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Business (Lecture 2)
Bad Business
1. Cutting Customer Service Level
Decreasing the number of consumer service representative causes
the waiting time per customer to increase. This increase in waiting time
frustrates the consumers, and ultimately leads them to search for other
alternatives with better services.
2. Replacing Representatives with Computers (Automation)
Substituting human representatives for automated answering
machines have a large impact on the psychology of the consumers. The lack
of human interaction have a negative effect on the consumers mind. This
negative impact causes to problems; firstly the consumer has a fall in their
perceived service idea. They seemed to get the idea that the firm/producer is
no longer concerned about its consumers after sales.
Secondly, inefficiency takes places. A human representative can
directly talk about the consumers problem and at times understand the
unique situations that may take place. However an automated machine does
not have the capability to talk about the problem directly nor take hand in a
unique situation.
3. Cutting Employee Wages
Normal assumption is that cutting down labour will decrease labor cost,
leading to a decrease in the total cost, and finally an increased profitability.
However research has shown that the assumption is wrong. Cutting down
labor lead only to a fall in profit. This occurred due to two reasons.
Cutting down labor caused a fall in moral in the rest of the employees.
When they can see the direct impact on their surroundings, they may be
depressed about the sudden change. Another impact would be that the
remaining employees will start feeling insecure as they too may get laid off.
Moral letdown and insecurity lead the workers to behave inefficiently.
Concluding that the profits falls further.
4. Fast growth effort due to Success
Firms at times in the pursuit of increasing its profits, tries to expand
rapidly. During this rapid growth, the owner(s) of the firm tend to deprive the
firm of proper attention. The lack of attention causes the firm to bear
improper hiring, providing improper training, and using unstandardized
materials in its products.
5. Extreme Fees
Some firms have the tendency to bill exaggerated fees in order to make
a large chunk of profit. Simple things that the firm can cover as supplement,
are sold separately by the firm. This extreme fees lead the consumers to be
frustrated and leaves to find cheaper and better alternatives.