Impact Customers Have On Businesses Business Essay


Many business organisations these days would no doubt agree that the environments in which they do their businesses is becoming more and more complex and more challenging to understand due to rapid pace of change. There have been many studies which concluded that no business can be successful without taking the needs of their customers into serious consideration.

There are several factors which have played significant roles which has changed the impact customers have on businesses. One of them would be the rise of consumerism in the 20th century. Rapid economic expansion due to the agricultural and industrial revolutions along with explosive population growth has rapidly increased the number of consumers in the market. Prior to this, only a small percentage of the population had sufficient disposable incomes to make an impact outside of their local societies. Due to rapid economic growth, more and more people earned enough to start having significant levels of disposable income which could be used for discretionary purchases. New inventions and improvements allowed businesses to transport goods faster and cheaper allowing more people to have increasing choices in the goods and services available to them. The services industry started being recognised as an arm of the economy in its own right and in more advanced economies, is more important than manufacturing and trading industries. Customers now have more choices and could demand more from businesses. Any business which does not respond adequately to the rapidly changing business environments may face overwhelming challenges and can even go out of business.

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As a local authority and a government body, while it is very difficult for MBAS to “go out of business” per se, it is still a service organisation that provides multiple services to the people. MBAS cannot deny the expectations of its customers because their customers are taxpayers and voters. As a government body, it receives all income from public sources (i.e. taxpayers) and if they are not happy, they will show their displeasure during elections and effect changes through the government. We can thus surmise that employees in service organisations play an important role in ensuring that customers have a positive first impression. If customers are not provided with a level of service which they expect, this will lead to dissatisfaction and as a consequence, the number of complaints will increase. According to MBAS Public Relations Section, the authority receives on average 29 complaints per day sent by the public through various channels namely the MBAS Complains Portal, telephone, mail and fax.

In order to reduce dissatisfaction with its services and thus the number of complaints, it is necessary for MBAS to increase the quality of services it provides. It is highly important for them to plan, coordinate and then implement a comprehensive program to promote and disseminate the mindset of service quality excellence among employees in the organisation. It is imperative for MBAS to improve its services because its customers (the public) expect to interact with competent employees who are able to display high levels of professionalism and provide equally high levels of service quality whether in terms of explanation or physical services provided.

Local authorities play an important role in the growth of both in the state they are located in and their own jurisdiction. You can go to virtually any part of Alor Setar and the name of the local authority administrating the city can be clearly seen. This has an effect of ensuring that services (or in contrast, the lack of services) provided by MBAS is always in the public eye. For example, a pedestrian bridge along Jalan Alor Setar-Sungai Petani at Batu 3, Tandop which has been in a state of disrepair for some time caused a scare when a large metal piece measuring 3 x 24 metres and a banner celebrating the Sultan's recent birthdaye road isrepair for some time caused a scare when piecen of S is always in the public eye. t services or fell on the road underneath the bridge. While no vehicles or people were hurt in the incident, there has been several earlier incidents of smaller pieces of metal falling off the bridge. A road user claimed that he had informed MBAS about the earlier incidents but thus far no action has been taken. A few questions had arose from the incident namely why the local authority did not take any action upon receiving complains about the bridge earlier? While there may be a lack of allocation at this time to repair the bridge, perhaps if MBAS had more competent staff, perhaps any loose metal pieces could have been removed and the bridge temporarily closed while awaiting allocation to fully repair the bridge. This would have helped to ensure no untoward incident happens.

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Landscaping and beautification activities of public areas and amenities are one of the local authorities primary function. It was reported recently that the Taman PKNK football field has not been properly maintained for several months. This had made the field unusable due to the tall grass which has now became homes to poisonous snakes and other animals. According to the news report, MBAS follows a schedule whereby grass will be cut on fields located in residential areas every 21 days. The questions that are being asked is what had caused the oversight in maintaining the field? The oversight was not noticed by the council despite multiple 21 days cycles having passed. Could it be due to incompetence of MBAS employees that lead to the oversight in providing the required service? Employees should be more innovative and creative in overcoming obstacles faced when providing such services.

The attitudes and procedures of MBAS once again came into question when a conflict occurred between the council and Chinese associations over what was felt as a new requirement to pay two different license fees for mahjong activities. The council had issued a letter on 7 July 2010 requesting payment for licensing fee but the associations had already paid a licensing fee to the Kota Setar district office for their mahjong activities. According to them, that is the only license they have always paid to conduct their activities. It was later clarified by Alor Setar Mayor Datuk Khazali Din that the license paid to the district office was to conduct mahjong activities but a separate license for the premises was also required to be paid to the council but was not enforced earlier. The questions raised in this incident relates to why if there were indeed such rules, it was not informed or explained to the Chinese associations earlier to prevent the misunderstanding from occurring in the first place.

As the mahjong activities has been going on for some time, the point now is that the attitude of the council and lack of tack in approaching the matter had caused the disruption of legitimate activities of other people. The approach used to approach the Chinese associations regarding the licensing issue reveals the inflexibility of the council. MBAS could have used more gentle approaches when approaching the associations and prevent the misunderstanding from occurring in the first place like giving them a suitable grace period rather than threatening immediate fines and legal action for non-compliance with its demands. MBAS will be categorised as a quality service provider if its employees have initiative, accountability, motivation and work as a team to accomplish their tasks or projects. Perhaps if the council had employees with the correct competencies in place, the various incidents mentioned above would not have happened?

MBAS has to provide sufficient skills, ability, and the correct knowledge and resources to their employees and place them at the right positions. At the same time, the council should also adopt new forms of work organisation such as work teams, management delayering, job sharing, reengineering and downsizing redundant employees. In this context, MBAS should not only improve business performance but must also focus itself on making the necessary management changes related to combination of factors such as employee competencies, new computing and communications technologies and measure the productivity of service staff and knowledge workers. There is precious little studies in the past to measure perceived service quality in MBAS. As a service provider, MBAS is expected to be more competent and innovative. Given the situation that the council now finds itself in, service quality will be an undoubtedly interesting area to study.

1.5 Research Objectives

The objective of this study is to determine if service quality at MBAS is driven by employee competencies. To be more specific, we want to:

Identify employee competencies which is important for MBAS to improve customer satisfaction;

Examine customer satisfaction as perceived by the public at MBAS; and

Investigate the relationship of employee competencies in relation to perceived customer satisfaction in MBAS.

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1.6 Research Question

This study was motivated by our determination to answer the following questions:

What are the competencies that employees at MBAS should have?

What is customer satisfaction as perceived by the public?

What are the relationships between employee competencies and perceived customer satisfaction?

1.7 Definition of Terms


A person who is hired to provide services to a company on a regular basis in exchange for compensation and who does not provide these services as part of an independent or self-employed business.


A cluster of related knowledge, skills and attitudes that affects a major part of role or responsibility that correlates with performance on the job, that can be against well accepted standards, and that can be improved via training (Competencies Workgroup, September 2002).


Service can be defined as “any primary complementary activity that does not directly produce a physical product that is the non-good part of the transaction between buyer (customer) and seller (provider)”. This classification of service includes all manufacturing organizations except industries such as agriculture, mining and construction. It also includes in the category real estate, financial services, transportation and public utilities.

Public Sector

According to The Macmillan Encyclopaedia, public sector is defined as parts of productive and non-productive sector of the economy that are financed out of taxation, are under state or local government control or both. It includes all employees and activities of national and state governments, public institutions and nationalised industries.

Local Government

A local government is the local authority formed in population centres to provide a range of services as their core business such as garbage collection, traffic and roadways, parking, building and planning control, zoning and others. A more detailed definition specific to the Malaysian context was provided above earlier.

1.8 Scope of the Study

This study stands on the strength of existing studies on customer satisfaction in public services. It analyses customer satisfaction as perceived by the public in MBAS. Some comments are made about employee competencies and how these competencies relates to customer satisfaction. These comments will provide thoughts about areas which should be examined regarding the relationship of these competencies with the customer satisfaction at MBAS.

1.9 Significance of the Study

The responses from the questionnaire survey is used to provide some input on customer satisfaction levels perceived by the public in MBAS. In view of the importance for MBAS to achieve high levels of competencies in their organisation, it is hoped that this study will benefit MBAS to improve their service quality and increase customer satisfaction. The results of this study can serve as a reference for MBAS on the level of employee competencies that relates to customer satisfaction.

1.10 Organization of the study

There are five chapters in this research. The introduction is found in chapter 1 which also contains the research background, research problem, research objectives and research question. The research problem is to address the importance of conducting this research. Chapter 2 will cover the literature review of all variables found in the course of this study. This chapter will highlight previous research and findings made by various researchers. This chapter is important to not only indicate that all variables is supported by previous study, it is also used to strengthen the research that will be carried out. Chapter 3 will elaborate on how the study will be conducted and the methodology used in the research. This chapter will show the population, sample, design, instrument and statistical analysis that will be conducted. Chapter 4 will cover the analysis of the results. We will conclude in chapter 5 and present our discussion, conclusion and implications of the research. We will also propose on future researc