COLLEGE OF BUSINESS Assignment Bank USA Prepared by:
COLLEGE OF BUSINESS
Assignment Bank USA
Prepared by:
QUESTION 1
What are that major problem?
Major problem of BankUSA‟s Credit Card Division include the customer satisfactions
on company performance. Conflict occurs between two departments, operations and
marketing. Conflict between two different sources of information, customer perceives the
company‟s performance as poor based on marketing‟s survey while the internal
operational seem to be good. The performance measurement system in this case study
analysis is to achieve some balance between having a few key measures on one hand, or,
on the other hand, having many detailed measures or information. Broadly, a compromise
is reached by making sure that there is a clear link between the operation‟s overall
strategy, the „key‟ performance indicators (KPIs) that reflect strategic objectives, and the
bundle of detailed measures that are used to „flesh out‟ each key performance indicator
and as a result a good respond and satisfying customers to the company. The poor quality
of after-sales services attributed to the lack of management depth, which in turn give rise
to organisational cultural issues and operational process flaws that include the failure to
utilise technology and inadequate financial control over costs and as one of the leading
bank player in the industry which is possessing vast financial capital to back its
operations and expansion, they are need to up-to-date with adopting and implementing
the latest technologies, attracting for itself a large base of customers.
QUESTION 2
What steps are required to develop a good internal and external performance and
information system?
Performance measurement
The activity of measuring and assessing the various aspects of a process or whole
operation‟s performance. Performance here is defined as the degree to which an operation
fulfils the five performance objectives at any point in time, in order to satisfy its
customers which is consist of quality, speed, dependability, flexibility and cost and all of
this performance are really composites of many smaller measures. The more aggregated
performance measures have greater strategic relevance. The more detailed performance
measures are usually monitored more closely and more often. In practice, most
organizations will choose to use performance targets from throughout the range.
All of these measures individually give a partial view of the operation‟s cost
performance, and each of them does give a perspective on the cost performance of an
operation that could be useful either to identify areas for improvement or to monitor the
extent of improvement.
Good performance measures are actionable, providing the basis for decisions at the level
at which they are applied. Performance measure should be support not conflict with
customer requirement. Another characteristic of a good performance measurement
system is the ability to accurately aggregate performance from the lowest to higher level
of organization to support the management. Good performance measures enable
managers to control process and make decision on the basis of facts not opinions. The
balanced scorecard attempts to bring together the elements that reflect a business‟s
strategic position, at the same time it restricts the number of measures and focus
especially on those seen to be essential.
It presents an overall picture of the organization‟s performance in a single report, and by
being comprehensive in the measures of performance it uses, encourages companies to
take decisions in the interests of the whole organization rather than sub-optimizing
around narrow measures. Another trend is banking institutions having a strategy known
as BSC (Balance Score Card) whereby the performance targets are not of financial
measure only but of customer and internal business measures also. The bank had
concentrated on hitting targets by mobilizing of valued accounts but has realized that
competition has made customer service and care and means of delivering the service and
care to be the basis of measuring performance targets. In turn, the bank is assessing the
performance of the front liners of the bank; relationship officers and customer service
officers on how well you treated the customer and how efficiently and effectively you
did.
Setting target performance
After identified each partial measure, it has to be compared against some performance
standard to make it meaningful. There are four types of performance standard commonly
used:
Historical standards, which compare performance now against performance
sometime in the past;
Strategic target standards, which compare current performance against some desired
level of performance;
Competitor performance standards, which compare current performance against
competitors‟ performance;
Absolute performance standards, which compare current performance against its
theoretically perfect state.
Benchmarking
Benchmarking is „the process of learning from others‟ and involves comparing one‟s own
performance or methods against other comparable operations (obtaining competitor
performance standards).
It‟s based on the idea that (a) problems in managing processes are almost certainly shared
by processes elsewhere, and (b) there is probably another operation somewhere that has
developed a better way of doing things.
Types of benchmarking:
i. Internal benchmarking - a comparison between operations or parts of operations
which are within the same total organization. E.g. a manufacturer with several
factories benchmarks each factory against the others.
ii. External benchmarking - a comparison between an operation and other operations
which are part of a different organization.
iii. Non-competitive benchmarking - compare with organizations do not compete
directly in the same markets.
iv. Competitive benchmarking - a comparison directly between competitors in the
same, or similar, markets.
v. Performance benchmarking - a comparison between the levels of achieved
performance in different operations. E.g. compare its own performance in terms of
performance objectives – quality, speed, dependability, flexibility and cost –
against other organizations‟ performance in the same dimensions.
vi. Practice benchmarking - a comparison between an organization‟s operations
practices and those adopted by another operation. E.g. a large retail store might
compare its systems and procedures for controlling stock levels with a department
store.
Criticism of Benchmarking :
Information may be inaccurate
What works for one company doesn‟t necessarily work for another
Stifle innovative thinking
Homogenises market
To generate useful operational performance measures a systematic process is required.
1. Identify all customers of the value chain and determine their requirements and
expectations. Organization should to know who their customers and what their
expected. Customer survey should be used.
2. Define the work process that provides the good or service and impacts to customer
needs.
3. Define the value-adding activities and outputs that compose the process. This step
to identify each part in the system in which value is added an intermediate output
is produced. Analysis performance in this step identifies the internal customer
within the process along their needs and expectations.
4. Develop specific performance measures. Each activity in step 3 represents a
critical point where value is added to the output for the internal customer until the
final output is produced.
5. Evaluate all the performance measures to ensure their usefulness.
The market is now dealing with plastic anywhere and everywhere. This trend was only
used by the affluent in society a few years back but due to convenience, safety, security,
the bank has realised that it can earn income from the cards at the same time offering the
client 24 hour access to his or her finances. 24 hour card centre specific for this purpose
as it has realized that most of its clientele prefer plastic to hard cash. It deals with debit
and credit cards locally and internationally.
The ATMs have made some transactions such as withdrawals, deposits, mini statements,
balance enquiries and payment of utility bills, all transactions that would have had to be
done in a banking hall at specific hours, easily accessable at any time of day from
numerous points of access. These service delivery channels have made banking so much
easier and cheaper.
The computer has made banking a whole lot easier, efficient, effective, safe, fast and
convenient. The introduction of the internet in the bank has made internal and external
customer service to be exceptional at the bank. For instance, one can actually check on
what the internal market is offering in foreign currency and compare with what the bank
is offering. Employees are also very cautious on time management and execution and
countable of duties as there is instant communication via email. All these technological
changes, though expensive, have brought a positive effect in the organization and the
whole of the banking sector as a whole.
QUESTION 3
How should internal and external performance data be related?
Internal environment may be defined as forces within an organization directly impacting
it. These forces affect the policies, protocols and procedures as well as resources an
organization may adopt and/or use periodically to achieve its goals
Both internal and external data are important for performance evaluation. External data
include a customer satisfaction and internal data provide the advantages and can add
significant depth to a performance. Managers must understand the cause and effect
linkages between key measures of performance. These relationships often explain the
impact of internal and external performance. The operational performances on external
results such as profitability, market share and customer satisfaction.
The quantitative modeling of cause and effect relationships between external and internal
performance criteria is called interlinking. This quantitative modeling tries to identify the
performance between all parts of the value chain, goods and services outputs, and
customer experience and outcomes. The manager can objectively make internal decisions
that impact external outcomes. Another example of an interlinking model is the financial
value of a loyal customer (VLC), which quantifies the total revenue or profit each target
market customer generates over some time frame. By multiplying the VLC times the
absolute number of customers gained or lost, the total market value can be found.
The implementation of relationship marketing therefore depends on a well-developed
internal (employee) and external customer orientation. The business should also
understand how customers measure value and how these value expectations can be met.
To attain lasting customer orientation careful attention should be given to detail, meeting
promises and swift response to the requirements of customers – i.e. competitive
capabilities. The same authors define competitive capabilities further as a business‟
ability to meet customer expectations compared to its competitor‟s ability to do the same.
The development of an external customer orientation will be facilitated by:
• leadership. Staff members must experience “an unbroken circuit of passionate,
sincere, unified and committed leadership from top levels to local managers”;
• centrality of customer requirements and performance feedback. This will also assist in
achieving the required inter-functional co-ordination and alignment; and
• collection and dissemination of external customer data. This data, however, only
becomes conducive for customer orientation development when it is widely circulated
in the business to become a shared organisation-wide platform from which decisions
are made.
Internal and external performance data be need to be related so it will stressed that
customer orientation should be explicit, otherwise the business risks over-serving
unprofitable accounts and wasting resources that might be allocated to profitable
customer groups among individual customers and corporate customers.
Relationship raises the need for customer orientation, which in turn raises the need for
customer-oriented employees. Without customer oriented employees it will be difficult to
implement customer orientation because employees are the ones who have to make it
happen. If customer-orientation is lacking, the implementation of relationship marketing
will suffer. This is because dissatisfied customers will never develop good relationships
with the business. Attracting, developing and motivating employees as internal partners
foster an internal customer orientation recalls the efforts made by many businesses to
make employee satisfaction and retention a top priority in recognition of the damage that
high employee turnover and disgruntled employees can cause to customer relationships.
Employee performance and attitude play an important role in service delivery to external
customers. Employee satisfaction impacts on employee attitudes, which in turn influence
employee performance and interaction with external customers. Employee interaction
with external customers obviously plays a pivotal role in the ultimate success of the
business which are distinguishes between internal customer satisfaction and employee
satisfaction.
The relationship between employee and customer satisfaction in terms of value the
business creates for employees, who in turn will be able to create value for customers.
External and technological factors constitute part of the organizational environment.
They shall therefore be merged, for purpose of the Bank USA case, in order to clearly
illustrate their effects on the organization.
QUESTION 4
What is the real services level?
Based on performance data, the average customer satisfaction for 15 months was 96.2%.
This shows the percentage of customer satisfaction is high. Plastic production turnaround
is less than 1 that means the plastic card turnaround performance is very good.
QUESTION 5
What operations measures internally or what marketing measures externally are
needed?
They should have permanent control over the division to provide accurate reports.
Operations department should be creative in making design surveys or customer
performance criteria.
Some journal discusses the theory of measuring service quality is very abundant, and
many scholars often use the index to build a measurement model. The importance and
satisfaction on the service element of the two indicators used to assess the quality of its
services as appropriate. To solve the problem of quality of service and meet the needs of
customers, many scholars suggest a variety of models, as follows:
(1) Importance-performance analysis (IPA)
Importance-performance analysis (IPA) was introduced by Martilla and James (1977) as
a method for developing and analyzing business strategies. This matrix is used to
prescribe prioritization of service attributes for improvement and can provide guidance
for strategy formulation. Although various researchers have proposed minor
modifications to the technique over the years, the basic framework has largely remained
the same. IPA was modified and applied to the bank industry performance evaluation.
The matrix is divided into quadrants according to performance and importance that may
be used to classify actions:
i. Leverage opportunity: The zone can be used as advantage against competition.
ii. Action opportunity: The zone is the criteria/ subcriteria that need attention.
iii. Transfer resources: Organization‟s resources may be better used elsewhere.
iv. Status quo: Generally, no action is required.
(2) Establishment of service quality performance model
To determine the best strategy for improving service quality and satisfaction of family
members, the present study applied a service-quality performance matrix. A 7-point scale
was adopted to evaluate the importance and satisfaction of each item. The study adopted
the „control chart‟ of Montgomery (1991) method; the performance matrix limits its
range to the area within 2 dotted lines to obtain the new performance matrix zone.
Performance upper control limit (PUCL) and performance lower control limits (PLCL)
were established according to the coordinate‟s value enabling objective diagnosis and
judgment of required improvements to be performed. The service quality items are
mapped onto the performance control matrix. The service quality items are fall into the
bottom right (Zone A) demonstrate that importance is greater than satisfaction; resources
to be invested must increase to improve satisfaction. The zone is called the „resources
insufficient zone‟. Accordingly, when the items fall into the upper left (Zone B) indicates
that importance is less than satisfaction; resources to be invested should be decreased to
prevent waste. The zone is called the “resources misspend zone”. Manager attends to
only with the items located outside the control lines for improvement. This new service-
quality performance matrix modified by the authors is called the “performance control
matrix”.
The importance–performance matrix and the priority for improvement which each
competitive factor should be given can be assessed from a comparison of their
importance and performance. This can be shown on an importance–performance matrix.
the „appropriate‟ zone – competitive factors in this area lie above the lower bound of
acceptability and so should be considered satisfactory;
the „improve‟ zone – lying below the lower bound of acceptability, any factors in
this zone must be candidates for improvement;
the „urgent-action‟ zone – these factors are important to customers but performance
is below that of competitors. They must be considered as candidates for immediate
improvement;
the „excess?‟ zone – factors in this area are „high performing‟ but not important to
customers. The question must be asked, therefore, whether the resources devoted to
achieving such a performance could be used better elsewhere.
An organization‟s approach to improving its operation can be characterized as lying
somewhere between the two extremes of „pure‟ breakthrough improvement and „pure‟
continuous improvement.
Breakthrough improvement, which is sometimes called innovation-based improvement,
sees improvement as occurring in a few, infrequent but major and dramatic changes.
Although such changes can be abrupt and volatile, they often incorporate radical new
concepts or technologies which can shift the performance of the operation significantly.
Continuous improvement assumes a series of never-ending, but smaller, incremental
improvement steps. This type of improvement is sometimes called kaizen improvement.
It is gradual and constant, often using collective group-based problem-solving. It does not
focus on radical change but rather attempts to develop a built-in momentum of
improvement.
The differences between breakthrough and continuous improvement are it is possible to
combine the two at different times. Large and dramatic improvements can be
implemented as and when they seem to promise significant improvement steps, but
between such occasions the operation can continue making its quiet and less spectacular
kaizen improvements
The techniques of improvement
Scatter diagrams, which attempt to identify relationships and influences within
processes;
Flow charts, which attempt to describe the nature of information flow and decision
making within operations;
Cause–effect diagrams, which structure the brainstorming that can help to reveal the
root causes of problems;
Pareto diagrams, which attempt to sort out the „important few‟ causes from the
„trivial many‟ causes;
why analysis that pursues a formal questioning to find root causes of problems.