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With the effect of economic crisis, the increasing need for survival among competitors is badly felt. Customers, who have acquired the necessary knowledge through dealing with various insurance companies and through 'word of mouth', are in position of power. Nowadays, customers demand service quality at better price. Therefore, companies have to find that "touch" which attract and retain customers.
Quality service is a crucial issue when products are almost the same in the financial sector. Moreover, having a 'sustainable competitive advantage' is becoming more and more difficult. In order to demarcate themselves from their competitors, companies have to revisit their core values and core competencies. They have to focus all their efforts on a few competencies which give them a distinctive competitive edge. One of their best competitive advantages is timely service quality.
Hence, service quality implies good processes, added value and good supply chain management. There will be a need to implement Kemba Kaizen and Total Quality Management. This will help to set smart performance objectives, to hone performance strategies and to improve the operational performance factors. The performance indicators in all departments on financial and non financial aspects will have to be developed and compared. Hence, a performance management system will have to be implemented.
Good Harvest Ltd, which is performing quite well, may consider the above issues in its policies for sustainable profitability.
1.2 Company Background
Good Harvest Ltd, a subsidiary of ABC Motor Ltd, was incorporated in 1976. It is the main accredited agent of the Mauritius Union Assurance Co Ltd, one of the oldest insurance companies in Mauritius, registered in 1948 of which, Sir Moilin Jean Ah Chuen was a Founder-Director and Chairman. The company is situated at Cnr. SSR and Eugene Laurent Streets, Port Louis.
Over the years, Good Harvest Ltd has developed a good reputation in the insurance coverage of motor vehicles. As a member of the ABC Group, Good Harvest Ltd benefits from the strength and expertise of the leading motor vehicle dealer in the country.
The organization provides the best possible insurance coverage for vehicles as well as for homes, businesses, life and pension
The company is made up of three departments: Accounting, Underwriting and Claim. It employs 25 people.
In its annual get together held in January 2012, Mauritius Union Insurance has awarded Best Sales Agency to Good Harvest Ltd.
1.3 Background of the Problem
In this era of an aggressive competition, service quality and financial strength are two major determinants of survival of Good Harvest Ltd. Moreover, with the negatively effect of economic crisis, the increasing need for survival among competitors is badly felt. Nowadays customers are in position of power, as they have acquired the necessary knowledge dealing with various insurance companies and through "word of mouth".
Furthermore, the service quality in this industry is a critical factor for success as more companies are engaged in this sector to compete with each other on the global front. Moreover, having a sustainable competitive advantage is becoming more and more difficult. This may result in a loss of customer loyalty and customer retention which will lead to a decrease in sales and profit of the organization.
Good Harvest Ltd feels secured as it has a niche market and has repeat orders from corporate clients. The biggest support comes from ABC Motors Ltd, the parent company, which sells many vehicles per year and offers vehicle insurance in the package. Usually, not all individual clients renew their insurance policies with the company.
Heavy reliance on the loyal big clients constitutes a potential danger. In the face of fierce competition in the insurance industry, the corporate clients may choose to insure their vehicles elsewhere. If this happens, it will be difficult for the company to move uphill and to sustain profitability
1.4 Problem Statement
Due to economic problem and tough competition, some companies are offering a higher amount of insurance for third party liability. For the same amount of benefits, certain companies offer timely service quality, while others offer low amount of premium to customers. Good Harvest Ltd may face difficulties due to the changing economic conditions.
Good Harvest Ltd may feel confident and secured in serving its niche market and being number one as sales agent of Mauritius Union Ltd. This situation may make it feel comfortable and cause it to overlook challenges and threats lying ahead. However, a change in the attitude of big customers towards it or an internal weakness may cause it serious problems resulting in loss of sales.
With the high rate of road accidents, leading to total loss, casualties and deaths, the company may face liquidity problem. This situation may also be caused by some credit sales which may end up in bad debts. In addition, a high volume of credit sales may have a negative impact on cash inflow.
Among non-financial problems, which the company may face, are customer complaints, customer dissatisfaction and poor customer retention. These problems are originated from claim department, where there is a high switching cost.
As the insurance products are more or less the same on the market and price cannot be changed without the consent of Mauritius Union Ltd, Good Harvest Ltd has the only option to consider operation management and financial management. Therefore a study has to be carried out to determine customers' perception of service quality, customers' expectation and the level of customer satisfaction.
1.5 Research Objectives
The objectives of the research are to identify
the causes that would most likely affect operational activities in the future;
the reasons why some customers have stopped dealing with the company;
the factors that affect service quality;
the factors that influence customer perceptions and
the gaps between customer expectation and perception.
1.6 Research Questions
What are the causes that would most likely affect the operational activities in the future?
Why some customers have stopped dealing with the company?
What are the factors that affect service quality?
What factors influence customer perception?
How to reduce gaps between customer expectation and perception?
1.7 Aims of the Study
The aims of the research are to improve the operating processes and service quality provided at Good Harvest Ltd and to provide the company with solutions against any future possible threats.
1.8 Significance of the study
The research will help the management to identify weaknesses in the delivery of service quality and in the operational activities such as speed, reliability and cost which may impact negatively on the customer's expectation. This will help the management to provide relevant training to their employees, to tackle their specific weaknesses and to improve their skills. Investment on new technologies will help to improve the operational activities and consequently to reduce operational costs.
The customers will perceive the service quality as a service that satisfies their expectation in terms of reliability, responsiveness and value for money. Hence, to achieve superior customer value, it is necessary to gain the co-operation of all employees throughout the entire value- delivery network of the company.
The organization will benefit through an awareness of its strengths and weaknesses. It will obtain some financial and non-financial indicators that will help it to take corrective measures. It will also help management to understand the factors that motivate employees and retain customers. Consequently, it will help the organization to increase sales and profits. Thus Good Harvest Ltd can increase its market shares.
1.9 Phases of the dissertation
This chapter shows an overview of the problems which Good Harvest Ltd may face in the future. Its competitive edge will be the delivery of service quality and the improvement of its operational processes. A strategic thinking and planning as well as a study have to be carried out. The next chapter, on literature review, deals with theories and concepts that have been explained and are available on the subject matter.