, toys, clothing, and B2B services for other businesses. Some items are available from Amazon's inventory, and other products and services are supplied by third-party sellers. These sellers, in turn, pay a portion of their revenues to Amazon. Amazon also manufactures and sells several versions of its Kindle e-book reader, which has made Amazon the leader in e-book sales. AMAZON'S GUIDING FORCE-THE CUSTOMER Amazon's guiding philosophy is to provide superior service to its customers. Bezos and his management team spent one year creating the website and database programs that drove Amazon.com in the beginning. They sought to create a friendly site that would not demand a high level of computer literacy. Bezos recognized that Internet commerce would shift the balance of power toward consumers. Consequently, Amazon.com built customer relationships by customizing its service, involving its website visitors in the service, and creating a communal spirit. Focus on the consumer is the cornerstone for developing customer loyalty. CUSTOMER AS COPRODUCER AND SERVICE CUSTOMIZATION Amazon.com integrates customers into the service delivery process in several ways. Customers can participate in a Customer Discussion service. This service presents an opportunity to read comments from readers about books or products of interest to the customer. The customer also can chat with other Discussion participants. The "wish list" is another service that Amazon.com offers. For example, a customer can enter titles of books he or she would like to have into a personal wish list. A friend who wants to give that customer a book as a gift then can make a selection from the wish list. Amazon also makes personalized recommendations to individual customers. Some of these recommendations are based on the customer's past purchases, and other recommendations are based on the behavior of past customers who have made purchases similar to those of the customer. If a consumer purchases a book on Amish quilts, for example, Amazon.com 's software will search for all of the people who purchased this same book. Using a mathematical process developed by Amazon.com called item-based collaborative filtering, the software determines what other books are popular with people who read the Amish quilt book. The customer then receives a list of proposed titles based on this information. Amazon.com uses this technique to provide the same friendly and personalized reading advice that a local bricks-and-mortar bookstore operation can, but it achieves greater accuracy and convenience at a fraction of the cost. One flaw of this early collaborative filtering was its inability to distinguish gift purchases. Someone buying his or her mother a book on quilting, for example, would receive recommendations on this topic despite a lack of personal interest. Amazon.com solved this problem by including a check box on the order page so the customer can indicate if the item is a gift. Another problem can arise because the power of collaborative filtering is based on the customer's history. If a person changes e-mail addresses frequently and uses a new Amazon.com identification, all of the data are lost. In addition to collaborative filtering, the company uses other strategies to achieve its mission. When repeat customers log on to the website, a personalized web page greets the customer by name and allows him or her to view the new recommendations made by the collaborative filtering tool. Bezos compares this personalized front page with "walking into your favorite store and finding only items that you want on the shelves near the door." Amazon also allows customers to store information on the company's secure server. Customers can authorize Amazon.com to keep a record of their credit cards and mailing addresses, for example. This technology, called 1-Click, streamlines the service so that customers don't have to reenter the information every time they make purchases. Amazon.com doesn't wait for customers to come to its site to provide its service. Customers receive periodic e-mails encouraging them to visit Amazon.com and giving a list of recommendations for items to check out on the next visit. OTHER UNIQUE USES OF TECHNOLOGY FOR THE CUSTOMER Amazon.com not only has used technology to personalize the customer experience, but also has designed its site with customers in mind. The pages are easy to understand and use. The website avoids large graphics, which can take a long time to load. A powerful search engine is another unique feature of Amazon.com. The company employs a "do what I mean" (DWIM) search function. The site recognizes the misspellings that customers make frequently and changes the search function to account for these mistakes. If a customer misspells the author's name Fitzsimmons as Fitzsimons, for example, Amazon.com still displays the book Service Management. MORE THAN JUST FRIENDLY TECHNOLOGY Amazon's technology has helped to create loyal customers who not only visit the site, but, as we have noted, also interact with it. Amazon.com is an active virtual community that involves the customer. Another feature of its Customer Discussion service is the Author's Corner, which sometimes allows readers to engage in question-and-answer sessions with their favorite writers. The company also encourages visitors and customers to post reviews of any book or product on the site. This review process involves the customers in developing the content on the website and creates an information tool for other website visitors. Amazon also allows users to form reading groups where customers can post comments to each other about specific books. The library of reviews is an important barrier to entry in a digital environment where entrepreneurs easily can copy this business model in a week. Amazon.com employees go to great lengths for the customers and consider them as part of a community. One customer reported with joy that a copy of his father's book, 20 years out of print, had been located for him by Amazon. The Associates Program expands this "community" beyond the websites under Amazon's direct control. Amazon.com allows registered websites, such as Yahoo.com, Drugstore.com, and Zappos.com, to recommend specific books, CDs, videos, and other Amazon products to their visitors using a hyperlink. If customers follow the hyperlink and purchase the product on Amazon.com, these associates receive up to a 10 percent commission. Amazon claims "tens of thousands" of associates are participating in its programs, which expands Amazon's presence and publicity on the web, but it also means that Amazon could lose some control of its brand and image. Amazon has encountered some other problems. A reporter once revealed that Amazon was selling space to publishers on a list of favourite books. Amazon also was accused of selling authors extra e-mail support on the website for various titles. 12 The company was flooded with outraged e-mails and stopped all paid promotions in response to the outcry. This incident raises the question, Will the loyal customer base of Amazon.com or any other electronic service tolerate being used for financial gain? The ability to provide the broad spectrum of services for millions of customers seamlessly and consistently depends on very sophisticated technology, much of which was pioneered by Amazon engineers and architects. The highly personalized page that greets a returning customer contains between 200 and 300 bits of software logic, and is a testament to their work. Referring to software and technology capabilities, Bezos says in a 2010 letter to shareholders issued in early 2011, "Many of the problems we face have no textbook solutions, and so we-happily-invent new approaches." 13 NOT JUST A BOOKSELLER ANYMORE As noted earlier, Amazon.com continues to develop new services. Amazon Web Services (AWS) is a pivotal addition to the company's offerings. This program supplies other businesses with a web-based platform for all of their operations. In addition to basic infrastructure technology, Amazon offers CloudWatch, which provides monitoring for the AWS cloud resources and applications. Amazon states that "developers and systems administrators can use CloudWatch to collect and track metrics, gain insight, and react immediately to keep their applications and businesses running smoothly." 14 The company's cloud computing services are available in 2012 in eight geographic regions and a new service, Amazon DynamoDB, has been launched. DynamoDB is a powerful new database that has high speed and predictable performance with seamless scalability so the user can adjust the program to meet individual resource requirements and performance metrics. A new alliance with Viacom, a company that provides online access to many entertainment venues, was announced in early 2012. 15 This alliance allows Amazon Prime members to stream movies and television programs instantly and commercial-free. 16 In accordance with his firm belief that successful entrepreneurs must take a long-term view of their businesses and the world, Bezos founded Blue Origin, a company dedicated (and determined) to provide affordable suborbital and orbital space travel. 17 In its short life thus far, Blue Origin has enjoyed the taste of success and failure, and researchers look forward-and upward-to matching Amazon.com 's achievements. AS AMAZON LOOKS TO THE FUTURE-WILL IT BECOME THE WALMART OF THE INTERNET? Amazon.com has been very successful turning a profit since 2004. Amazon's personalized customer service and online community strategy work well. The company claims its sales of electronic books have surpassed the sales of its printed books, and it is the largest seller of videos and music on the Web. 18 Early skeptics suggested that price-sensitive buyers would constantly search the net for the lowest prices and leave companies without any pricing power or brand loyalty. Amazon has not suffered this predicted pattern in part because it has taken a long-range view of the business and invested heavily in creating a loyal customer base. Fast expansion into a variety of retailing areas reinforces Amazon's goal to be a one-stop shopping site on the Internet. Some sources suggest that Amazon might venture into the brick-and-mortar arena by establishing Appletype- stores to sell its Kindle e-readers, and, also, might introduce a smart phone. 19 This Walmart strategy has its dangers, however. Amazon runs the risk of expanding too rapidly, which could damage or dilute its brand image. Thus far, however, this long-term growth strategy is proving successful. The most recent publicly released financial statement indicates that net sales of $34,204 million for the year of 2010 were up by almost $10,000 million over sales during 2009. How does Amazon.com illustrate the sources of service sector growth? Comment on information technology, Internet as an enabler, innovation, and changing demographics.
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Company A illustrates the sources of service sector growth by emphasizing on Information technology, making effective use of internet, innovation and changing demographics.
Company A's contribution to IT sector is explained below:
The company has a market cap of $87 billion and supplies goods all over the globe. The firm is a more centralized organization, who built their own website and partnered with Toys R as a strategic alliance. Their association with the Toys R made them to take a new turn called *GS' commerce. It's an approach to provide technology and marketing solutions to the retailers.
Company A's effective use of internet is described below:
• The company prefers to be an intermediary that accelerates peer to peer commerce. Besides that, company A efficiently uses new technologies to provide convenience to the customers for one place shopping. The firm when receives an order from the customer, it studies the delivery needs and provide two days delivery on most of the orders.
The firm in the beginning has kept only the stocks of the frequent sold products. Later, the firm has increased the warehouse space as the operations went global.
• They started as an online book retailer and later laid their hands on all products. The firm installed an electronic store management system to exchange information within the company and the warehouse.
• The company made the business model scalable by locating the stores that are in each city and distributing goods with lower occupancy cost.
• Also, the firm outsourced their inventory management process to provide logistics and order fulfillment services. The firm concentrated mostly on innovation and software to make their inventory process easier than the hardware.
Company A's contribution in innovation and changing demographics is described below:
• Company A already has a strong market presence, so making internet radio known to consumers was not a difficult task for them. The e-commerce giant has been welcoming advanced opportunities for streaming music without interruption.
• In light of the technological environment, Company A knew that they will be competing with other organizations that stream music for free with limited interruptions. Other competitors for example, allow users to stream for free and create their own playlist.
In such a case, Company A evaluated their strategies and framed strategies accordingly in the market.
• The current economy enabled company A to expand in the market. A small reduction in the cost generally increases the sales of the company.

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The service vision of Commuter Cleaning is to provide dry cleaning services for individuals with careers or other responsibilities that make it difficult for them to find the time to go to traditional dry cleaners. The company's goals are to provide a high-quality dry cleaning service that is both reliable and convenient. The targeted market consists of office workers who live in the suburbs of large metropolitan areas. The service will be marketed primarily to single men and women as well as dualcareer couples, because this segment of the population has the greatest need for a quality dry cleaning service but does not have the time to go to the traditional dry cleaners. The targeted cities are those surrounded by suburbs from which many people commute via mass transit. The facilities where customers will drop off and pick up their dry cleaning will be located at sites where commuters meet their trains or buses into the downtown area (i.e., park and-ride locations and commuter train stations). For each city, it will be necessary to determine who owns these transit stations and how land can be rented from the owner. In some locations, facilities where space could be rented already exist. In other locations, there might not be any existing facilities, and the pickup and drop-off booths will need to be built. The facilities for laundry pickup and drop-off need not be large. The building or room at the station need only be large enough to accommodate racks for hanging the finished dry cleaning. Initially, it might be necessary to restrict the service to laundering business-wear shirts, because these are the easiest of all clothing articles to clean and also will allow the operations to be simplified. Typically, a man or woman will need a clean shirt for each workday, so a large demand exists. One drawback would be the diminished customer convenience, because dry cleaning of garments would necessitate a separate trip to a traditional dry cleaner. If dry cleaning were outsourced, however, it would be possible to offer full-service cleaning very quickly, because a plant and equipment need not be purchased. A decision also needs to be made about providing sameday or next-day service. One factor in this decision will be whether competitors in the area offer same-day service. These cleaners represent a serious threat only if they open early enough and close late enough to be convenient and accessible to customers. Most important, same-day service should be provided only where it is feasible to deliver on this promise consistently. All advertisements will include a phone number that potential customers can call to inquire about the service. When a customer calls, he or she can request the service. That same day, the customer will be able to pick up a Commuter Cleaning laundry bag with the customer's name and account number on it and a membership card that is coded with the account number. The delivery system will be a hub-and-spoke system, similar to the one that FedEx uses for package handling. Customers will have the convenience of dropping off their laundry at numerous neighborhood commuter stations. All dry cleaning will be picked up and delivered to one central plant, and once the shirts are clean they will be returned to the customer's drop-off point. Same-day service is possible with pickups beginning at 8:00 AM and returns completed by 5:00 PM. The customer will place the dirty shirts in the bag at home and simply leave the bag at the station on the way to work. The station worker will attach a color-coded label on the bag to identify the location where the shirts were dropped off so that they can be returned to the same station. A laundry pickup route will be established to bring bags from each location to the central cleaning plant. Once the bag reaches the central plant, the items will be counted and the number entered into the billing database. After the shirts have been cleaned, they will be put on hangers with the customer's laundry bag attached. The cleaned shirts will be segregated according to the location to which they need to be returned and then placed on a truck in reverse order of the delivery route. The customer will provide the station worker with his or her membership card, which will be used to identify and retrieve the customer's clothing and bag. Because all customers will be billed monthly, the time to pick up the laundry should be expedited and waiting lines avoided. Initially, cleaning will be outsourced to a large dry cleaner with excess capacity. A favorable rate should be negotiated because of the predictable volume, convenience of aggregating the demand into one batch, and performing the pickup and delivery service. Contracting for the cleaning will reduce the initial capital investment required to build a plant and buy equipment, and it also will provide time for the business to build a customer base that would support a dedicated cleaning plant. Further, contracting will limit the financial risk exposure if the concept fails. If the cleaning is outsourced, there will be no need to hire and manage a workforce to perform the cleaning; therefore, management can focus on building a customer base instead of supervising back-office activities. Also, with contract cleaning, it is more feasible to offer dry cleaning services in addition to laundering business shirts. In the long run, however, contract cleaning may limit the potential profitability, expose the business to quality problems, and prevent the opportunity to focus cleaning plant operations around the pickup-and-delivery concept. Ideally, once Commuter Cleaning has built a large client base and has access to significant capital, all cleaning will be done internally. Most of the hiring will be targeted to area college students. Initially, two shifts of workers will be needed for the transit station facilities but just one van driver at any given time. As business expands, additional vans will be acquired and additional drivers hired. The first shift of drop-off station workers will begin at 6:00 AM and finish at 9:00 AM, at which time the van driver will transport the items from the drop-off sites to the cleaning site. The number of drivers needed and the hours they work will depend on how many pickup and drop-off sites exist, their proximity to each other, the cleaning plant location, and the ability to develop efficient routing schedules. The second shift of drivers will deliver the cleaning from the plant to the transit stations from about 3:30 to 5:00 PM. The second shift of transit-site workers will begin at 5:00 PM and end when the last train or bus arrives, usually about 8:30 PM. Once cleaning is done internally, it will be possible to have plant employees also pick up the laundry and deliver it to the stations each day. This will allow Commuter Cleaning to hire some full-time workers, and it also will bring the back office workers closer to the customers so that they can be more aware of problems and customer needs. College students will be the best candidates for workers, because their schedules vary and classes usually are held in the middle of the day, from about 10 AM to 3 PM. Also, depending on course loads, some students might have time to work only three hours a day, while others can choose to work both the first and second shifts. The starting salary will be set slightly above the wage for typical part-time service jobs available to college students to discourage turnover. When Commuter Cleaning is first introduced into a city, additional temporary workers will be needed to manage the customer inquiries for initiating the service. The week before introduction of the service, representatives will be at the station facilities to answer questions and perform the paperwork necessary to initiate service for interested customers. Because all advertisements will include the customer service number, it will be necessary to have additional representatives manning the phones to handle the inquiries. All employees will have the title "customer service representative" to stress the function of their jobs. These workers will be encouraged to get to know their customers and reach a first-name basis with them. When customers initiate service, they will be encouraged to open an account for monthly billing rather than to pay each time that items are picked up. At this time, the customer service representative will collect all the necessary information, including name, address, phone number, location from where they commute, and credit card number. If a customer desires, the amount owed will be charged to the credit card each month. This is the most desirable form of payment, because it is efficient and involves no worry of delayed payments. This method also is becoming more common, and people generally now are comfortable having their credit cards billed automatically. Each month, statements will be sent to all customers with transactions to verify the bill and request payment from those who do not use a credit card. If a customer is late in paying, a customer service representative will call and ask if he or she would like to begin paying with a credit card. Repeatedly delinquent customers will be required to pay at the time of pickup, a stipulation that will be included in the customer's initial agreement for service. The customer service representatives will be responsible for answering all customer inquiries, including the initiation of service, and one customer service representative will be responsible for customer billings. Each day, the laundry delivered to the plant will be entered into a database that accumulates each customer's transactions for the month. A smooth demand throughout the week is desirable to create a stable work load; however, actions likely will be needed to control fluctuations in demand and to avoid imbalances in the work load. One method of controlling demand is through price specials and promotions. Offering a discount on certain days of the week is common practice for dry cleaners, and one approach would be to offer special prices to different customer segments to entice them to bring in their laundry on a certain day. For example, Friday might be the busiest day of the week and Monday and Tuesday the slowest. In this case, the customer base could be divided (e.g., alphabetically) and each segment offered a discount price on a particular day. Other ideas include providing a complimentary cup of coffee to anyone bringing in laundry on Monday. These promotions can be implemented once demand fluctuations are observed. Attention also must be given to holidays, which might create temporary surges or lulls in business. Using the data in Table 3.5, calculate a break-even price per shirt if monthly demand is expected to be 20,000 shirts and the contract with a cleaning plant stipulates a charge of $0.50 per shirt.
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Breakeven point refers to a point at which total revenue and total cost are equal and there is no loss or net loss or gain.
Calculate the breakeven price of each shirt by setting the total monthly fixed expenses equal to the monthly demand and multiply the difference between the price per shirt and the cleaning per shirt as shown below:
img Hence, the breakeven price per shirt is $1.19 if monthly demand is expected to be 20,000 shirts.

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What ethical issues are raised in the promotion of sales during a service transaction ?
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Promotion of the sales is a mandatory part of the business as the service providers have to reach out to the masses to get the customers. The customers would be getting this sort of promotions on regular basis and the service providers develop marketing plans to penetrate in to the customers.
The service business is growing in a very rapid pace that there are many dealers for the dame service across the streets. These dealers in order to get more customers, develop sales promotions claiming the additional attributes they may inherit. These promotions should follow the business ethics as the customers tend to believe these promotions before choosing a service provider. It is highly recommended that no false statements are made during the promotions that would mislead the customers.
There may be several ethical issues during the promotion of sales, some of them can be discussed as follows.
1. Honesty : The promotions should be as honest a possible as the customers would expect for the attributes mentioned. If a restaurant claims to be meat free, they need to be honest in this regard other wise it would hurt the faith of the vegan customers.
2. Transparent service : The promotions should be transparent and no hidden agendas has to be there. If the firm claims to have branches across the globe, it has to be there. It does not entertain the meaning of having those in the future. It would be a case manipulating the customers.
Customer satisfaction can never be attained with false promotions. They would come to know about the actual facts sooner or later and would have an adverse effect on the business. It is always advisable to have an honest and transparent promotion of the services so as to gain the trust of the customers. The trust of the customers would make them loyal to the services and it in turn is an investment for the firm.

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Like many entrepreneurs, Jeffrey Bezos, founder of Amazon.com had an idea, did his homework, and developed a new service. Amazon.com opened its virtual doors in July 1995. Since then, the retailer has served millions of customers worldwide and, in the fourth quarter of 2011, generated more than $17 billion in net sales, which represents an increase of 35 percent more than that of the equivalent quarter the previous year. 11 Many people regard Amazon.com as the "golden child" of the Internet. Unlike many entrepreneurs, however, Bezos was not content with just gaining market share for his initial concept. Nearly 25 years after opening its doors, Amazon.com still is developing new services. The young CEO started Amazon with the intention of establishing a strong brand name that he could leverage into other products. He marketed books first, because he believed they were ideal cyberspace products. Customers do not need much physical interaction with the product or with a salesperson to purchase books. Books, therefore, are well suited to marketing over the web. A key success factor for Amazon.com is that it captures market share and fosters brand loyalty by focusing on customer needs. Bezos believes that paying too much attention to shortterm gains means forgetting about long-term customer satisfactions. This long-term customer focus comes at a price, however. Despite impressive sales growth, Amazon did not turn a profit quickly, but that didn't stop it from becoming a dominant force in online retailing. In addition to books, the Amazon website now includes products and services such as electronics, music, software, toys, clothing, and B2B services for other businesses. Some items are available from Amazon's inventory, and other products and services are supplied by third-party sellers. These sellers, in turn, pay a portion of their revenues to Amazon. Amazon also manufactures and sells several versions of its Kindle e-book reader, which has made Amazon the leader in e-book sales. AMAZON'S GUIDING FORCE-THE CUSTOMER Amazon's guiding philosophy is to provide superior service to its customers. Bezos and his management team spent one year creating the website and database programs that drove Amazon.com in the beginning. They sought to create a friendly site that would not demand a high level of computer literacy. Bezos recognized that Internet commerce would shift the balance of power toward consumers. Consequently, Amazon.com built customer relationships by customizing its service, involving its website visitors in the service, and creating a communal spirit. Focus on the consumer is the cornerstone for developing customer loyalty. CUSTOMER AS COPRODUCER AND SERVICE CUSTOMIZATION Amazon.com integrates customers into the service delivery process in several ways. Customers can participate in a Customer Discussion service. This service presents an opportunity to read comments from readers about books or products of interest to the customer. The customer also can chat with other Discussion participants. The "wish list" is another service that Amazon.com offers. For example, a customer can enter titles of books he or she would like to have into a personal wish list. A friend who wants to give that customer a book as a gift then can make a selection from the wish list. Amazon also makes personalized recommendations to individual customers. Some of these recommendations are based on the customer's past purchases, and other recommendations are based on the behavior of past customers who have made purchases similar to those of the customer. If a consumer purchases a book on Amish quilts, for example, Amazon.com 's software will search for all of the people who purchased this same book. Using a mathematical process developed by Amazon.com called item-based collaborative filtering, the software determines what other books are popular with people who read the Amish quilt book. The customer then receives a list of proposed titles based on this information. Amazon.com uses this technique to provide the same friendly and personalized reading advice that a local bricks-and-mortar bookstore operation can, but it achieves greater accuracy and convenience at a fraction of the cost. One flaw of this early collaborative filtering was its inability to distinguish gift purchases. Someone buying his or her mother a book on quilting, for example, would receive recommendations on this topic despite a lack of personal interest. Amazon.com solved this problem by including a check box on the order page so the customer can indicate if the item is a gift. Another problem can arise because the power of collaborative filtering is based on the customer's history. If a person changes e-mail addresses frequently and uses a new Amazon.com identification, all of the data are lost. In addition to collaborative filtering, the company uses other strategies to achieve its mission. When repeat customers log on to the website, a personalized web page greets the customer by name and allows him or her to view the new recommendations made by the collaborative filtering tool. Bezos compares this personalized front page with "walking into your favorite store and finding only items that you want on the shelves near the door." Amazon also allows customers to store information on the company's secure server. Customers can authorize Amazon.com to keep a record of their credit cards and mailing addresses, for example. This technology, called 1-Click, streamlines the service so that customers don't have to reenter the information every time they make purchases. Amazon.com doesn't wait for customers to come to its site to provide its service. Customers receive periodic e-mails encouraging them to visit Amazon.com and giving a list of recommendations for items to check out on the next visit. OTHER UNIQUE USES OF TECHNOLOGY FOR THE CUSTOMER Amazon.com not only has used technology to personalize the customer experience, but also has designed its site with customers in mind. The pages are easy to understand and use. The website avoids large graphics, which can take a long time to load. A powerful search engine is another unique feature of Amazon.com. The company employs a "do what I mean" (DWIM) search function. The site recognizes the misspellings that customers make frequently and changes the search function to account for these mistakes. If a customer misspells the author's name Fitzsimmons as Fitzsimons, for example, Amazon.com still displays the book Service Management. MORE THAN JUST FRIENDLY TECHNOLOGY Amazon's technology has helped to create loyal customers who not only visit the site, but, as we have noted, also interact with it. Amazon.com is an active virtual community that involves the customer. Another feature of its Customer Discussion service is the Author's Corner, which sometimes allows readers to engage in question-and-answer sessions with their favorite writers. The company also encourages visitors and customers to post reviews of any book or product on the site. This review process involves the customers in developing the content on the website and creates an information tool for other website visitors. Amazon also allows users to form reading groups where customers can post comments to each other about specific books. The library of reviews is an important barrier to entry in a digital environment where entrepreneurs easily can copy this business model in a week. Amazon.com employees go to great lengths for the customers and consider them as part of a community. One customer reported with joy that a copy of his father's book, 20 years out of print, had been located for him by Amazon. The Associates Program expands this "community" beyond the websites under Amazon's direct control. Amazon.com allows registered websites, such as Yahoo.com, Drugstore.com, and Zappos.com, to recommend specific books, CDs, videos, and other Amazon products to their visitors using a hyperlink. If customers follow the hyperlink and purchase the product on Amazon.com, these associates receive up to a 10 percent commission. Amazon claims "tens of thousands" of associates are participating in its programs, which expands Amazon's presence and publicity on the web, but it also means that Amazon could lose some control of its brand and image. Amazon has encountered some other problems. A reporter once revealed that Amazon was selling space to publishers on a list of favourite books. Amazon also was accused of selling authors extra e-mail support on the website for various titles. 12 The company was flooded with outraged e-mails and stopped all paid promotions in response to the outcry. This incident raises the question, Will the loyal customer base of Amazon.com or any other electronic service tolerate being used for financial gain? The ability to provide the broad spectrum of services for millions of customers seamlessly and consistently depends on very sophisticated technology, much of which was pioneered by Amazon engineers and architects. The highly personalized page that greets a returning customer contains between 200 and 300 bits of software logic, and is a testament to their work. Referring to software and technology capabilities, Bezos says in a 2010 letter to shareholders issued in early 2011, "Many of the problems we face have no textbook solutions, and so we-happily-invent new approaches." 13 NOT JUST A BOOKSELLER ANYMORE As noted earlier, Amazon.com continues to develop new services. Amazon Web Services (AWS) is a pivotal addition to the company's offerings. This program supplies other businesses with a web-based platform for all of their operations. In addition to basic infrastructure technology, Amazon offers CloudWatch, which provides monitoring for the AWS cloud resources and applications. Amazon states that "developers and systems administrators can use CloudWatch to collect and track metrics, gain insight, and react immediately to keep their applications and businesses running smoothly." 14 The company's cloud computing services are available in 2012 in eight geographic regions and a new service, Amazon DynamoDB, has been launched. DynamoDB is a powerful new database that has high speed and predictable performance with seamless scalability so the user can adjust the program to meet individual resource requirements and performance metrics. A new alliance with Viacom, a company that provides online access to many entertainment venues, was announced in early 2012. 15 This alliance allows Amazon Prime members to stream movies and television programs instantly and commercial-free. 16 In accordance with his firm belief that successful entrepreneurs must take a long-term view of their businesses and the world, Bezos founded Blue Origin, a company dedicated (and determined) to provide affordable suborbital and orbital space travel. 17 In its short life thus far, Blue Origin has enjoyed the taste of success and failure, and researchers look forward-and upward-to matching Amazon.com 's achievements. AS AMAZON LOOKS TO THE FUTURE-WILL IT BECOME THE WALMART OF THE INTERNET? Amazon.com has been very successful turning a profit since 2004. Amazon's personalized customer service and online community strategy work well. The company claims its sales of electronic books have surpassed the sales of its printed books, and it is the largest seller of videos and music on the Web. 18 Early skeptics suggested that price-sensitive buyers would constantly search the net for the lowest prices and leave companies without any pricing power or brand loyalty. Amazon has not suffered this predicted pattern in part because it has taken a long-range view of the business and invested heavily in creating a loyal customer base. Fast expansion into a variety of retailing areas reinforces Amazon's goal to be a one-stop shopping site on the Internet. Some sources suggest that Amazon might venture into the brick-and-mortar arena by establishing Appletype- stores to sell its Kindle e-readers, and, also, might introduce a smart phone. 19 This Walmart strategy has its dangers, however. Amazon runs the risk of expanding too rapidly, which could damage or dilute its brand image. Thus far, however, this long-term growth strategy is proving successful. The most recent publicly released financial statement indicates that net sales of $34,204 million for the year of 2010 were up by almost $10,000 million over sales during 2009. What generic approach(s) to service design does Amazon.com illustrate, and what competitive advantages does this design offer?
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What are the limits of the production-line approach to services ?
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Is Amazon.com a model for the future of retailing ?
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Give an example of a service in which isolation of the technical core would be inappropriate.
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The service vision of Commuter Cleaning is to provide dry cleaning services for individuals with careers or other responsibilities that make it difficult for them to find the time to go to traditional dry cleaners. The company's goals are to provide a high-quality dry cleaning service that is both reliable and convenient. The targeted market consists of office workers who live in the suburbs of large metropolitan areas. The service will be marketed primarily to single men and women as well as dualcareer couples, because this segment of the population has the greatest need for a quality dry cleaning service but does not have the time to go to the traditional dry cleaners. The targeted cities are those surrounded by suburbs from which many people commute via mass transit. The facilities where customers will drop off and pick up their dry cleaning will be located at sites where commuters meet their trains or buses into the downtown area (i.e., park and-ride locations and commuter train stations). For each city, it will be necessary to determine who owns these transit stations and how land can be rented from the owner. In some locations, facilities where space could be rented already exist. In other locations, there might not be any existing facilities, and the pickup and drop-off booths will need to be built. The facilities for laundry pickup and drop-off need not be large. The building or room at the station need only be large enough to accommodate racks for hanging the finished dry cleaning. Initially, it might be necessary to restrict the service to laundering business-wear shirts, because these are the easiest of all clothing articles to clean and also will allow the operations to be simplified. Typically, a man or woman will need a clean shirt for each workday, so a large demand exists. One drawback would be the diminished customer convenience, because dry cleaning of garments would necessitate a separate trip to a traditional dry cleaner. If dry cleaning were outsourced, however, it would be possible to offer full-service cleaning very quickly, because a plant and equipment need not be purchased. A decision also needs to be made about providing sameday or next-day service. One factor in this decision will be whether competitors in the area offer same-day service. These cleaners represent a serious threat only if they open early enough and close late enough to be convenient and accessible to customers. Most important, same-day service should be provided only where it is feasible to deliver on this promise consistently. All advertisements will include a phone number that potential customers can call to inquire about the service. When a customer calls, he or she can request the service. That same day, the customer will be able to pick up a Commuter Cleaning laundry bag with the customer's name and account number on it and a membership card that is coded with the account number. The delivery system will be a hub-and-spoke system, similar to the one that FedEx uses for package handling. Customers will have the convenience of dropping off their laundry at numerous neighborhood commuter stations. All dry cleaning will be picked up and delivered to one central plant, and once the shirts are clean they will be returned to the customer's drop-off point. Same-day service is possible with pickups beginning at 8:00 AM and returns completed by 5:00 PM. The customer will place the dirty shirts in the bag at home and simply leave the bag at the station on the way to work. The station worker will attach a color-coded label on the bag to identify the location where the shirts were dropped off so that they can be returned to the same station. A laundry pickup route will be established to bring bags from each location to the central cleaning plant. Once the bag reaches the central plant, the items will be counted and the number entered into the billing database. After the shirts have been cleaned, they will be put on hangers with the customer's laundry bag attached. The cleaned shirts will be segregated according to the location to which they need to be returned and then placed on a truck in reverse order of the delivery route. The customer will provide the station worker with his or her membership card, which will be used to identify and retrieve the customer's clothing and bag. Because all customers will be billed monthly, the time to pick up the laundry should be expedited and waiting lines avoided. Initially, cleaning will be outsourced to a large dry cleaner with excess capacity. A favorable rate should be negotiated because of the predictable volume, convenience of aggregating the demand into one batch, and performing the pickup and delivery service. Contracting for the cleaning will reduce the initial capital investment required to build a plant and buy equipment, and it also will provide time for the business to build a customer base that would support a dedicated cleaning plant. Further, contracting will limit the financial risk exposure if the concept fails. If the cleaning is outsourced, there will be no need to hire and manage a workforce to perform the cleaning; therefore, management can focus on building a customer base instead of supervising back-office activities. Also, with contract cleaning, it is more feasible to offer dry cleaning services in addition to laundering business shirts. In the long run, however, contract cleaning may limit the potential profitability, expose the business to quality problems, and prevent the opportunity to focus cleaning plant operations around the pickup-and-delivery concept. Ideally, once Commuter Cleaning has built a large client base and has access to significant capital, all cleaning will be done internally. Most of the hiring will be targeted to area college students. Initially, two shifts of workers will be needed for the transit station facilities but just one van driver at any given time. As business expands, additional vans will be acquired and additional drivers hired. The first shift of drop-off station workers will begin at 6:00 AM and finish at 9:00 AM, at which time the van driver will transport the items from the drop-off sites to the cleaning site. The number of drivers needed and the hours they work will depend on how many pickup and drop-off sites exist, their proximity to each other, the cleaning plant location, and the ability to develop efficient routing schedules. The second shift of drivers will deliver the cleaning from the plant to the transit stations from about 3:30 to 5:00 PM. The second shift of transit-site workers will begin at 5:00 PM and end when the last train or bus arrives, usually about 8:30 PM. Once cleaning is done internally, it will be possible to have plant employees also pick up the laundry and deliver it to the stations each day. This will allow Commuter Cleaning to hire some full-time workers, and it also will bring the back office workers closer to the customers so that they can be more aware of problems and customer needs. College students will be the best candidates for workers, because their schedules vary and classes usually are held in the middle of the day, from about 10 AM to 3 PM. Also, depending on course loads, some students might have time to work only three hours a day, while others can choose to work both the first and second shifts. The starting salary will be set slightly above the wage for typical part-time service jobs available to college students to discourage turnover. When Commuter Cleaning is first introduced into a city, additional temporary workers will be needed to manage the customer inquiries for initiating the service. The week before introduction of the service, representatives will be at the station facilities to answer questions and perform the paperwork necessary to initiate service for interested customers. Because all advertisements will include the customer service number, it will be necessary to have additional representatives manning the phones to handle the inquiries. All employees will have the title "customer service representative" to stress the function of their jobs. These workers will be encouraged to get to know their customers and reach a first-name basis with them. When customers initiate service, they will be encouraged to open an account for monthly billing rather than to pay each time that items are picked up. At this time, the customer service representative will collect all the necessary information, including name, address, phone number, location from where they commute, and credit card number. If a customer desires, the amount owed will be charged to the credit card each month. This is the most desirable form of payment, because it is efficient and involves no worry of delayed payments. This method also is becoming more common, and people generally now are comfortable having their credit cards billed automatically. Each month, statements will be sent to all customers with transactions to verify the bill and request payment from those who do not use a credit card. If a customer is late in paying, a customer service representative will call and ask if he or she would like to begin paying with a credit card. Repeatedly delinquent customers will be required to pay at the time of pickup, a stipulation that will be included in the customer's initial agreement for service. The customer service representatives will be responsible for answering all customer inquiries, including the initiation of service, and one customer service representative will be responsible for customer billings. Each day, the laundry delivered to the plant will be entered into a database that accumulates each customer's transactions for the month. A smooth demand throughout the week is desirable to create a stable work load; however, actions likely will be needed to control fluctuations in demand and to avoid imbalances in the work load. One method of controlling demand is through price specials and promotions. Offering a discount on certain days of the week is common practice for dry cleaners, and one approach would be to offer special prices to different customer segments to entice them to bring in their laundry on a certain day. For example, Friday might be the busiest day of the week and Monday and Tuesday the slowest. In this case, the customer base could be divided (e.g., alphabetically) and each segment offered a discount price on a particular day. Other ideas include providing a complimentary cup of coffee to anyone bringing in laundry on Monday. These promotions can be implemented once demand fluctuations are observed. Attention also must be given to holidays, which might create temporary surges or lulls in business. What generic approach to service system design is illustrated by Commuter Cleaning, and what competitive advantages does this design offer?
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What are some drawbacks of increased customer participation in the service process ?
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What features of the 100 Yen Sushi House service delivery system differentiate it from the competition, and what competitive advantages do they offer ?
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The service vision of Commuter Cleaning is to provide dry cleaning services for individuals with careers or other responsibilities that make it difficult for them to find the time to go to traditional dry cleaners. The company's goals are to provide a high-quality dry cleaning service that is both reliable and convenient. The targeted market consists of office workers who live in the suburbs of large metropolitan areas. The service will be marketed primarily to single men and women as well as dualcareer couples, because this segment of the population has the greatest need for a quality dry cleaning service but does not have the time to go to the traditional dry cleaners. The targeted cities are those surrounded by suburbs from which many people commute via mass transit. The facilities where customers will drop off and pick up their dry cleaning will be located at sites where commuters meet their trains or buses into the downtown area (i.e., park and-ride locations and commuter train stations). For each city, it will be necessary to determine who owns these transit stations and how land can be rented from the owner. In some locations, facilities where space could be rented already exist. In other locations, there might not be any existing facilities, and the pickup and drop-off booths will need to be built. The facilities for laundry pickup and drop-off need not be large. The building or room at the station need only be large enough to accommodate racks for hanging the finished dry cleaning. Initially, it might be necessary to restrict the service to laundering business-wear shirts, because these are the easiest of all clothing articles to clean and also will allow the operations to be simplified. Typically, a man or woman will need a clean shirt for each workday, so a large demand exists. One drawback would be the diminished customer convenience, because dry cleaning of garments would necessitate a separate trip to a traditional dry cleaner. If dry cleaning were outsourced, however, it would be possible to offer full-service cleaning very quickly, because a plant and equipment need not be purchased. A decision also needs to be made about providing sameday or next-day service. One factor in this decision will be whether competitors in the area offer same-day service. These cleaners represent a serious threat only if they open early enough and close late enough to be convenient and accessible to customers. Most important, same-day service should be provided only where it is feasible to deliver on this promise consistently. All advertisements will include a phone number that potential customers can call to inquire about the service. When a customer calls, he or she can request the service. That same day, the customer will be able to pick up a Commuter Cleaning laundry bag with the customer's name and account number on it and a membership card that is coded with the account number. The delivery system will be a hub-and-spoke system, similar to the one that FedEx uses for package handling. Customers will have the convenience of dropping off their laundry at numerous neighborhood commuter stations. All dry cleaning will be picked up and delivered to one central plant, and once the shirts are clean they will be returned to the customer's drop-off point. Same-day service is possible with pickups beginning at 8:00 AM and returns completed by 5:00 PM. The customer will place the dirty shirts in the bag at home and simply leave the bag at the station on the way to work. The station worker will attach a color-coded label on the bag to identify the location where the shirts were dropped off so that they can be returned to the same station. A laundry pickup route will be established to bring bags from each location to the central cleaning plant. Once the bag reaches the central plant, the items will be counted and the number entered into the billing database. After the shirts have been cleaned, they will be put on hangers with the customer's laundry bag attached. The cleaned shirts will be segregated according to the location to which they need to be returned and then placed on a truck in reverse order of the delivery route. The customer will provide the station worker with his or her membership card, which will be used to identify and retrieve the customer's clothing and bag. Because all customers will be billed monthly, the time to pick up the laundry should be expedited and waiting lines avoided. Initially, cleaning will be outsourced to a large dry cleaner with excess capacity. A favorable rate should be negotiated because of the predictable volume, convenience of aggregating the demand into one batch, and performing the pickup and delivery service. Contracting for the cleaning will reduce the initial capital investment required to build a plant and buy equipment, and it also will provide time for the business to build a customer base that would support a dedicated cleaning plant. Further, contracting will limit the financial risk exposure if the concept fails. If the cleaning is outsourced, there will be no need to hire and manage a workforce to perform the cleaning; therefore, management can focus on building a customer base instead of supervising back-office activities. Also, with contract cleaning, it is more feasible to offer dry cleaning services in addition to laundering business shirts. In the long run, however, contract cleaning may limit the potential profitability, expose the business to quality problems, and prevent the opportunity to focus cleaning plant operations around the pickup-and-delivery concept. Ideally, once Commuter Cleaning has built a large client base and has access to significant capital, all cleaning will be done internally. Most of the hiring will be targeted to area college students. Initially, two shifts of workers will be needed for the transit station facilities but just one van driver at any given time. As business expands, additional vans will be acquired and additional drivers hired. The first shift of drop-off station workers will begin at 6:00 AM and finish at 9:00 AM, at which time the van driver will transport the items from the drop-off sites to the cleaning site. The number of drivers needed and the hours they work will depend on how many pickup and drop-off sites exist, their proximity to each other, the cleaning plant location, and the ability to develop efficient routing schedules. The second shift of drivers will deliver the cleaning from the plant to the transit stations from about 3:30 to 5:00 PM. The second shift of transit-site workers will begin at 5:00 PM and end when the last train or bus arrives, usually about 8:30 PM. Once cleaning is done internally, it will be possible to have plant employees also pick up the laundry and deliver it to the stations each day. This will allow Commuter Cleaning to hire some full-time workers, and it also will bring the back office workers closer to the customers so that they can be more aware of problems and customer needs. College students will be the best candidates for workers, because their schedules vary and classes usually are held in the middle of the day, from about 10 AM to 3 PM. Also, depending on course loads, some students might have time to work only three hours a day, while others can choose to work both the first and second shifts. The starting salary will be set slightly above the wage for typical part-time service jobs available to college students to discourage turnover. When Commuter Cleaning is first introduced into a city, additional temporary workers will be needed to manage the customer inquiries for initiating the service. The week before introduction of the service, representatives will be at the station facilities to answer questions and perform the paperwork necessary to initiate service for interested customers. Because all advertisements will include the customer service number, it will be necessary to have additional representatives manning the phones to handle the inquiries. All employees will have the title "customer service representative" to stress the function of their jobs. These workers will be encouraged to get to know their customers and reach a first-name basis with them. When customers initiate service, they will be encouraged to open an account for monthly billing rather than to pay each time that items are picked up. At this time, the customer service representative will collect all the necessary information, including name, address, phone number, location from where they commute, and credit card number. If a customer desires, the amount owed will be charged to the credit card each month. This is the most desirable form of payment, because it is efficient and involves no worry of delayed payments. This method also is becoming more common, and people generally now are comfortable having their credit cards billed automatically. Each month, statements will be sent to all customers with transactions to verify the bill and request payment from those who do not use a credit card. If a customer is late in paying, a customer service representative will call and ask if he or she would like to begin paying with a credit card. Repeatedly delinquent customers will be required to pay at the time of pickup, a stipulation that will be included in the customer's initial agreement for service. The customer service representatives will be responsible for answering all customer inquiries, including the initiation of service, and one customer service representative will be responsible for customer billings. Each day, the laundry delivered to the plant will be entered into a database that accumulates each customer's transactions for the month. A smooth demand throughout the week is desirable to create a stable work load; however, actions likely will be needed to control fluctuations in demand and to avoid imbalances in the work load. One method of controlling demand is through price specials and promotions. Offering a discount on certain days of the week is common practice for dry cleaners, and one approach would be to offer special prices to different customer segments to entice them to bring in their laundry on a certain day. For example, Friday might be the busiest day of the week and Monday and Tuesday the slowest. In this case, the customer base could be divided (e.g., alphabetically) and each segment offered a discount price on a particular day. Other ideas include providing a complimentary cup of coffee to anyone bringing in laundry on Monday. These promotions can be implemented once demand fluctuations are observed. Attention also must be given to holidays, which might create temporary surges or lulls in business. Prepare a service blueprint for Commuter Cleaning.
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The service vision of Commuter Cleaning is to provide dry cleaning services for individuals with careers or other responsibilities that make it difficult for them to find the time to go to traditional dry cleaners. The company's goals are to provide a high-quality dry cleaning service that is both reliable and convenient. The targeted market consists of office workers who live in the suburbs of large metropolitan areas. The service will be marketed primarily to single men and women as well as dualcareer couples, because this segment of the population has the greatest need for a quality dry cleaning service but does not have the time to go to the traditional dry cleaners. The targeted cities are those surrounded by suburbs from which many people commute via mass transit. The facilities where customers will drop off and pick up their dry cleaning will be located at sites where commuters meet their trains or buses into the downtown area (i.e., park and-ride locations and commuter train stations). For each city, it will be necessary to determine who owns these transit stations and how land can be rented from the owner. In some locations, facilities where space could be rented already exist. In other locations, there might not be any existing facilities, and the pickup and drop-off booths will need to be built. The facilities for laundry pickup and drop-off need not be large. The building or room at the station need only be large enough to accommodate racks for hanging the finished dry cleaning. Initially, it might be necessary to restrict the service to laundering business-wear shirts, because these are the easiest of all clothing articles to clean and also will allow the operations to be simplified. Typically, a man or woman will need a clean shirt for each workday, so a large demand exists. One drawback would be the diminished customer convenience, because dry cleaning of garments would necessitate a separate trip to a traditional dry cleaner. If dry cleaning were outsourced, however, it would be possible to offer full-service cleaning very quickly, because a plant and equipment need not be purchased. A decision also needs to be made about providing sameday or next-day service. One factor in this decision will be whether competitors in the area offer same-day service. These cleaners represent a serious threat only if they open early enough and close late enough to be convenient and accessible to customers. Most important, same-day service should be provided only where it is feasible to deliver on this promise consistently. All advertisements will include a phone number that potential customers can call to inquire about the service. When a customer calls, he or she can request the service. That same day, the customer will be able to pick up a Commuter Cleaning laundry bag with the customer's name and account number on it and a membership card that is coded with the account number. The delivery system will be a hub-and-spoke system, similar to the one that FedEx uses for package handling. Customers will have the convenience of dropping off their laundry at numerous neighborhood commuter stations. All dry cleaning will be picked up and delivered to one central plant, and once the shirts are clean they will be returned to the customer's drop-off point. Same-day service is possible with pickups beginning at 8:00 AM and returns completed by 5:00 PM. The customer will place the dirty shirts in the bag at home and simply leave the bag at the station on the way to work. The station worker will attach a color-coded label on the bag to identify the location where the shirts were dropped off so that they can be returned to the same station. A laundry pickup route will be established to bring bags from each location to the central cleaning plant. Once the bag reaches the central plant, the items will be counted and the number entered into the billing database. After the shirts have been cleaned, they will be put on hangers with the customer's laundry bag attached. The cleaned shirts will be segregated according to the location to which they need to be returned and then placed on a truck in reverse order of the delivery route. The customer will provide the station worker with his or her membership card, which will be used to identify and retrieve the customer's clothing and bag. Because all customers will be billed monthly, the time to pick up the laundry should be expedited and waiting lines avoided. Initially, cleaning will be outsourced to a large dry cleaner with excess capacity. A favorable rate should be negotiated because of the predictable volume, convenience of aggregating the demand into one batch, and performing the pickup and delivery service. Contracting for the cleaning will reduce the initial capital investment required to build a plant and buy equipment, and it also will provide time for the business to build a customer base that would support a dedicated cleaning plant. Further, contracting will limit the financial risk exposure if the concept fails. If the cleaning is outsourced, there will be no need to hire and manage a workforce to perform the cleaning; therefore, management can focus on building a customer base instead of supervising back-office activities. Also, with contract cleaning, it is more feasible to offer dry cleaning services in addition to laundering business shirts. In the long run, however, contract cleaning may limit the potential profitability, expose the business to quality problems, and prevent the opportunity to focus cleaning plant operations around the pickup-and-delivery concept. Ideally, once Commuter Cleaning has built a large client base and has access to significant capital, all cleaning will be done internally. Most of the hiring will be targeted to area college students. Initially, two shifts of workers will be needed for the transit station facilities but just one van driver at any given time. As business expands, additional vans will be acquired and additional drivers hired. The first shift of drop-off station workers will begin at 6:00 AM and finish at 9:00 AM, at which time the van driver will transport the items from the drop-off sites to the cleaning site. The number of drivers needed and the hours they work will depend on how many pickup and drop-off sites exist, their proximity to each other, the cleaning plant location, and the ability to develop efficient routing schedules. The second shift of drivers will deliver the cleaning from the plant to the transit stations from about 3:30 to 5:00 PM. The second shift of transit-site workers will begin at 5:00 PM and end when the last train or bus arrives, usually about 8:30 PM. Once cleaning is done internally, it will be possible to have plant employees also pick up the laundry and deliver it to the stations each day. This will allow Commuter Cleaning to hire some full-time workers, and it also will bring the back office workers closer to the customers so that they can be more aware of problems and customer needs. College students will be the best candidates for workers, because their schedules vary and classes usually are held in the middle of the day, from about 10 AM to 3 PM. Also, depending on course loads, some students might have time to work only three hours a day, while others can choose to work both the first and second shifts. The starting salary will be set slightly above the wage for typical part-time service jobs available to college students to discourage turnover. When Commuter Cleaning is first introduced into a city, additional temporary workers will be needed to manage the customer inquiries for initiating the service. The week before introduction of the service, representatives will be at the station facilities to answer questions and perform the paperwork necessary to initiate service for interested customers. Because all advertisements will include the customer service number, it will be necessary to have additional representatives manning the phones to handle the inquiries. All employees will have the title "customer service representative" to stress the function of their jobs. These workers will be encouraged to get to know their customers and reach a first-name basis with them. When customers initiate service, they will be encouraged to open an account for monthly billing rather than to pay each time that items are picked up. At this time, the customer service representative will collect all the necessary information, including name, address, phone number, location from where they commute, and credit card number. If a customer desires, the amount owed will be charged to the credit card each month. This is the most desirable form of payment, because it is efficient and involves no worry of delayed payments. This method also is becoming more common, and people generally now are comfortable having their credit cards billed automatically. Each month, statements will be sent to all customers with transactions to verify the bill and request payment from those who do not use a credit card. If a customer is late in paying, a customer service representative will call and ask if he or she would like to begin paying with a credit card. Repeatedly delinquent customers will be required to pay at the time of pickup, a stipulation that will be included in the customer's initial agreement for service. The customer service representatives will be responsible for answering all customer inquiries, including the initiation of service, and one customer service representative will be responsible for customer billings. Each day, the laundry delivered to the plant will be entered into a database that accumulates each customer's transactions for the month. A smooth demand throughout the week is desirable to create a stable work load; however, actions likely will be needed to control fluctuations in demand and to avoid imbalances in the work load. One method of controlling demand is through price specials and promotions. Offering a discount on certain days of the week is common practice for dry cleaners, and one approach would be to offer special prices to different customer segments to entice them to bring in their laundry on a certain day. For example, Friday might be the busiest day of the week and Monday and Tuesday the slowest. In this case, the customer base could be divided (e.g., alphabetically) and each segment offered a discount price on a particular day. Other ideas include providing a complimentary cup of coffee to anyone bringing in laundry on Monday. These promotions can be implemented once demand fluctuations are observed. Attention also must be given to holidays, which might create temporary surges or lulls in business. Critique the business concept, and make suggestions for improvement.
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Suggest other services that could adopt the 100 Yen Sushi House service delivery concepts.
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Prepare a service blueprint for the 100 Yen Sushi House operation.
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How has the 100 Yen Sushi House incorporated the just-in-time system into its operation ?
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