Customer Service Perspective
Saatchi & Saatchi Company has been in operation since 1990’s and is noted as one of the leading brands globally as Kaplan. Saatchi & Saatchi though being one of the creative organizations has had its share of challenges the most notable being financial challenges. The company has gone from being listed as a recognized billion dollar organization to becoming almost bankrupt. Bankruptcy in this established company is noted to had began as a result of the 1990 recession which could not even be corrected by the previous immerse growth in the last years of 70’s and the 80’s. The company’s downward trend is also as a result of poor management of acquisitions and loss of efficient and skilled managers. It’s worth noting that in the year 1995 Charles and Maurice one of the senior managers in the company left the company after a long period and this actually made the financial strain in the company rapid. After the major loss in leadership the company was sure there was an urgent need to impose strategic reforms and structural changes. New personnel was appointed in April 1997 and assisted in setting new strong financial and customer perspectives.
Saatchi & Saatchi Company financial crisis brought about the need restructure the company under the new leadership; Kevin Roberts as the CEO and Bob Seelert as the chairman. The financial perspective included achievable and quantifiable goals. To begin with, the company was to increase its revenue so that it would grow at a faster rate than the market increased. Secondly, was to ensure 30 percent of their revenue would be operational profit. Lastly, they would ensure earning per share also increased or more precisely doubled. All the set financial goals were to be achieved within the specified time line of three years and were to be achieved currently with improving customer service.
The company decided to divide into three mini agencies to help in implementing the set strategic plan. The mini agencies were set depending on the number of company staff working in a specific location they were namely; the Lead, Drive and Proper mini agency. The lead mini agency consisted of firms that served the tiny markets and had less than 50 employees. Drive mini agency or division consisted of firms that served the middle markets and had between 100 and 150 employees. The senior most mini agency was the Prosper unit that served the large markets such as the main market New York and this is the division that was given most resources and focus. The three divisions had one major objective of assisting the company attain its financial goals thorough focusing on both financial and customer perspectives. Customer perspectives that were to be implemented were paying more attention to individual needs of clients and embracing innovation by generating new ideas.
Saatchi came to conclude that its financial stability was tired to satisfying its customers in all its three mini agencies or units. The company’s top executives acted under the phrase “permanently Infatuated Clients” which made it easier for them to channel resources towards unit requirements and potential. The new strategies and creation of units made perfect sense to all the units since they could actually begin to gain financially by paying more attention to customer perspectives. The units were lead by their specific leaders to learn that if customers are satisfied, they will not look for another company to satisfy their needs (Kaplan & Norton, 1992). On the other hand, financial perspectives were equally important since they determined operating income, economic value and return on capital which were all significant in meeting the company’s three year financial goal. Saatchi wanted to gain referrals from its existing clients and not just gaining popularity in Wall Street. Analysis also prove that 80% of Saatchi’s revenue is directly from its customers, therefore the company felt it was its responsibility to pay attention to all its customers in all the location to be able to increase its revenue (Saatchi & Saatchi).
From a personal point of view the balanced scorecard strategy proved to be a good move for Saatchi in achieving its implementation efforts. BSC was a perfect stepping stone for the company to recover from its financial crisis of the year 1997 and rise progressively in attaining financial stability. With the contribution of all the financial and customer based perspectives; aspects of BSC the company was able to conquer the Wall Street goals earlier than planned. The company was able to gain a strong market base in Wall Street by June 200 before its December 2000 target. In September 2000 Publicis Group SA gained ownership of the company for a sum of $2.5 billion which was almost five times its actual market price, this was further prove that the BSC strategy was well implemented and was effective to the success of the company.
United Air line, Inc. is one of the major airlines in the United States with 360 aircraft and more than 48,000 employees. The company has merged with several other airlines such as Delta Air Lines which is the world’s largest fleet and United Continental Holdings. These mergers have seen the company increase its market in terms of airline destinations in more than 170 countries. However, according to continental chief executive officer, Jeffery Smisek the company’s public image and market value have not been performing well in the industry even after the significant change in its brand image. For this reason the company decided in the year 2010 improving its perspectives to be able to meet its objectives was necessary. Customer service perspective proved to be the most effective strategy to implement and they laid three major objectives that the perspective was supposed to focus on. The three objectives are namely; increase customer size, increase customer purchases, increase customer referrals and recommendations. The objectives were supposed to assist the company meet its mission, vision and strategy in the market which were mainly diseconomies to scale, strong financial position, strong market share and service and products expansion.
Objective Measure Target Action
Increase customer size Increased market share The target will be all the existing customers of the airline in all the 170 countries. The company will reduce prices of their services to attract more clients. Ensure quality in all flights to enhance customer satisfaction.
Increase customer purchases Company profitability or increased revenue since customers get the urge to travel more using the company airlines. Increasing purchases will be required from both existing clients and also from new customers. Therefore the company will advertise to both groups. Encouraging customer to purchase more will be through providing gifts and coupons linked to how much a client spends.
Increase customer referrals and recommendations Employee loyalty and retention in all the airline destinations. Referrals are made by the existing market. The airline will therefore pay more attention to its current clients for it to receive recommendations. To enhance referrals from existing clients the company should strive to increase customer satisfaction through acquisitions and embracing innovations based on clients suggestions.
The balanced scorecard measures the four perspectives required for the success of a business. The main four perspectives namely financial, customer, learning and growth and besides the internal process all influence both internal and external environment of the company. When all the perspectives are well coordinated the company tends to be in a better position in the market, its organization structure and strategic vision are also properly structured. However, even though all the perspectives are important in a company especially for the profit oriented companies, financial perspective is the most ultimate perspective. This is because financial perspective identifies the key customer aspects: profit, loyalty, acquisition and retention which all dictate the internal and external environment of an organization. As further evidenced by the Wal-Mart Stores, Inc operations financial perspective dictates the environment in an organization thus growth, sustainability and harvest it will achieve in both short and long run periods.
Wal-Mart Stores, Inc has been in operation since 1962, it’s the largest retailer in the world with over two million employees learning about 8,500 retail stores and warehouse stores in the15 countries. The company is well known for its accessibility and profitability, last year the company increased its sales by 10% of its merchandise. Further, the target or strategy of the company over the last year show that its sales warranties also increased by 15% when compared to the records of the last three years. The company’s tactic as at last year which has also been extended to this year is to pay more attention on advertising and increasing its market range. Clearly the company’s current move has had some significant positive impact on the company profit margin but it’s worth noting that the growth is quite low for such a large corporation that has been in operation for over fifty years. The slow growth can be strongly explained by the lack of the company to embrace a balanced score card approach which dictate; in addition to its current strategy of paying too much attention on financial perspective related activities it should also consider implementing other perspective such customer service.
Financial perspective in Wal-Mart has lead to sales growth rate since it has resulted to the company paying attention to financial ways of expanding the market. Wal-Mart Stores, Inc operating managers the Walton Family strongly felt that operating the company under different names such as Walmex in Mexico, Asda in United Kingdom and Seiyu in Japan will ensure the company has a different image in each area. This move has assisted the company to ensure they do not have to repair all tarnished public image since a problem in Seiyu Japan may not necessary affect sales in Walmex Mexico. Clearly, the company does not pay attention to customer perspective but financial perspective is also indicated by the pricing strategy and advertising measures. The pricing strategy for the company is strictly dependent on cost profit volume approach. Wal-Mart Stores, Inc ensures that the prices are dependent on cost thus ensuring the products and services offered cater for the operational and fixed cost plus the expected profit. At no time do we note the company reducing prices or proving significant samples, gifts or coupons in advertising to increases customer satisfaction.
Wal-Mart Stores, Inc. financial perspective can further be defined as a strategy to further sustain its current market. In its many divisions the company has made cross selling of its product quite common, it has also implemented several cost reduction rates such as employee wages and advertising rates. The company’s financial strategy has also assisted the company to remain quite stable in a competitive industry even though the Fortune Global 500 list prepared in the year 2012 stated that the company did not have a strong competitive advantage in the market. In the competitive industry Wal-Mart profitability is noted in new product line and increase in unprofitable customers. With that analysis it’s clear that the company persistence in financial perspective and lack of concern in customer service perspective does not encourage growth of old product lines, strength of existing markets and increase in percentage revenue from customers.
A performance measure of the balance scorecard involves incorporating all the four perspectives; customer service, internal process and growth it dictates the objectives of an organization. In cases where a company decides to pay more attention in a specific perspective leaving out the other four like in Wal-Mart Stores, Inc case a few weakness and limitation may be noted in the long run. Wal-Mart Stores, Inc embraces financial perspective to enhance growth, to sustain the company and yield a good harvest by opening new product lines to attract new clients, target new markets and reduce costs of operation. Using the Wal-Mart Stores, Inc. as an example we can conclude that using one line perspective such as financial strategy may for sure yield profits for an organization but in the long run it may result to slow growth due to lack of customer satisfaction and weak competitive advantage.
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