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Master of Business Administration

October 2010 September 2011

Strathclyde Graduate Business School MBA Programme

ASDM Assignment This assignment accounts for 50% of the overall mark for the ASDM module (the end-ofcourse exam accounts for the remaining 50%). There are three parts to the assignment. The division of marks between the three parts is shown (total = 100 marks). The marks allocated to each section are an indication of the amount of effort which should go into each section of the assignment. An indication of required length of submission is also given in each section. The assignment is intended to be group based. Because of the amount of work involved in this assignment you are strongly advised to work with a small group of other students (between 3 and 5) on this assignment.

All sections are compulsory - you will not receive an overall mark unless you submit a credible attempt at each of the four sections.
The aims of the assignment are: To engender a good understanding of, and skills in, the following aspects of the ASDM class: Using a spreadsheet to make sense of data Conducting statistical analysis on a data set of reasonable size Presenting analyses in visual and written form Using multicriteria decision analysis to structure and inform a decision.

Submission Requirements You will be advised of the deadline for submission of this assignment by your local MBA Administrator. You should submit one report per group. Your report should include your analysis for parts A, B and the collation of the individual answers to Part C. You should also include a copy of the Excel file used for your analysis. You will be required to complete the MBA peer assessment form to measure the contribution of each group member to the assignment. Your MBA administrator will provide this form and advise you of the process for submission.

1. Introduction
The Housing Department of a large local authority in Scotland has recently completed a questionnaire survey of housing tenants satisfaction with the services provided by the Department. The results from the questionnaire have been input into Excel. Unfortunately there is no-one in the Department with the necessary skills to analyse the data. You have been asked to analyse the data and provide a suitable management report for the Department. Note: the data provided is a real data set but the name of the actual Housing Department has been kept confidential

2. The Problem
The Department is responsible for renting out and maintaining the housing stock (houses and apartments) of the local authority which covers a large geographic area in Scotland. The housing stock is rented out to several thousand local people on a long-term basis. The Department is committed to providing a quality service to its tenants and to help with this the Department decided earlier this year to undertake a tenant satisfaction survey. The intent behind the survey was to identify current levels of tenant satisfaction with the service provided by the Department and to identify areas of the Departments performance where tenants felt there was room for improvement. This would then help the Department plan for performance improvement. However, rather than conduct a simple satisfaction survey, the Department was advised by staff at Strathclyde Business School to undertake a more systematic and robust approach to measuring the quality of service provided. Accordingly, the Department adopted a gap approach. It is essential that you understand the methodology behind this survey. Further details are shown later in Appendix 1. 2.1 The survey With the help of Strathclyde Business School, the Department adapted the standard ServQual questionnaire (see Appendix 1) for the housing service. The Department operates from seven different towns in the local authority area and the Departments manager was keen to assess service quality across the whole Department but also within each town area. The seven towns are: Arnmuir, Bracklin, Cambus, Deebank, Erinlang, Forthside, Grantspey. A total of 2000 questionnaires were distributed, geographically stratified in proportion to the housing stock in each town catchment area. A total of 550 questionnaires were returned. Overall, this is a response rate of 27% although this varied from 25% in Bracklin to 36% in Deebank. A suitable statistical test indicated that there was no significant difference between the geographical distribution of useable returns by town compared with those distributed. Questionnaires were mailed out to tenants, with a covering letter explaining the purpose of the survey and reassuring tenants that all responses would be anonymous. A pre-paid envelope was provided for return of the completed questionnaire.

2.2 The task Part A (60 Marks) Your first task is to conduct a thorough analysis of the data presented and to write a report for the Departmental manager (whose knowledge of statistics is very limited) summarising the key findings from the survey. You should use descriptive and inferential statistics where appropriate. Your analysis should include, as a minimum, reporting on: Tenants expectations, perceptions and gap scores across the 5 dimensions Tenants importance weightings across the 5 dimensions Key expectations and gap scores within each dimension A comparative analysis of key results across the 7 towns

You should also include a clear set of recommendations for the Departments manager on those areas of performance that should be prioritised for improvement. You MUST also include a copy of the Excel file that you have used for the analysis

(Suggested length 5-10 pages plus appendices of tables, charts, diagrams)

Part B (30 marks) The Departmental manager has now considered the results of the analysis you have undertaken in Part A and is considering a number of alternative options as to how the Department can provide a better service to the tenants. 4 options are currently under consideration. To provide a wider context, the Department is part of one of the 32 local authorities (LA) in Scotland. Each LA is responsible for providing a range of services for local residents (education, housing, leisure facilities, welfare services, libraries, local transport etc). The LAs are funded partly by a grant directly from the Scottish Government and partly by a local property tax. Each LA has a number of elected representatives who represent the local communities and who, in principle, take the key strategic decisions for the LA. The LA services employ professional managers and staff to run the services on a daily basis although some services may be outsourced. LA services have a difficult task of balancing the requirements of different stakeholders. There are the service users themselves, there are local citizens who pay for services through the local property tax, there are elected representatives, there are the managers and staff of the various services, there is the Scottish Government. The housing service currently has an annual operating budget of around 1.5 million which goes on staff costs, operating costs and the cost of property repairs. Under current economic conditions, the service anticipates that its operating budget is likely to be cut considerably over the next few years putting further pressure on the service in terms of quality and service. Any budget cuts are likely to lead to a reduction in staff numbers although it is hoped this can be done through natural wastage rather than

redundancy. The capital budget allocated to the service for property upgrades and new build is likely to fall to zero. The 4 options under consideration are: Option A Staff training The first option is to provide additional staff training focussed primarily on those areas where the largest service quality gaps have been identified through your own analysis. The training will be focussed on how staff can realistically improve the service they provide tenants given existing budget constraints. Such training will not necessarily incur a high cost as its thought that much of the training can be done in-house and that staff can be released from their day-to-day activities in small groups so as to minimise disruption. The Departmental manager is aware that staff training will not necessarily address all the gaps identified. The manager is also aware that such training is not necessarily a guarantee of improved performance and quality as some staff have been very reluctant to accept any responsibility for the service quality gaps identified. Option B Outsource the housing service to a local cooperative housing association The second option is to outsource the entire service to a local cooperative housing association (HA). HAs are non-profit organisations run by their tenants but employing professional staff to carry out the day-to-day activities of the service and also to provide professional management. The HA would be run by a Board made up of people nominated by the local authority to ensure good governance and also by elected representatives of the tenants who would therefore have a direct involvement in the running of the service. The HA should in theory at least be able to provide high levels of service quality to tenants. Most of the existing housing service staff would automatically be transferred to the HA with existing terms and conditions. However, there would be the option for staff who did not want to transfer to take voluntary redundancy. The local authority estimates it could incur a one-off cost of between 250k and 350k for this. In addition, the setup costs to the local authority for this option would be relatively high (around million) as the authority supports the new HA to get established (offices, IT systems etc) and the local authority would pay an annual contribution to the HAs running costs of around 500k. Option C Outsource the housing service to a private sector company The third option would be to outsource the entire service to the private sector. This would be done through an invitation-to-tender process whereby private companies would bid for the annual payment they would require from the local authority to provide the service. The local authority would then pay that fee each year to the successful bidder to provide the service for the next 5 years. It is not clear, given the current recession in the UK, what level of payment private firms might require but a guesstimate is that it could be as low as 250k. The private company would also retain the rental income generated by the housing stock from providing the service. Staff currently working in the housing service would need to apply for their jobs with the successful private bidder and there are no guarantees as to how many would be employed or what terms and conditions would be. Understandably the local trades/labour union is concerned about the impact on its members of this option (although only around 40% of housing service staff are union members). Elected representatives serving on the local authority have also expressed concern about the lack of control over the private company

and tenants have expressed concerns that the private company would be able to raise rents as it wanted. The cost savings to the housing service however under this option are considerable. Option D: A management buy out The fourth option is for the existing management and staff of the housing service to organise a management buy out. This would involve the existing management team paying the local authority an agreed amount for the existing housing stock. The new service would then be responsible for providing the service to local tenants and the local authority would have no more involvement. It is anticipated that most staff would transfer over to the new organisation after the buy out but this is not guaranteed. Its not known what the current value of the housing stock is but an informal estimate is between 10-15 million. A Scottish bank has already indicated it would consider providing the funding for the buy-out. Some stakeholders have expressed concern however. Elected representatives have argued that the local authority would have no future influence over local housing policy which could cause major problems for economic growth and development, tourism and so on. There is also a risk to the local authority that if the new service is not financially viable in the medium term and goes out of business, the local authority will have to pick up the pieces. Local residents are concerned that quality of service may not improve given that it would be the same management and the same staff as at present. Required: Analyse the decision problem facing the housing service manager using multi-attribute value analysis supported by the V.I.S.A software HINT: Each group member should role play different actors within this decision problem. For example, roles include the analyst, the facilitator and different stakeholders. This will give you the opportunity to mimic real-life and the experience of managing or participating in the decision analysis. Your report on the analysis should: Discuss the roles you played and how you used the CAUSE framework or other approaches to support your problem structuring Discuss the development of a value tree for the analysis of alternatives Explain the process of scoring and weighting you have used (and include a table or graph of values) Discuss the synthesis of information for each stakeholder or scenario and compare results across stakeholders / scenarios Carry out appropriate sensitivity analyses and outline what you learned from these Recommend a course of action (this may be a decision, a need to consider further alternatives, a need to design a more robust or better compromise alternative etc ...) You should include carefully chosen visual displays to illustrate your report. (Suggested length 5-8 pages plus appendices of tables, charts, diagrams)

Part C - Reflection (10 Marks) Write a short report outlining what, for you individually, have been the main learning points from this assignment i.e., what specifically have you learned from doing this assignment. This may be about yourself, about group working, about the aspects of ASDM covered by this assignment. In particular you should reflect on the relevance of what you have learned for your own job. Note: each member of the group must submit their own individual report for this section.

(Suggested length 2 pages)

Note In the guidelines about length we take a page to be A4, single spaced, 11 point characters i.e. around 300 words. Remember these are guidelines, not hard constraints.

Appendix 1 The gap approach (ServQual)

A1.1 Introduction The gap approach to measuring service quality (also known as ServQual) is based on a simple concept. Service quality is defined as the extent to which a service meets customers needs or expectations, that is as the difference between customer expectations of service and customer perceptions of service actually received. If expectations are higher than actual perceived performance, then perceived service quality is less than satisfactory and hence customer dissatisfaction occurs. To illustrate, assume that one key aspect of providing a quality service relates to staff being polite to housing tenants (its customers). We would then ask customers 2 related questions and ask them to indicate their opinion for each question using a 7 point Likert scale. The first question relates to tenants expectation of service.

Staff in an excellent housing service will always be polite to tenants

Strongly Disagree 1 Strongly agree 6 7

With this question, a tenant is being asked to indicate their expectation of any housing service. If they have high expectations they will provide a high score for this question. If they have low expectations because this is less important to them - they will provide a low score. In this way if we ask a series of such questions covering different aspects of service (such as politeness, speed of service etc) then we can assess tenants expectations across all questions. This will help us understand where tenant expectations are high and where they may be low. Clearly, from a service improvement perspective we would prioritise improvement in those areas where tenant expectations were high, other things being equal. The second question relates to tenants perception of service actually received.

Staff in Anytowns housing service are always polite to tenants

Strongly Disagree 1 Strongly agree 6 7

With this question, the tenant is being asked to assess their perception of service actually received from the Housing department. If this has been good they would provide a high score for this question. If this has been bad they would provide a low score.

The gap approach then compares these two scores with a simple formula. If we use E to represent the expectations score and P to represent the perceptions score we then have the gap score, G, as: G=P-E That is, the gap score is the perceptions score minus the expectation score. For example, suppose our customer scored expectations as 6 and perceptions as 4 we would then have a gap score: G = 4 - 6 = -2 A negative gap score implies that customer expectations are not being met. Clearly, the larger the gap score the larger the gap between what the customer expected from us and what they felt they actually received. With a 7-point scoring scale then the gap score could potentially vary from -6 to +6 with zero implying expectations were met exactly. It is important to appreciate that a negative gap does not necessary imply poor quality service rather it indicates the quality of service is below what the customer expected. Information on service quality gaps can help managers diagnose where performance improvement can best be targeted. The largest negative gaps, combined with assessment of where expectations are highest, facilitates prioritisation of performance improvement. Equally, if gap scores in some aspects of service do turn out to be positive, implying expectations are actually not just being met but exceeded, then this allows managers to review whether they may be over-supplying this particular feature of the service and whether there is potential for re-deployment of resources into features which are underperforming. For example, suppose there were a second question relating to the Department getting the job right first time. For this question the Expectation score was 7 (indicating the highest possible score) and the Perception score was 5. This would give a gap score of -2, the same as for the first question. On the face of it both areas of performance are under-performing to the same extent as far as customers are concerned.

A1.2 ServQual questions The concept of gaps scores can be a useful one for a service manager since they provide information on customer expectations, perceptions of service received and any gaps between the two. However, one of the problems for managers in designing a customer questionnaire is to decide which aspects of service should be examined that is, which areas of performance should be covered. Without some form of framework, questionnaires are in danger of becoming an unstructured collection of unrelated questions. The results from such a survey may well be difficult to assess in terms of performance improvement issues. One popular framework used is that if ServQual (Service Quality). The developers of ServQual argue that for most service organisations, service quality can be broken down into 5 individual dimensions:

Dimension Tangibles

Description the physical facilities and equipment available, the appearance of staff; how easy it is to understand communication materials such as leaflets performing the promised service dependably and accurately helping customers and providing a prompt service inspiring trust and confidence in the service and its staff providing a caring and individual service to customers

Reliability Responsiveness Assurance Empathy

These five dimensions can then be used to help structure a survey questionnaire and assess the resulting information. Under each of the five dimensions we can construct appropriate questions for customers to respond to. Each set of questions under a particular dimension can then be designed to capture specific features of that dimension.


The use of such service quality dimensions allows management to develop an understanding of the relative performance of the service across these dimensions. We are able to see, for example, whether expectations are higher in the Reliability dimension or for Responsiveness. We can also see where service quality gaps are largest. A more focused examination of particular dimensions is then possible by looking at the individual questions making up each dimension. The developers of ServQual identified 22 questions under the 5 dimensions. They proposed that this core set of questions could be adapted by different organisations to measure service quality. A1.3 Original ServQual questions
Tangibles 1 An excellent service 2 An excellent service 3 An excellent service 4 An excellent service are visually appealing will will will will have have have have up-to-date equipment attractive physical facilities staff who are neat in appearance materials (such as pamphlets and brochures) which

Reliability 5 In an excellent service, when they promise to do something by a certain time they do so 6 In an excellent service when customers have a problem they show a sincere interest in solving it 7 An excellent service will perform the service right first time 8 An excellent service will provide their services at the time they promise to 9 An excellent service will insist on error-free records Responsiveness 10 Employees of provided 11 Employees of 12 Employees of 13 Employees of requests an excellent service will tell customers exactly when service will be an excellent service will give prompt service to customers an excellent service will always be willing to help customers an excellent service will never be too busy to respond to customer

Assurance 14 The behaviour of employees in an excellent service will instil confidence in customers 15 Customers will feel safe in their contact with an excellent service 16 Employees in an excellent service will be consistently courteous with customers 17 Employees in an excellent service will have the knowledge to answer customer questions Empathy 18 An excellent service will give customers individual attention 19 An excellent service will have operating hours convenient to all their customers 20 An excellent service will have employees who give customers personal attention 21 An excellent service will have the customers best interests at heart 22 Employees in an excellent service will understand the specific needs of their customers

It is important to realise that customers completing a Servqual questionnaire simply see the list of 22 questions. They do not see the 5 dimension headings.


A1.4 Dimension weights In addition to asking customers about their expectations and perceptions of service, ServQual also asks customers to indicate the importance to them of each of the overall dimensions of service. Respondents are asked to assign a score to each of the dimensions (totalling to 100). This allows an understanding of the priorities between the overall service quality dimensions. A1.5 Adapted ServQual questions The Housing Department adapted the ServQual questions. This was done through customer focus groups and discussions of senior staff in the Department. The adapted questions are shown below:
Tangibles 1 An excellent service 2 An excellent service 3 An excellent service 4 An excellent service are well-designed will will will will have have have have up-to-date equipment attractive offices and meeting rooms staff who are neatly dressed materials (such as pamphlets and brochures) which

Reliability 5 An excellent service, when they promise to do something by a certain time they do so 6 In an excellent service when customers have a problem they show a sincere interest in solving it 7 An excellent service will do the job right first time 8 An excellent service will provide their services at the time they say they will 9 An excellent service will keep accurate records (e.g. rent accounts, repair requests) Responsiveness 10 An excellent service 11 An excellent service 12 An excellent service 13 An excellent service will will will will tell customers exactly when work will be carried out give prompt service to tenants always be willing to help tenants never be too busy to respond to tenant requests

Assurance 14 An excellent service will have the confidence of tenants 15 Tenants will feel their confidentiality is assured with an excellent service 16 Employees in an excellent service will be consistently polite to tenants 17 Employees in an excellent service will have the knowledge to answer tenant questions Empathy 18 An excellent service will tell tenants what service are available 19 An excellent service will have opening hours convenient for enquiries, phone calls etc 20 An excellent service will have working hours convenient for repairs, maintenance etc 21 An excellent service will have local offices convenient for tenants 22 An excellent service will have the tenants best interests at heart 23 Employees in an excellent service will understand the individual needs of their tenants


A1.6 Dimension weights The Housing department also included the following question on the questionnaire to measure the relative importance of the 5 service dimensions:

Listed below are 5 features relating to the Housing Departments services. We would like to know how important each of these features is to you in providing a quality service. Please allocate a total of 100 points between the 5 features according to how important each is to you the more important it is the more points you should give it. Please ensure that the points add up to 100
1. The appearance and suitability of the Departments offices, equipment, staff and written materials 2. The ability of the Department to do what it says it will and to do it accurately and reliably 3.The willingness of the Department to help tenants and to provide a prompt service 4. The knowledge and courtesy of the departments staff and their ability to win tenants trust and confidence 5. The ease with which the Department can be contacted and the interest it shows in helping tenants with their problems

_____________ points _____________ points _____________ points

_____________ points

_____________ points 100 points


Appendix 2 The Excel data file The Excel data file contains the responses from the Housing Departments survey. The data entry operators were told to enter the data from each returned questionnaire exactly as it appeared on the questionnaire. Accordingly, some respondents did not provide an answer to all questions, some respondents gave multiple answers to the same question, some respondents appeared to have misunderstood some questions. You will need to decide how to deal with these issues and explain what you have done in your report. The structure of the data file is as follows:
Columns A B Description A numeric identifier for each completed questionnaire for administrative purpose Area code relating to each of the 7 towns: 1= Arnmuir, 2= Bracklin, 3= Cambus, 4= Deebank, 5= Erinlang, 6= Forthside, 7= Grantspey Responses to the questions relating to Expectations. For example, column M relates to Q11e and forms part of the Responsiveness dimension. Responses to the questions relating to Perceptions. For example, column AJ relates to Q11p and forms part of the Responsiveness dimension. The number of points given to each of the 5 dimension to indicate importance. These should total to 100