Coastline BUSINESS 100 – Critical Thinking exercises

Coastline BUSINESS 100 – Critical Thinking exercises

Critical ThinkingObjective:Complete and submit Critical Thinking exercises as defined in thecourse Syllabus.Requirements:Successful Strategic thinking Exercises will be three (3) to five (5) pages inlength and incorporate the information and knowledge gained in the course.Use the sections shown in the Evaluation Criteria to guide your analysis.Success Criteria:Think of yourself as a newly hired executive or consultant to the firm. Theowner(s) is/are frustrated by the current situation and want to makechanges that will correct the issues affecting business operations. Theyneed an analysis of the situation and recommendations and a plan toimprove which insures the viability and profitability of the organization.Timing:Papers are due and should be submitted via e-mail as defined in the classschedule.Evaluation:Assignments will be evaluated based the assignment rubricAssignments must include a cover sheet with your name, class, and title of the CriticalThinking assignment.Every Customer CountsLOSING CUSTOMERS IS ALWAYS HARDMaintaining good relationships with customers can be stressful for a small business. Fred is a lawyer Iknow who’s had a successful practice for more than 25 years. When I ran into him recently, he told mehe was making some changes. “I’m at a new stage of my life,” he said. “From now on, I’m working onlywith people whom I respect and who respect me.” “That’s a pretty bold statement,” I said. “I mean it,” hesaid. “I just fired three clients. I sent them their files with a note saying, ‘My firm will no longer representyou.’ I’d had it with them. They were a constant aggravation. They didn’t treat me right. They abused myoffice people. They took forever to pay their bills.”“How did they respond?” I asked. “One of them called me up,” Fred said. “He thought it was a joke.When I told him I was serious, he asked me why. I said, ‘You really don’t want to know.’ He insisted thathe did. ‘OK,’ I said, ‘you’re a miserable person. You make everyone’s life miserable, but you’re not goingto ruin my life anymore.’ He hung up on me. It felt so good. I wished I’d done it sooner.”There was a time when I would have thought Fred was crazy. I would have said, “So what if yourcustomers are difficult? They pay your salary. They cover your bills. They make it possible for you toremain in business. It’s too darn bad if you find them aggravating. Life is full of aggravations. Get over it.Besides, keeping an old account is a lot easier than finding a new one. When you fire a difficult customer,you’re just trading one set of aggravations for another.”Not that I believed in the old saying about customers’ always being right. That’s baloney. But I’d long feltit was important to accommodate customers even when they were wrong—for the good of the business.Lately, however, I’ve had a change of heart. The turning point came a few months ago, when I received anotice announcing that a fairly substantial customer was leaving my records-storage company.Now, we don’t lose many accounts, so I was curious to find out what had happened with this one. Mypeople told me that the customer, a big law firm, had hired a new records manager, and she wasimpossible to deal with. Whenever she called, she would yell and scream and threaten our customerservice representatives. They’d be shaking by the time they got off the phone.When customers abuse your employees, refuse to pay their bills, and generally take advantage of yourbusiness, you should let them go. I wanted to see for myself what was going on, so I told my accountingpeople to send out the standard box-removal letter, detailing the charges for permanently taking boxesout of our warehouse. I then made sure that when the records manager responded, as she undoubtedlywould, her call would come to me. Sure enough, she telephoned a couple of days later, and she wasfurious. “How dare you send us a letter like this?” she demanded. I explained that we were simply following the terms of the contract. “I don’t care what’s in the contract,” she said. “This is outrageous, andyou can’t get away with it. Who do you think we are?”I told her we’d be glad to sit down and discuss the situation. She responded by showering me withinsults. There was nothing to discuss, she said. “You’ll be hearing from one of the senior partners,” shefumed. “Fine,” I said, “but I don’t want you to call me again. I won’t take your abuse on the phone, and—starting today—neither will my people.” Afterward, I told my employees that they could hang up on therecords manager if she called back and started to get nasty.A senior partner did eventually contact me, and we had a pleasant-enough conversation. I asked him ifhe knew why his firm was dropping us. He said no but he’d investigate. When he got back to me, heindicated that the firm was reconsidering its decision. Would I be willing to meet with the office manager—that is, the boss of the records manager—who was in charge of such matters? I said, “Of course.”My sales manager, Brad, accompanied me to the meeting. The office manager turned out to be a lovelywoman who said she’d like to work things out but there were a few issues we had to discuss. “Do theyinvolve price and service?” I asked. She said yes. “We can definitely work those out,” I said, “but I alsohave an issue.” I pointed to the records manager, who was sitting next to her. “That woman has beenabusive to my people,” I said. At that, the records manager exploded. “Abusive!” she said. “Your peopleare incompetent. I’ve never seen such poor service.”“I’m not speaking to you,” I said and turned back to the office manager. “I value all my customers veryhighly, but I really don’t want your business unless you can assure me that this person will be civil on thetelephone. If we’ve done something wrong, she doesn’t have to be happy about it, but she can’t screamand curse at my people.”The records manager started to rant again. I turned to the office manager and threw my hands up. Theoffice manager seemed flustered. “Are you saying that you’re going to fire us?” she asked. “I’m sayingthat the abuse has to stop immediately,” I said. “You can see for yourself what we’re dealing with.” “Obviously, the two of you don’t get along,” the office manager said.“I’ve spoken to this person once before today, and I can get along with almost anyone,” I said. “Herbehavior is simply unacceptable. If it was up to me, I’d have you pay the removal fee and call it quits rightnow. But I don’t have to deal with you on a regular basis. Brad and our operations people do. If you canpersuade him that our people are going to be treated respectfully in the future, I’ll let him keep theaccount.”I excused myself, went downstairs, and waited. Twenty minutes later Brad came down. “I tried,” he said.“It was hopeless. I can’t believe they’re keeping that woman in that job.” Dropping the customer cost usabout $200,000 a year in sales, but I didn’t regret the decision. On the contrary, I wondered if I shouldhave acted sooner. What if the customer hadn’t sent us the withdrawal notice? How long might the abusehave continued? And how many other customers had abused my people without my knowledge? Whatprice had we paid in terms of bad morale, low productivity, and turnover?The experience changed the way I viewed the business. Recently, for example, I was looking into areceivables problem and discovered that part of it was due to habitual nonpaying customers. I don’tmean customers who had fallen on hard times; we work with those people. I mean customers who werefollowing a deliberate strategy of ignoring our bills and payment requests for as long as they could getaway with it.As it turned out, they were all marginal accounts (which is typical), and they were driving our accountingpeople up the wall. We had one collections guy who was spending hours and hours going after eightaccounts that owed us $50 a month, our minimum fee, and refused to pay until we sent a warning letter.Even when we collected, the revenues from the eight accounts amounted to a paltry $400 a month, or$4,800 a year. So I announced a new policy. In the future, we’d send out no more than one warning letterto an account. The second letter would be a box-removal notice. My accounting people cheered.Don’t get me wrong. I haven’t changed my principles. I still believe fervently in the importance ofproviding great customer service. For the vast majority of our customers, moreover, I feelnothing but warmth and gratitude, and I’d do almost anything to keep them. Nor do I have any problemwith those who complain, even when their complaints are unjustified. Our goal is to have happy, satisfiedcustomers. If one of them is unhappy or dissatisfied for any reason, we want to hear about it.But I’ve learned there’s a line that can’t be crossed, although it took me more than 20 years to see it.When customers abuse your employees, refuse to pay their bills, and generally take advantage of youand your business, you should let them go. Life is too short, and good people are too hard to find. If youcan’t afford to lose the account right now, come up with a plan for replacing the business in the future.The following ‘areas of concern’ are provided to help stimulate your thinking for this case. Theyare not intended to provide a list of questions to answer:1. How would you evaluate the customer service health of the firm? What factors have lead to thecurrent situation?2. What are the strengths and weaknesses of customer service of the firm?3. Do you agree or disagree that some customers should be let go?4. What are the underlying issues that are being manifested?5. What suggestions would you make to improve the handling of situations now and in the future?6. What changes would you recommend to increase the likelihood of success? Include theareas of concern and your recommended plan of action and controls to monitor the planssuccess.7. Hint: the decision to drop the customer has already been made and does not need to bediscussed unless it relates to your analysis of the problem or alternatives for what should bedone in the future.8. Chapters 6, 7 and 12 may provide insight into the issues.


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