FLP2233 Module3 Website

DIPLOMA IN
SHIP MANAGEMENT
2012 / 2013
MODULE 3
Handling Customers and Planning for the Future
AUTHORS
Mike Tyndall, Director
Goal Achievement Ltd, UK
Peter Springett, Managing Director
Odyssey Training Ltd, UK
Lloyd's and the Lloyd's crest are the registered trademarks of the society incorporated by the Lloyd's Act 1871 by the name of ‘Lloyd's’
CONTENTS
Page No.
GENERAL INTRODUCTION 4
PART ONE – CUSTOMER FOCUS
1 THE IMPORTANCE OF CUSTOMER FOCUS 6
2 IDENTIFYING WHO IS THE CUSTOMER 11
2.1 External Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

2.2 Internal Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
3 IDENTIFYING CUSTOMER NEEDS 18
3.1 What do they Expect? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

3.2 How we are Meeting what they Expect? . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
3.3 How do we Compare Against our Competition? . . . . . . . . . . . . . . . . . . . . . .19
3.4 What are their Hidden Needs? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
3.5 External Hidden Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
3.6 Internal Hidden Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
3.7 Who are our Potential New Customers? . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
3.8 Creating the Right Image . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
4 MEETING CUSTOMER NEEDS 26
4.1 What are the Needs of the Customer? . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

4.2 Customer Information Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
4.3 Information about the Customer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
4.4 Business Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
5 TRAINING AND MOTIVATION OF STAFF 32
5.1 Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

5.2 Training Workshop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Diploma in Ship Management 2012 / 2013 (FLP2233) 3-1

Contents Module 3
5.3 Training Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

5.4 Motivation of Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
6 PERFORMANCE STANDARDS 39
7 EXCELLENCE IN CUSTOMER CARE 42
8 CUSTOMER MANAGEMENT 45
8.1 Handling Customer Complaints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
9 EFFECTIVE COMMUNICATION 55
10 REVIEW AND SUMMARY 58
PART TWO – STRATEGIC ANALYSIS
11 INTRODUCTION – STRATEGIC MANAGEMENT 59
11.1 What is Strategy? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59

11.2 Why is Strategy so Important? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
11.3 What is the Strategic Cycle? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
12 INTERNAL ENVIRONMENT 63
12.1 Organisational Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63

12.2 Organisation Structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
12.3 Organisation Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
12.4 Frameworks for Internal Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
13 PRODUCTS AND SERVICES 79
13.1 Target and Advantage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79

13.2 Portfolio Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80
14 EXTERNAL ENVIRONMENT 83
14.1 External Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83

14.2 Frameworks for External Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84
3-2 Diploma in Ship Management 2012 / 2013 (FLP2233)

Module 3 Contents
15 STRATEGIC OPTIONS 87
15.1 Generic Business Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87

15.2 Current Product /Market Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89
15.3 Product or Market Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89
15.4 Diversification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .90
16 IMPLEMENTING CHANGE 92
16.1 The Change Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92

16.2 Force Field Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93
16.3 Ways and Means . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93
RECOMMENDED READING 95
TUTOR-MARKED ASSIGNMENT 96
ADDENDUM 99
MODULE 3 – PART TWO STRATEGIC ANALYSIS

TUTOR-MARKED ASSIGNMENT 100
PLEASE NOTE
For candidates taking the Diploma option, there are two questions
involved in the Tutor-Marked Assignment (separated as Part One
and Part Two) which are at the rear of this module. Your worked
Assignment should be sent to the TMA Administrator (details are
given at the end of the Tutor-Marked Assignment) for processing.
© Copyright IIR Limited 2012. All rights reserved.

These materials are protected by international copyright laws. This manual is only for the use of course participants
undertaking this course. Unauthorised use, distribution, reproduction or copying of these materials either in whole or in
part, in any shape or form or by any means electronically, mechanically, by photocopying, recording or otherwise,
including, without limitation, using the manual for any commercial purpose whatsoever is strictly forbidden without prior
written consent of IIR Limited.
This manual shall not affect the legal relationship or liability of IIR Limited with, or to, any third party and neither shall
such third party be entitled to rely upon it. All information and content in this manual is provided on an "as is" basis and
you assume total responsibility and risk for your use of such information and content. IIR Limited shall have no liability
for technical errors, editorial errors or omissions in this manual; nor any damage including but not limited to direct,
punitive, incidental or consequential damages resulting from or arising out of its use.

GENERAL INTRODUCTION
PART ONE
Continuing along the theme of developing management skills, Module 3 takes

us into the important, but often neglected, discipline of “customer focus”.
Shipping is a service industry, and as such is totally dependent on satisfying its

customers if the company wishes to stay in business.
In the United Kingdom we are presently witnessing one of the country’s most
famous retailers struggling to regain its customer base, after a couple of years
of disastrous results. There is a possibility that this company will be bought out
by a competitor. Until recently this company had an enviable reputation as a
perfect example of a highly successful, customer service orientated company,
providing value for money quality goods. Customers still met the ever-helpful
staff who showed no visible sign of any change in the service being provided.
So what went wrong? Undoubtedly somewhere in the service chain the

company stopped listening to its customers. It started supplying its stores with
goods that did not meet its customers’ needs. Sales dropped and a boardroom
battle ensued and changes in management were made. Will they regain their
status, profits and reputation? Time will tell.
What the above example illustrates is that it in a complex service business it

may only take one element in the service chain to lose customer focus to cause
serious damage to the company’s image.
As you work through this module try implementing the concept of customer
focus in your own organisation. It does not matter what position you hold.
Focusing on both your internal and external customer needs will only benefit
your company.
PART TWO
Strategic planning is an essential part of the duties of the senior management

team in any organisation. If you are naturally gifted with the skills of a strategist,
then you will have an idiosyncratic method of study that will enable you to
combine the dynamic interaction of company, competitors, customers and the
environment and present a focused set of plans and objectives with a plan of
action for the company’s successful future. Sadly, this is a rare gift, and we have
to study methods that will systematically enable us to plan strategically.
Have no doubt, strategic planning does require hard work, some business
intuition and an ability to think laterally. Sometimes the best strategy may make
no changes. But there are times when a company can no longer rely on incre-
mental improvements of productivity to stay in the race. Strategic planners who
recognise this and can plan for change will have to fight their case against

Module 3 General Introduction
number crunching and apparently rational thinking colleagues who feel comfort-
able with the status quo. But fight they must for the very survival of the company
in the long term.
This module cannot turn you into a “natural” strategist, but it will enable you
to understand why strategic planning is so important in today’s increasingly
competitive world.

PART ONE – CUSTOMER FOCUS
1. THE IMPORTANCE OF CUSTOMER FOCUS
LEARNING OUTCOMES
After successfully completing this chapter, you will:
● understand the role of customer service in the overall

business mix;
● recognise the main function of the shipping company as a

business; and
● appreciate the need for it to be customer-focused at all

times.
3-001 In any business which is competitive it is absolutely essential that the company,
organisation or undertaking puts meeting the needs of its customers as its number one
priority. The marine industry in general and shipping in particular are no exception to this.
3-002 Businesses only survive and prosper if they succeed in keeping the customers
they have got and at the same time win new customers for their service.
3-003 Peter Drucker, author of many well-known books about business management,
states:
3-004 Many organisations seem to think of their customers as transactions and data
rather than people. They will look at statistics such as business performance for
the last quarter and they will talk about a record number of transactions rather
than a record number of “happy customers”. The more enlightened organisations
always think of their customers as people first and transactions second. Important
though data capture is, it often ignores the human side of business. A high
percentage of the decision-making process is based on human emotion rather
than logic. People frequently make a decision for emotional reasons but then
justify that decision with logic. For example: A customer may change a supplier

Module 3 The Importance of Customer Focus
because they did not feel they were well treated and made to feel important by
that supplier but they will often give as their reason “we’ve got a better deal from
somewhere else.
3-005 Recognising the fact that a ship, whether it is a passenger ferry, ocean-going liner,
coastal tug or oil tanker, deteriorates when laid up, quicker than when operational,
it is therefore essential it is in use as much of the time as is possible.
3-006 The vessel will only be operational if it has “satisfied customers”. Satisfied
customers mean:
● happier motivated staff who are enjoying working life because, instead of
being moaned at by customers, they are getting compliments about the
service provided;
● less time, money and effort being expended on sourcing new customers; and
● the company is well thought of and its reputation continues to grow;

success breeds success.
3-007 In order to ensure that existing customers are maintained and developed it is
necessary firstly to understand what their needs and expectations of a company
are and secondly to ensure that those needs are met and where possible
exceeded on a consistent basis.
3-008 It is estimated that it takes five times as long to get new customers as it does to
look after those we already have.
3-009 One of the first things any organisation should do is to carry out what is called a
SWOT analysis of its current levels of customer service. SWOT stands for:
3-010 In other words – what are we good at, what are we not good at, what are the
future opportunities we should be seeking to exploit and what are the potential
threats to us of not doing so.

The Importance of Customer Focus Module 3
3-011 This SWOT analysis should be the fulcrum on which the future “customer
service strategy” should be based, alongside a customer perception survey,
which is covered in depth later in this module.
A useful way to complete a SWOT analysis is to view Strengths and

Weaknesses as the situation at present and Opportunities and Threats as the
future.
3-012 Recently the chief executive of a major worldwide corporation was asked what
his business objectives for the coming trading year were. He replied: “I only have
one objective for both the coming year and beyond, and that is to consistently
exceed the expectations of our customers.”
3-013 Another CEO put it that his intention was to regularly ‘surprise’ his customers, in
of course, a positive way.
3-013a The main function of any commercial enterprise, ship owning being no
exception, is:
This statement is both simple and powerful and yet is often lost sight of in the
day-to-day hurly burly of business life.
3-014 We will go on to discuss in greater depth, later in this module, how best to set
about doing this by finding out, meeting and monitoring these needs.
3-015 If customer focus is to enjoy the high profile it deserves, every individual in the
organisation needs to be educated and trained in how important this area is to
future prosperity and that they can and should have an influence on it. The mod-
ule will address how this should take place and will use various organisations
(where it has been particularly successful) as reference points.
3-016 There are many organisations whose product has continued to perform well but
who have lost market share or even gone out of business because they either
stopped listening to their customers, took them for granted and/or failed to han-
dle complaints efficiently and professionally.with the right attitude.
3-017 No organization can ever afford to be complacent about it’s Customer Relations.
In fact it could be argued that the time to put extra focus on this vital area is
when the company is doing really well and feedback suggests that Customer
Relations are currently very good. Better this approach than researching it when
Customer Relations are poor and the number of customer complaints has
increased. The ideal situation as mentioned throughout the module is that
Customer Relations remain the number one priority of any organization AT ALL
TIMES.

Module 3 The Importance of Customer Focus
3-018 A recent survey indicated that of all the various reasons why customers stopped
dealing with companies – such as price, better product, personal allegiances or
product malfunction – an overwhelming 68% went somewhere else due to “poor
or indifferent” customer service (and I suspect that indifference is the key word
here). If ever proof were needed of the importance of “customer focus” this is it.
3-019 The reality is that we are highly unlikely to achieve 100% of satisfied customers, but
if we do not strive for 100%, we will struggle to achieve even 90%.
3-020 The Marketing Council recently conducted a survey amongst senior marketing peo-
ple across many different industries. They were asked what they thought were the
most essential areas of marketing to focus on in the next few years.
The results were as follows:
So yet again focusing on the customer was seen to be the most important area
to concentrate on.
3-021 It does not seem to matter which reference point we use, comment or quote, the
message is the same: “Look after your customer” and thereby retain them.
3-022 The challenge in ship management is how can we ensure that we are truly
customer-focused in all that the term has come to represent. A challenge indeed
but an exciting one nonetheless.
3-023 Tom Peters, in his world-renowned book In Search of Excellence, says that often
organisations are so busy chasing new customers that they frequently neglect
those they already have. This is an easy trap to fall into but one which any
company does at its peril.
3-024 So far, the above notes refer to the customer as an external entity but, equally
important, we need to recognise that we also have internal customers and we

The Importance of Customer Focus Module 3
need to strive just as hard to ensure that their needs are satisfactorily addressed
and the same diligence applied as to external customers.
3-025 Meeting the needs of internal customers helps to sustain a high level of staff
motivation, which in turn leads to higher productivity and ultimately has a very
beneficial effect on the external customer. In other words a “happy ship” –
forgive the pun!
3-026 One organization who wish to remain anonymous carry out an annual internal
customer satisfaction survey. They ask their employees to put themselves in the
position of customers of the company and ask a series of questions around
“How well do you think you have been treated during the last year?”
“In what areas do you think we failed in the service and support we have
provided”?
“In which areas do you feel there is an opportunity for us to make a significant
leap forward in our treatment of staff”?
3-027 The rationale behind their thinking is – if we as a company are not delivering
good customer service to our own internal staff what chance have we of deliv-
ering excellent customer service to our external customers, which is after all, the
main cornerstone of our future growth. An interesting approach which gives
much food for thought.
3-028 In summary, this introduction has sought to highlight just how important looking after
the customer is and therefore the company and all its employees must have a
“customer focus” attitude and approach to its business if it is to be really success-
ful.
Remember, everyone is someone’s customer.
3-029 In the following chapters we will break down each component part in detail,
enabling us to understand and begin to apply the key principles.
SELF-ASSESSMENT EXERCISE
Name two companies which during the last six months have
disaffected you and explain:
1. the reasons why; and
2. what lessons can be learned from these experiences and

adopted in ship management.

2. IDENTIFYING WHO IS THE CUSTOMER
LEARNING OUTCOMES
● understand how to recognise all those entities who can be

called customers – internal and external;
● know more about customers’ motives for choosing your

shipping services;
● learn how to find out the customers’ perception of your

company; and
● know how to identify your “target market”.
3-030 There are two types of customer – external and internal. If we are to be a
customer-focused organisation, we must truly understand the needs of both
and fully appreciate that, though the needs may be different, they are equally
important.
2.1 EXTERNAL CUSTOMERS
3-031 First let us consider external customers:
● Who are they?
● How many do we have?
● Where are they located (internationally)?
● Who are our key contacts?
● How much do they spend with us?
● How much could they spend with us?
● How much of their total business do we have?
● Why do they buy from us?
● What do they think of us?
● What are their needs and expectations of us?
● How secure/vulnerable are they as customers (might we lose them!)?

Identifying Who is the Customer Module 3
● What are their hidden needs?
● Who are our potential new customers?
● How many could we realistically handle?
● What /who is our target market?
3-032 So let us take each one of these questions individually and examine how we can
find out all this information.
WHO ARE OUR CURRENT EXTERNAL CUSTOMERS?
3-033 The organisation needs to establish first the total number of real live customers
it has on its books. Nowadays it is a great deal easier to access this basic infor-
mation through a database.
3-034 A well-set-up database should be able to provide name, location, key contacts,
and revenue spend year to date etc.
3-035 What the database will clearly not be able to do or is unlikely to be able to do is
provide any meaningful background as to how satisfied the customers are with
our service and the back-up they have received and how likely it is they will con-
tinue to use our services.
3-036 The type of external customers will be (directly or indirectly) any or all of the
following:
● Charterers
● Agents
● Merchants
● Brokers
● Shipping companies
● Underwriters
3-037 One of the problems frequently experienced by companies involved in providing

a service is that they sometimes seem to forget about the customer, or even if
they are aware, the customer seems so far away from the day-to-day business
of trading.
3-038 It is sometimes likened to the customer being at the end of a very long tunnel.
Only just visible and not very accessible.
3-039 This can lead to complacency and subsequently a loss of trade. This example
further underpins the importance of regular contact with the customer.
3-040 All successful companies “keep close to their customers”.

Module 3 Identifying Who is the Customer
WHY DO THEY BUY FROM US?
3-041 This information is more difficult to find out and needs to come from a number
of different sources (some official and some unofficial).
3-042 Official sources would be the people most closely involved in the selling of the
business, i.e. the charterers of the ship in the first place.
3-043 The typical reasons for placing the business with us will be things like:
● They have dealt with us in the past and we are a “known quantity”.
● Our terms and conditions of doing business are competitive.
● Key contacts at senior level are strong and probably go back some
time.
● We have a good track record of handling the particular cargo involved.
● We know the shipping route well and have transported goods there several
times before.
● We have demonstrated a good track record for reliability.
● Our “after-sales care” has been good.
3-044 It is worth noting that in many instances the above is assumed and therefore
taken for granted. This is potentially very dangerous because if it is not regularly
researched and thoroughly checked out we may find it is not actually true and
any future business could therefore be vulnerable and seriously at risk in a
competitive market. If we do not set up the means to monitor this regularly, we
will not learn that anything is amiss until it is too late. It is often said that the best
time to improve things further is when you are in a strong position already.
Sound advice!
WHAT DO THEY THINK OF US?
3-045 It is vital that this information is regularly sought after, both formally and informally,
and even more important that it is reviewed, analysed and acted upon.
3-046 One of the most favoured methods of finding out this information is via a ques-
tionnaire which every customer of the shipping line would be asked to complete
on a regular basis, at least annually and better still, every six months (see the
Addendum at the end of this module).
3-047 In organisations which place high importance on customer service, it is normal

practice for them to hold quarterly meetings with a selected number of
their major customers, the purpose of which is to examine ways of further
enhancing their service to those customers. In other words a policy of “continuous
improvement”.

3-048 A typical agenda for such a meeting would look like this:
3-049 However, though these formalised approaches to customer satisfaction are

extremely valuable (if as mentioned the findings are acted upon), often the best
way of finding out what your customers think of you is to ask them informally.
3-050 All individuals in the company (at whatever level they operate), should be
encouraged to take every opportunity to do this. It will mostly happen in a casual
conversational way but more is often learned this way than through the formal
route.
3-051 When carrying out this type of unofficial research it is important that the right
type of questions are asked in the right way.
3-052 There are two fundamental types of questions – open questions and closed
questions.
3-053 Closed questions tend to invite one-word responses, e.g. a question such as
“are we providing you with a good level of customer service?” would be likely to
draw either a yes or no answer, which would not really help us much in ascer-
taining how well or not well we are doing.
3-054 However, open questions invite a more detailed informative response, e.g.
● What do you think of the current level of customer service and support we
are providing you with?
or
● In what ways do you think we could further improve on our customer care?

Write down six open questions you could ask to find out what the
customer thinks about us in terms of our customer service: three for
external customers and three for internal customers:
External Customers
1. _________________________________________________
2. _________________________________________________
3. _________________________________________________
Internal Customers
1. _________________________________________________
2. _________________________________________________
3. _________________________________________________
EVERYONE HAS A ROLE TO PLAY
3-055 There is good motivation to be gained from employees feeling that they have a
role to play in the enhancement of customer service and even more importantly
that they can and indeed should actually make every effort to influence the
customer’s opinion in a positive manner.
3-056 None of this will ever take place, however, unless care of the customer is clearly
seen as being the most important factor in the continuing success of the company.
3-057 There also needs to be a process by which such feedback gets speedily back
to the people in the company who can act upon it in a positive manner.
3-058 Once this happens it is absolutely essential that the loop is completed by going
back to the customer to ensure that suggestions/concerns have been satisfac-
torily addressed.
3-059 For example: if a customer has a complaint they want somebody to come back
to them and explain what has happened as a consequence of their complaint. I
had a recent experience where I had a complaint which related to the difficulty
of booking a service call and I was told that my complaint would be passed on.
When I said that not only did I want it it passed on but I wished to know the out-
come, I was advised that I would have to write a formal letter of complaint to
which I would then receive a reply.

3-060 You will observe that although I was the customer (who had been poorly treated)
the onus was on me to take up my time to write a letter before I could receive
any feedback.
3-061 So take the responsibility of getting back to your customer as quickly as possi-
ble and advise them what has happened rather than put the onus on them to fol-
low it through.
3-062 To compound the felony, when I was being given the name of the “Customer
Service Manager” to whom I should write, I asked if I could speak direct with her
now. The reply came back (and I kid you not,) “She is only Customer-facing on
Tuesdays and Thursdays” .The day being a Wednesday meant I was out of luck!
3-063 Not unreasonably,I assumed that anyone bearing the title of “Customer Service
Manager” would be customer-facing the whole time. So if in your company, you
have someone with that title or similar, ensure that they are customer-facing at
all times. If that person is not there for any one of a number of good reasons, it
is vital to ensure that someone else is available to talk to the customer. Avoid at
all costs, the comment that “There is unfortunately no-one here in customer
service this afternoon”.
3-064 You will not be surprised to learn that they lost me as a customer, ironically and
this is the key learning, not because of the complaint itself but as in so often the
case, due to way it was so poorly handled
3-065 Building further on this theme, it is not only what the employee finds out from the
customer which is valuable but what ideas the employees themselves may have
of how to improve the level of customer care.
3-066 This employee-driven approach has been very successfully applied by ASDA
the supermarket chain.
3-067 ASDA set up a system whereby all employees were asked to put forward their
ideas as to how the store could be improved. This was not restricted to customer
service but applied to all elements of the business. They set up a means by
which the employee who came up with the best suggestion of the month was
awarded a prize and also enjoyed the publicity which accompanied it. This
approach I understand is still operational today.
2.2 INTERNAL CUSTOMERS
3-068 Having reviewed how we meet the needs of our external customers we now
need to examine how we can do the same with our internal customers.
3-069 Our internal customers are likely to be:
● the shipowners;
● members of the crew;
● fellow colleagues;
● the ship’s master;

● the marine superintendent;
● the chief officer;
● the purser (where applicable);
● office and clerical staff;
● chief engineer and team of engineers;
● safety officer etc.
3-070 We have to consider what it is like to be a customer of our own organisation and
how infuriating it is when the service we receive is less than we would hope and
expect. We are justifiably quick to complain.
3-071 We take the concept of customer and supplier for granted when it happens
outside the company. However, it is exactly the same process when it occurs
within. The only real difference is we fail to see it that way.
3-072 We need to adopt the philosophy which endorses the belief that within the
company, at different times, we are all customers of each other and suppliers to
each other.
3-073 As well as receivers (customers) of internal service and support, we are

frequently providers (suppliers) of it. Then the responsibility lies very squarely
with us to deliver to the standard expected by our customer, this time internal.
3-074 An example might be: you ask someone in your records office to provide you
with some information regarding the number of business transactions a
particular customer has done with the shipping line during the last six months.
3-075 In this context you are the customer and the colleague in the office is the
supplier.
3-076 Another example: if the master lays down certain things he wants done by the
crew, it is incumbent upon him to state clearly exactly what needs to be done,
how it is to be done and by when etc. In this the master is the customer.
3-077 However, once the request is understood and accepted by the crew (or its
representative) they become the supplier. The crew – just like an external
supplier – must then deliver exactly what is required by the customer, i.e. the
master.
3-078 This concept can easily be adopted as a part of effective ship management and
as has been mentioned earlier, it has many additional advantages such as driving
performance standards up, apart from the improvements achieved in customer
satisfaction.

3. IDENTIFYING CUSTOMER NEEDS
LEARNING OUTCOMES
● understand what the customer really wants from you as a

shipping company;
● learn about the “hidden needs” of the customer; and
● learn how to create the right image for your company.
3-079 We have talked so far about finding out what the customer thinks of the service
we are currently providing, whether good, bad or indifferent, but we have not yet
established what the needs and expectations of our customers are.
3-080 British Airways which, over time, has invested huge amounts of time, resources
and money on looking after the customer, e.g. its “putting customers first”
programme, takes the view that human relation factors are five times more
important than operational issues.
3-081 There are three distinct phases to this:
● What do they expect?
● How well is the company meeting/exceeding what they expect?
● How does the company compare against its competition?
3.1 WHAT DO THEY EXPECT?
3-082 There is an example questionnaire in the addendum which is meant only as a

guide and can be easily adapted to meet specific needs.
3-083 There are two important considerations when identifying what customers
need.
● Customers do not always exactly know what they want /expect.
● All customers are not the same.

Module 3 Identifying Customer Needs
3-084 Alan Sugar, founder of Amstrad Computers, described his company as:
3.2 HOW WE ARE MEETING WHAT THEY EXPECT?
3-085 This can be researched and evaluated as soon as the needs and expectations
highlighted by the questionnaire are known.
3-086 This links in with the points made earlier in the module where we talked about
official and unofficial research.
3-087 This time we are talking about official research but in a formal structured manner
against clearly determined criteria.
3.3 HOW DO WE COMPARE AGAINST OUR COMPETITION?
3-088 This is all based on a concept called benchmarking.
3-089 This concept is increasingly becoming a standard approach for many leading
companies who recognise how vital it is to consistently meet their customers’
needs.
3-090 Market research organisations have been in existence for many years now,
providing statistics of all shapes and sizes, and they are a recognised part of
business life.
3-091 Fairly new on to the scene are benchmarking organisations whose role in life is
to work on behalf of their client, e.g. a shipowner, to find out how its customer
service matches the competition in that market.
3-092 For example they will ask the customer questions like:
● Rank the following ship management companies 1–5 in terms of good

customer service.
● Why is company y ranked number one and what is it that it is doing in

customer service to achieve that position?
● Why do you think company x is only ranked fourth out of five and what key
actions does it need to take in order to compete for the number one position?
● Which company provided the most rapid response to any queries and how?
3-093 This creates a “profile” of the ideal ship manager and the level of customer
service it would expect, thereby providing us with a benchmark to aim for.

Identifying Customer Needs Module 3
3-094 It is worth noting that there is further benefit in benchmarking yourselves against
other industries, markets and companies who are not in competition with you.
Do you want to be just “best in class” or “best in school”?
3-095 However, the most successful companies in terms of customer management are
those which not only meet but exceed the anticipated standards and yet are still
not content. “Continuous improvement” has to be an obsession in first class ship
management.
3-096 Whilst there are clearly many different elements to the mix, the overall require-
ment customers have is “value for money allied with good customer service”.
3-097 Although price is often stated as “the only thing which matters” it is seldom the
case in reality. Assuming that the price concerned is competitive in the market
place, customers have many other things which are important to them but they
do not always realise it. It is therefore vital that, when tendering for business, all
the benefits we offer are highlighted and clearly explained, particularly customer
service, support and what is often referred to as “after care”.
3-098 If price and price alone was the only determining factor in securing business, then
most of the world’s best known companies who have built their reputation on
“quality”, such as BMW and Mercedes in the car world, Sony and Bang & Olufsen
in the world of hi-fi, McDonalds and BurgerKing in the food industry plus Polo
Ralph Lauren and Armani in the world of fashion, would not still be in business.
3-099 Their products are not by any means the cheapest in their market place but they
have successfully marketed and consistently practiced, the concepts of high class
engineering and reliability in the case of BMW, Bosch and Sony, quality service
and cleanliness in the case of McDonalds and Burger-King. Quality and cut of
clothes in the case of Polo Ralph Lauren and Armani.
Top quality cloth /fabric style and fit in the case of the designer label clothiers
such as Boss, Armani, Ralph Lauren to name but a few.
Another highly respected name in the world of Hi-fi is Bose. Recently the remote
control for my Bose unit broke. It was well out of the guarantee period but a
phone call where I immediately got through to someone in Customer Service
(without having to press endless buttons) sorted it out immediately to my com-
plete satisfaction.
The first comment was “Sorry to hear you have experienced this problem”
followed by, “give me your address and I will post a new one off to you straight-
away at no charge” even though it was not covered by guarantee. The action
taken cost Bose very little but the feeling of goodwill it generated towards their
company was significant. Bose as you will be aware are at the high end,
pricewise, of their market but the quality of their product supported by first class
customer service is why they are leaders in their field.
3-100 I recently came across a very good analogy which perfectly highlights the vital
importance of customer service and its relationship to the product provided.
3-101 The example was how we choose and remain with, a particular dental practice
(if any of us can afford dental treatment in today’s world!)

3-102 Many suppliers in all industries/professions focus so strongly on the product that they
frequently neglect the service angle. Dentists are a good example: Their training,
motivation and focus is on the technical product of dental care, yet as their customers
we are not knowledgeable enough to assess the technical competence of their work.
3-103 We are therefore very heavily influenced by service criteria such as the quality of
the waiting area, the personal warmth of the receptionist, nurse and so on. How
easy is it for us to get an appointment, are we made to feel special when we ring
up and again when we arrive at the surgery. How long do we have to wait, are
we kept informed about a wait, if it is longer than the norm. Does the dentist seem
pleased to see us, does he/she seem appreciative of our custom. After all there
are usually at least one or two other dentists we could have chosen.
3-104 All of the above easily transposes back into Ship Management. We take basic
competence as a given, it is everything else around it which builds continuity.
3-105 So in the case of Ship Management we need to examine what is the “value
added” as far as our customers are concerned.
Write your own personal definition of what you believe value added
is and then list up to ten examples of how it could be provided in ship
management:
1. _________________________________________________
2. _________________________________________________
3. _________________________________________________
4. _________________________________________________
5. _________________________________________________
6. _________________________________________________
7. _________________________________________________
8. _________________________________________________
9. _________________________________________________
10. _________________________________________________
3.4 WHAT ARE THEIR HIDDEN NEEDS?
3-106 (This applies to both internal and external customers.)

3.5 EXTERNAL HIDDEN NEEDS
3-107 Obviously, as the term “hidden” infers, these needs are more difficult to find out
but are nevertheless highly important. Often it is the hidden needs which are the
most influential in the ultimate buying decision.
3-108 Hidden needs are often emotionally based and we need to dig deep to uncover
them. For example: a hidden need might be that the person making the ultimate
decision to award a contract may be under some time pressure to make the deci-
sion, therefore a tried and tested supplier (shipping line) may be the best choice.
3-109 Another hidden need might be the need to be seen to have negotiated an
additional benefit in the terms and agreement of the “carriage of goods”.
3-110 It could be that the company chartering the business wants to minimise the
amount of perceived bureaucratic administration and paperwork involved – without
in any way overlooking any legal codes of practice. Therefore the more of the
administration the shipping line itself is prepared to do, the more time is saved
by the agent, broker or charterer.
3-111 There are several more similar types of hidden need which could occur and the
above examples are only meant to highlight the point.
3-112 Few if any of the examples given would be likely to be voiced as requirements
in a specification but as already mentioned they can be hugely influential in the
decision-making process.
3-112a One of the major hidden needs is TRUST, something vital to the customer but
seldom expressed.
3-113 Clearly the better we understand both formalised and hidden needs, the greater
chance we have of keeping the customers we already have and acquiring
new ones.
3-114 Later in the module we will address how we can find out these hidden needs and
use them to gain legitimate commercial advantage over our competitors.
3.6 INTERNAL HIDDEN NEEDS
3-115 Detailed below are a number of examples of the sort of internal hidden needs
we might uncover:
● The need for colleagues to feel appreciated for particular work they have
done.
● The need to feel they are being adequately financially rewarded for the,
often difficult, job they do.
● The need to be given scope to show initiative.
● The importance of being made to feel part of a team and have a sense of
belonging.

● The need to feel that any requests for information are important and
should be handled as quickly as possible.
● The need for the master to feel he has the loyalty of his crew and their
real commitment to high levels of customer service internally as well as
externally.
● The need for the crew to feel that they will be listened to if they have ideas
or concerns about things.
3-116 There will be many more examples than those listed above but they are
intended to highlight the type of hidden needs which if not acknowledged and
recognised can lead to dissatisfaction and de-motivation of staff. This can then
manifest itself in reduced levels of external customer service, so proving just
how closely linked and integrated internal and external needs are.
3.7 WHO ARE OUR POTENTIAL NEW CUSTOMERS?
3-117 Often the best place to start looking at this question is with all those companies
which have previously been customers but no longer place business with us for
whatever reason.
3-118 In most cases it is reasonable to assume that providing they still have a need for
the services we provide there is a good chance that we can win them back. So
they certainly are a starting point.
3-119 Then we need to start looking at where we can develop brand-new first-time
customers.
3-120 Tracking individuals who have been responsible for placing business with us in
the past but have moved on to a position with another company is one very good
way of identifying future potential.
3-121 In customer focus terms, this also underpins how vital it is that we always spare
no effort to look after individuals within our customer base whilst they are “in our
care” because:
(a) we want to maintain them as current customers anyway;
(b) they may well move on somewhere else; and
(c) they are our best possible ambassadors in the market place.
3-122 In deciding whether to pursue new business opportunities with new customers
we need to fully research the total potential of the business to us and also to
ensure that the business, if secured, will return a reasonable level of profitability.
Additionally how much servicing will be required to maintain the business. There
is clearly no point in gaining new customers unless they are profitable to us.
3-123 Further to this, it is essential that in seeking new business we set realistic targets
of how many new accounts we can cope with in terms of service and support. It
is no good gaining them if we lose them just as quickly because we are not
geared up to handle them properly.

3.8 CREATING THE RIGHT IMAGE
3-124 It is also important to recognise that the potential new customers we are seeking will
also be doing their own research about suitable companies to place business with.
3-125 We therefore need to concentrate on creating a good “image” in our market

place and in the eyes of potential customers. An excellent reputation for
customer service would be hugely influential in persuading a charterer, broker,
agent or merchant, to place the business with us. We often only get the one
chance to create a favourable impression so it is essential we don't get it wrong.
3-126 We need to work at being “front of mind” with charterers, brokers, agents and
merchants – when we do not currently have business with them.
3-127 In some industries this is known as being a “preferred supplier”. Companies will
work very hard to become listed as preferred suppliers even though they are
currently not doing business with that company. This gives them what is sometimes
referred to as a “hunting license”.
3-128 In other words a real opportunity to compete for the business when it is up for
review or tender. To use a motor racing term – let us try to ensure we are at least
in “pole position on the starting grid” when the business is awarded.
3-129 You cannot become a preferred supplier unless your image is very positive. So
it is the area which requires constant focus. In a competitive arena such as sea
transportation it will become increasingly more difficult to obtain a real edge over
competition.
3-130 Areas such as computerisation will continue to develop but all companies will be
pretty much on a par with each other.
3-131 No one company is likely to enjoy a major price advantage. The time taken to
transport cargo or passengers to their destination will remain fairly constant for
all vessels so no real advantage there.
3-132 However, one area which lends itself to creating a competitive edge is customer
service and customer support. Companies which recognise this opportunity will
invest a great deal of time, resources and money in striving to achieve a
competitive edge and seek “continuous improvement”.
3-133 In the early 1980s the supermarket chain Tesco found itself lagging behind com-
petition and the average store was perceived as being rather scruffy and down-
market. In other words a poor image.
3-134 Tesco decided that the only way it was going to improve this image was to invest
heavily in training its staff in the principles and implementation of good customer
service.
3-135 Prior to this training programme, if you asked a member of staff in a store where
a particular item of food was located, you would be lucky if they acknowledged

you with a grunt! And on a good day they might even point vaguely in the direction
of the aisle where you would find the item.
3-136 Nowadays ask the same question of a member of staff and they will immediately
stop what they are doing, and walk with you to the exact place where the item
you seek is to be found.
3-137 This did not happen by accident; it was a direct result of the training received and the
awareness Tesco created in its staff of the importance of caring for your customer.
3-138 Whatever you may think of them as an organisation (and opinion is often
divided), one cannot argue with the fact they have been extremely successful as
a business entity.
3-139 It is no coincidence that Tesco is now regarded as market leader and others
have sought to copy it in its customer service levels. However, Tesco set the
standard.
3-140 Although it is a very different industry to the marine industry it is very valuable
to look outside of our market place and learn from what others have done. How
beneficial it would be if your ship set new standards of customer service for
other ships to aspire to, in your industry.
3-141 A rhetorical question to contemplate (referenced earlier in the module) when

considering customer service objectives might be:
● Do we want to be the best in our industry?
or
● Do we want to be the best of the best?
3-142 Standards in our own industry may not be that high and therefore arguably not
the Holy Grail we should be seeking. Food for thought!

4. MEETING CUSTOMER NEEDS
LEARNING OUTCOMES
● know what customer information you need and how to

get it;
● learn how to ascertain whether you are meeting the

identified needs of your customer from their perspective;
● understand what information the customer needs to know

about your shipping services; and
● learn how to ensure there is always a good communication

flow between you and your customer.
3-143 Whether the customer is a potential or existing client, understanding its needs is
a prerequisite toward attainment of future business opportunities.
3-144 Meeting customer needs can be defined as “fulfilling all requirements of the cus-
tomer to the highest standard within the terms and conditions laid out between
the two parties”.
4.1 WHAT ARE THE NEEDS OF THE CUSTOMER?
3-145 Each customer will have different needs but in the shipment business such key
headings will need to be covered.
● How easy is it to get through to talk to a human being!
● Shipment companies’ track record of reliability.
● Products involved for shipment.
● Product specifications (perishable etc).
● Technical requirements.
● Outer case details for shipment.
● Tariffs and rates for transportation.
● Stowage.

Module 3 Meeting Customer Needs
● Pallet or container.
● Pick-up and destination port.
● Access to goods for shipment.
● Timing and delivery.
● Loading and unloading.
● Insurance and underwriting needs.
● Payment terms.
● Post-delivery requirements.
● Follow-up action.
4.2 CUSTOMER INFORMATION REQUIREMENTS
3-146 Reliability and quality of service will be a key to obtain potential and future
business. The customer will be looking to see whether any future business part-
ner has the organisation, personnel and back-up to satisfy its requirements.
3-147 The interface between the customer and the supplier is a crucial element of
satisfying customer needs. Key points need to be considered:
What Information Does the Customer Need?
● Details of management structure.
● Who is the main contact from the supplier and are they available 24 hours
a day. If not, who is the back-up person?
● Key personnel in relevant departments identified as the main contact and

which departments are relevant.
Identify them below:
1. _________________________________________________
2. _________________________________________________
3. _________________________________________________
4. _________________________________________________
5. _________________________________________________
6. _________________________________________________
● E-mail, telephone, website, fax details etc.
● Are the two companies’ IT systems compatible?

Meeting Customer Needs Module 3
● What computer systems are relevant (conferencing etc).
● Is there a language problem?
● Who is the decision-maker?
These are just a few topics for consideration. What about the supplier’s needs
to satisfy the customer’s need?
4.3 INFORMATION ABOUT THE CUSTOMER
3-148 For any contract the supplier will need certain basic details common to all potential
customers.
3-149 First identify these and then put them on a spreadsheet as a questionnaire, which
is used to obtain information from a potential customer. The form needs to be flex-
ible enough to produce in hard copy or downloaded on the computer or Internet.
Remember to always begin any verbal customer contact BY LISTENING.
4.4 BUSINESS PLAN
3-150 Any potential customer will be looking for a business plan to satisfy these needs.
Therefore consider eight elements you believe are key and name them below in
a logical sequence:
1. _______________________________________________________
2. _______________________________________________________
3. _______________________________________________________
4. _______________________________________________________
5. _______________________________________________________
6. _______________________________________________________
7. _______________________________________________________
8. _______________________________________________________
3-151 One of the things which without doubt influences customers to continue to
patronise a company and its service is that the experience is a pleasant one.
3-152 Currys, a well-known main distributor of motor vehicles, coined the following
advertising slogan:

3-153 This psychological approach paid rich dividends for the company.
3-154 Not only should we like our customers but it is even more critical that we let them
know that we like them. The most basic human requirement is the need to be
liked, wanted and valued. Let us not forget that those we deal with are people
first and customers second.
3-155 The learning for us in ship management is that we need to work hard at ensur-
ing that the same can be said of us, whether we are talking internal or external
customers. People should want to pick up the phone to talk to us. They should
want to come to see us in person. Even if they have a complaint, we should be
easy to get hold of and sympathetic to their concerns.
3-156 Another way of viewing it is “make it easy to complain”.
Complaints = Opportunities
I am frequently surprised at the number of companies who fail to capitalize on

the opportunity which a complaint from a customer can provide.
Even the best organization, however well set up, will inevitably slip up now and
again. These slip ups can occur for a whole variety of reasons.
However when the customer then understandably rings up, e-mails or writes to
complain, the manner in which they are dealt with, hugely influences their per-
ception of the company. Most people accept that sometimes things do go wrong
and it is the way in which the issue is rectified which matters most
This customer reaction usually goes one of two polarized ways. Either the cus-
tomer finishes up being more frustrated than before they contacted the company
or alternatively they can be left thinking “What a good company, yes they did get
something wrong but the way they handled it was excellent”
So as a result of the excellent handling of a complaint, ironically your company's

reputation can be enhanced, considerably more than it would have been, had
there been no complaint in the first place.
So the message clearly is: Continuously strive to avoid mistakes in the first place
but when they do happen, view it as a ‘heaven sent opportunity to build cus-
tomer goodwill and enhance the reputation of your company’.
3-157 Herb Kelleher, former chief executive of Southwest Airlines, preached that:
Another currently well used concept to validate customer satisfaction is

“The Mystery Shopper”.

Meeting Customer Needs Module 3
This is where people (usually employed by an external agency although on

occasions employees of the company are used) phone up the organization
pretending to be a customer interested in using our service.
They will then report back their experience as a customer (against clearly
defined customer service criteria) to the company who has commissioned
“The Mystery Shopper” assignment.
It may seem a bit sneaky to some but I feel that it is a valid method of
finding out exactly how customers are being treated in reality rather than
just against the written intentions/mission statement of the company.
Customer Satisfaction Surveys do clearly have their place but recently a

director of a well known company was heard to say.
“Everytime I look at our latest Customer Satisfaction Survey it tells me our

customer service levels are at a very high 98%, yet frequently when I talk
directly to customers about our customer service,, they tell me we are lousy”!
PHONING BACK
3-158 This is arguably one of the most, if not THE MOST, important element of good
customer relations. The absence of returning calls, is certainly the area, which
in our experience, creates the greatest level of frustration in customers and
causes their blood pressure to rise unnecessarily.
3-159 Your return call could be either in answer to a voicemail message they left earlier
or because you promised to phone them back – let’s say before 4.00 today.
3-160 Even if by 4.00 if you don’t yet have the answer to the customer’s enquiry, query,
complaint or whatever it was that created the interaction in the first place,
ALWAYS return their call by 4.00 as promised.
3-161 When you don‘t phone back, for whatever reason, the unintended message you
are sending to your customer or at least their interpretation is any one of the
following:
● You don’t care or can’t be bothered
● They, the customer, are not important to you
● Your organization is in-efficient and unprofessional
3-162 None of the above may actually be the case and probably aren’t but in the eyes
of the customer, that is their perception and it is a well known truism that
“Perception is Fact”.
3-163 We know of one client we work regularly with in the field of customer service
who impresses on all her staff daily, that “Failure to return customer phone calls
is an Offence” I applaud the sentiment and by the way her company are very
highly regarded and commercially successful.

3-164 In summary, meeting customer needs is achieved by:
● identifying those needs;
● having within the organization, the infrastructure to achieve a rapid

response to customer needs;
● encouraging/training staff to take “Ownership” of customer problems;
If your company does not have an official job role of Customer Relations
Manager appoint someone as the “Customer Relations Champion” and
periodically rotate the role between employees so everyone gets a feel of
the importance and responsibility involved.
● delegating key people in the relevant departments as project heads for the
relevant major contracts;
● ensuring communication links are always open with your customers;
● making the organisation user-friendly and liked by its customers;
● having a business plan to achieve the customer’s requirements; and
● finally that you, the company, can be relied on to deliver on time at the
agreed price the merchandise to be shipped.

5. TRAINING AND MOTIVATION OF STAFF
LEARNING OUTCOMES
● learn how to ensure that all the people working in the

organisation are customer focused;
● understand how to identify training needs; and
● appreciate how to motivate staff.
3-165 An area where companies let themselves down is often the resources and time
allocated to training and motivation of staff. To ensure optimum performance
from your employees a training module needs to be in place which should cover
all key members of staff and particularly those who supply back-up or have an
interface relationship with customers.
In these difficult economic times, there are many examples of the pitfalls of
focusing on the training budget as one of the first places to cut costs. This is
because in the present business environment there is fierce competition in the
battle to maintain and gain market share. Organisations who are tempted to con-
sider this as a way of saving money to become more competitive in their pricing
do so at their peril and are guilty of thinking only of the short term. Untrained
staff are usually not motivated staff.
A recent research study undertaken by ICS (Institute of Customer Service)

highlights the fact that companies with a reputation for service excellence can
generate 24% higher profit margins than their competitors who lack that same
level of customer endorsement. In addition, organisations with a good reputation
can achieve up to 71% more profit per employee.
If you are expecting your staff to truly embrace the concept of the customer
being the fulcrum of the business, it is important to have a simple ‘Mission
Statement’ that all the staff can both understand and relate to.
On a recent initial visit to a potential new client I was struck by the simple but
prominently displayed ‘Mission Statement’ which was above the reception desk
and could not be missed by any visitors. The statement read “Our mission in life
is to satisfy customers profitably”.
During my visit which lasted around 3 hours in which I was given an extensive
tour round the plant, I took the opportunity to test out whether staff knew what
the 'Mission Statement” was, what it stated and what it meant. I asked 3 differ-
ent members of staff in 3 distinctly different departments in the company and I
most impressed by the fact that all of them were able to tell me what the state-
ment said and how their job related to it.

Module 3 Training and Motivation of Staff
It was explained to me by the MD that they had chosen to include the word prof-
itably in the Mission Statement order that staff would have an awareness of the
need for cost-efficiency and that those responsible for negotiating contracts on
behalf of the company were vigilant about the prices and terms finally agreed
with the customer. His comment was “Anybody can give the product away but
we have margins jobs and quality to protect” I must say that this did strike a
chord with me in terms of how to run a sustainable business.
3-166 It is vital to win the “hearts and minds” of your employees first before they can
have a significant effect on improving customer care.
3-167 Staff are frequently trained in topics like product knowledge, technical informa-
tion etc. Whilst these subject areas are important and build the confidence of
people interfacing with customers, they often do not address ATTITUDE.
3-168 Homebase, the retail store, have a concept entitled:
This is aimed at highlighting to everyone in the business wherever they work –

be it the stores, distribution or head office – just how vital caring for the customer
is in building and retaining business. It has a message displayed all over its
sites. The message states:
3-169 “The Homebase Way” is jointly aimed at reminding employees that they can
make a real contribution to improving customer service and that they them-
selves are truly valued and appreciated for their contribution to the achievement
of that objective.
3-170 Richard Branson, the founder of Virgin Group, believes:
The Homebase example above is testament to that value.
3-171 The following is a guide of what could be put in place.

Training and Motivation of Staff Module 3
5.1 TRAINING
3-172 All relevant areas should be covered to that specific job specification from date
of joining:
● induction to the company;

Customer Relations should form the major theme of the induction pro-
gramme from start thereby highlighting it’s priority to all inductees. New
recruits should be told from day one that the company’s objective is to find
out the expectations of it’s customers from the customer’s perspective and
then to spare no effort not only to meet those needs but exceed them.
● market needs training;
● specific training to job description;
● communication skills;
● the importance of the customer;
● standards of performance;
● business training development programme to be put in place for key
personnel with regular assessments and reviews.
5.2 TRAINING WORKSHOP
3-173 Imagine for this workshop that you are the master of your ship:
● identify the key departments that need training;
● identify the training you believe you personally need;
● choose one particular department and develop an outline training module
which would address its customer service training needs.
5.3 TRAINING ASSESSMENT
3-174 Training is beneficial when positive results come from it. A well-trained
employee will become more productive in his or her role and will in return get
satisfaction in a job well done as a direct result of the training.
Is All Training Good?
3-175 Not necessarily. Bad training can be more damaging than no training at all. What
do we mean by bad training? What do you think?
Give five examples of bad training:
1. _______________________________________________________
2. _______________________________________________________
3. _______________________________________________________
4. _______________________________________________________
5. _______________________________________________________

3-176 When your employees make the following quotes you know you have a problem.
● We were trained last year on safety measures but no notes were given out
so I have forgotten the key elements of the course.
● What is the point of my training in communication skills when my boss

does not know the meaning of the word?
● We had a course a year ago but nobody has assessed whether the course
has been beneficial to me.
● No further training has been given so I am no longer up to speed with the

technology. What is the point?
3-177 The lesson of the above must be that training is an essential element of getting
the best out of your employees, but it must be:
● Focused
● Continual
● Appraised.
3-178 Achieving the above will achieve the company’s objectives in having a
well-trained highly motivated team.
The Need to Train Consistency in Customer Focus
3-179 In a great deal of our meetings and training needs analysis with prospects and
clients we always come across the same theme. Every customer service
function within every organisation we deal with often has one overriding desired
outcome and that is the need for consistency.
3-180 You could of course argue that some of the service provision within some
organisations is actually consistent but it is consistently average or worse, con-
sistently bad.
3-181 Consistency of service provision is a bit like a Holy Grail within customer focus
functions because there are so many factors that go into making it happen.
Starting with the recruitment of staff. One of the key questions which should be
asked at every customer focus interview is: “Do you like people?”
3-182 In a recent situation, someone actually answered this question in an interview

for a customer focus position that “as a rule they preferred animals to people”.
3-183 So, first things first are you consistently recruiting the right people in through the
door? If you have a consistency of approach to your recruitment that is an excel-
lent start. If it is evident in the interview that the interviewee is not ‘comfortable’
with people they should not be considered for a customer facing role,as such a
role requires that as an absolute minimum.
3-184 Next comes the need for customer focus training. Is every member of the team
given the same level and type of training to ensure that they are all exhibiting
the desired behaviours of a customer service representative within your organi-
sation? This need for consistency within customer focus training and develop-
ment is absolutely vital if you are to capitalise on your positive recruitment.

3-185 The next area to consider is whether or not there is a consistency of approach
regarding the customer focus culture within an organisation. Does your culture
demonstrate a consistent message that customer focus is important across all
parts of the organisation?
3-186 Is the treatment of internal customers (covered earlier) within your organisation
consistently reflecting the values and behaviours you wish to demonstrate to the
outside world?
3-187 So once the message is in place, the training is consistent and the recruitment
and selection is consistent then half the battle is won from there.
3-188 One major challenge that our clients regularly face and wish to address is how
to ensure that service to customers is consistent. In other words it shouldn’t mat-
ter whether you ring Bob in Ireland at 9 am on a Monday morning or Susan in
London at 4 pm on a Friday the level of service is the same.
3-189 This is something that only a robust and ongoing commitment to training and
development of your staff can address. By giving people a clear message over
what is expected of them in every customer interaction you go some way to
ensuring that there is a consistency of approach.
3-190 You may choose to do this customer focus training internally or by bringing in a
third party provider however the key thing is that you do something. If you want
to establish consistency in the levels of service provision throughout the organ-
isation there is no better place to start than through training.
3-191 Another area where companies strive for consistency is in the way they serve
every customer. It is human nature and possibly even a commercial necessity
to grade customers in terms of their importance and net value to the organisa-
tion.
3-192 The key thing with this is however that this sort of grading of customers should
happen at a higher level and should not really be the decision of each individual
customer service operative. If you think of Mcdonalds everyone is served in the
same way (albeit slightly robotically) however it does not matter if you are Prince
or Pauper you will still receive the same level of service with your Big Mac and
fries.
3-193 So should you grade your customers? If so how should you do it and how should
this be communicated to individual members of the team?
3-194 My own personal opinion is that every customer should be treated exactly the
same way and you should receive the same treatment regardless of who you
are. Some of our biggest clients have started out as very small in real terms but
have turned into major customers over time.
3-195 You may have a different opinion on this but if you are thinking of changing the
level of service given to each different customer remember to make sure that the
grading of customers is based on cold hard evidence and not on a subjective
viewpoint. Think about it, if you did not know who he was would you judge Bill
Gates as a rich man or would you look at his dress-down, slightly scruffy appear-
ance and bracket him as a lower grade customer?

5.4 MOTIVATION OF STAFF
3-196 Customers when deciding which suppliers to deal with will make decisions not
just on cost and product offering but also on reliability, trust and the ability of the
company to offer after-sales back-up. To achieve this staff need to be motivated
to perform.
3-197 There are two key areas for consideration:
● Employees need a sense of belonging and to feel that their role matters to
the success of the company. Giving authority and accountability to the
individual can do this. Other areas which can make a difference are the
personal touches, i.e. Christmas offerings, eating together, ambience of
the environment, compassion when required. All this helps to motivate the
staff and improve performance.
● In key areas performance-related bonuses should be considered against

a criteria set – a key criteria being customer awareness.
3-198 A happy, motivated and well-trained staff can make the difference between suc-
cess and failure! It is important to note that the way staff act with customers usu-
ally reflects their manager’s behaviour. So as a manager, you need to be a role
model. Your staff will watch how you deal with difficult situations such as han-
dling an angry customer and then copy your behaviour.
3-199 When I am staying in a hotel, which in the nature of my job is pretty frequently,
I can always tell in a very short time of being there, whether the Hotel Manager
is one who believes in the importance of Customer Relations. The reason I can
tell, is that every hotel employee I come across, puts himself / herself out to
greet me in a friendly professional manner. This manner comes from the top and
it is clearly the result of good staff training.
3-200 Team events (Honda bikes and outdoor activities, to give a couple of examples)
can be a real motivator and can bind individuals together as a close-knit team.
3-201 To supply these requirements staff need to be motivated. This could be done in
the form of productivity bonuses or a performance-related scheme. Ideally, this
should be linked to achievement of agreed customer service targets.
Avoid “Unscrewing the Leg” in Customer Focus
3-202 A three legged stool can only stand up if all three legs are working. Think of your
customer focus teams as three legged stools for a moment.
3-203 If one leg decides to unscrew itself or worse still it tries to unscrew one of the
other legs the net result is that the stool will fall over and crash to the ground. In
order for customer focus to work all three legs of the stool need to be function-
ing, strong and working together.
3-204 How often have you come across the following scenario? There has been some
kind of customer service failure or breakdown and so you approach someone
within an organisation to deal with it. Instead of presenting a united front the per-
son you are dealing with blames another department or member of the team.

3-205 “This always happens when our Admin Dept. are involved” – “we have been let
down again by Payroll” – “I have told them about this before but nobody listens.”
These are just a couple of examples of the practice of leg unscrewing.
3-206 Of course there may be a problem with a particular department or individual but
your customer does not need to know about it. All it serves to do in the end is to
make the customer feel like they are dealing with a disorganised and disparate
bunch of people.
3-207 Take the example of the best football managers. When something goes wrong
on the pitch you will very rarely find the best managers unscrewing the leg of
their team or any individual. Instead a united front is presented and the team
moves on. That does not mean that internally a particular player or department
such as defence is not hauled over the coals it is just not done in public.
3-208 This unscrewing of the leg in customer focus can relate to both internal and
external customers. Often within an organisation front of house blames back of
house, back of house blames management and so on and so forth - none of
which actually helps the customer.
3-209 One of the best examples I can give of this practice is when you are standing in
a queue say at your local coffee shop and they are clearly very busy and strug-
gling to serve everyone. One member of staff asks another to do something for
them and that person helps them out but not before rolling their eyes and clearly
demonstrating to the customer that there is a problem.
3-210 This is classic unscrewing of the leg. The team is supposed to be united with
one common goal - to provide excellent customer service. However from the
customer’s viewpoint it looks unprofessional and presents the impression that
the team do not get on or do not work well together.
3-211 Unscrewing the leg is usually born out of some other frustration or hidden
agenda. Maybe operative A has received a recent pay rise and operative B is
jealous or operative A took a couple of days sick and left operative B in the lurch.
3-212 The crucial point here is that it does not actually matter what the hidden agenda
is, it should remain just that, hidden from the customer, after all the customer
has one basic desire which is to be served their coffee quickly and politely.
3-213 So the next time you are thinking of blaming another individual, department or
team just picture a three legged stool like the one below and ask yourself “am I
unscrewing one of the legs here?” if I am the whole stool will collapse
3-214 What motivates you apart from money? Give your ideas and how you would
satisfy them?
1. _______________________________________________________
2. _______________________________________________________
3. _______________________________________________________
4. _______________________________________________________
5. _______________________________________________________

6. PERFORMANCE STANDARDS
LEARNING OUTCOMES
● understand the need to have performance standards;
● learn how to set them and monitor; and
● learn how to communicate them effectively.
3-215 Having now examined, in some depth, who we think our customers are, how we
identify their needs, how we train and motivate staff to recognise the importance
of customer focus, we need now to review how we set the standards of cus-
tomer focus in the first place.
3-216 In reality we have to accept that these performance standards will not always be
met but it is critical that they are in place and that everyone in the company
knows what they are.
3-217 A typical criterion for performance standards might be:
3-218 Using the above example as a reference point, consider six performance stan-
dards you would set if you were responsible for doing so – and write them in below:
1. _______________________________________________________
2. _______________________________________________________
3. _______________________________________________________
4. _______________________________________________________
5. _______________________________________________________
6. _______________________________________________________

Performance Standards Module 3
3-219 It is important when setting performance standards that they reflect the pursuit
of the highest possible standards of customer service rather than (as can some-
times be the case) – the minimum acceptable practice!
3-220 Philip Kotler, author of Marketing Management, declares that:
3-221 Be sure that the company knows what it is measuring and why it is measuring it.
3-222 A good base to start when formulating performance standards and measurement
criteria is to refer to what the customers are telling you they expect and then to
develop a set of criteria which, if achieved, will actually exceed their expectations.
3-223 Some key points to bear in mind when setting performance standards are:
● Set a standard for each key task which has to be done.
● Ensure that the standard set is stretching but attainable.
● When, and if necessary, to raise the standard.
● Avoid setting too many standards as this serves only to confuse people
and dilutes focus.
● Ensure staff know what ‘good performance’ looks like.
3-224 As well as using the customer as a reference base, the company should be
considering what it believes are the standards it should be setting itself.
3-225 What effectively then happens is that the final performance standards agreed
and set are a powerful combination of the two elements.
3-226 Organisations often refer to these performance standards as a “customer charter”

and I believe this is a good way of viewing the process.
3-227 Imagine it like the Magna Carta or the American Constitution.
3-228 It is fair to say that the actual development of performance standards is the “easy
bit”. The difficult challenge is to ensure that they are being consistently carried out.
3-229 This means that a process must be set up to monitor progress and swiftly rectify
any highlighted shortcomings.
3-230 It is also vital that everyone in the organisation is made to recognise that any short-
fall is a matter of real importance rather than “just something which went wrong”.

Module 3 Performance Standards
3-231 One company even added to its customer charter the words “If we fail to meet
your expectations we will . . .” which is really putting your money where your
mouth is so to speak.
3-232 This is not intended to convey that whoever is responsible must be made to
“walk the plank”; simply that they learn from the mistake and work hard to see
that it does not recur.
3-233 We have already identified the importance of all staff being aware of what the
standards are, how important they are and the critical influence that individuals
can and should have on the achievement.
Imagine it is your responsibility to see that the above happens.
Consider three methods in which this universal understanding could

be achieved through effective communication:
1. _________________________________________________
2. _________________________________________________
3. _________________________________________________
3-234 In summary on performance standards. For any company, organisation or ship

manager which is really serious about customer care/customer focus, a set of
clearly known and understood performance standards is not just a “good thing
to have” – it is absolutely essential. It is like the company Bible.
3-235 Sam Walton, founder of the supremely successful Wal-Mart American retail
chain, which recently moved into the United Kingdom, believed in the superlative
importance of great customer service:
3-236 I think the above is a fantastic dream to pursue and even if we only got close we
would be doing really well as a customer-focused organisation.

7. EXCELLENCE IN CUSTOMER CARE
LEARNING OUTCOMES
● understand the difference between good and excellent

customer service;
● learn how to achieve it; and
● fully appreciate the positives of providing it.
3-237 Excellent customer care encompasses everything which is above and beyond
what any customer has a right to expect anyway. What customers have a right
to expect, we will consider for the purposes of this module, is good rather than
excellent customer care.
3-238 A definition of excellent customer care is:
3-239 Another way of looking at this is “under-promise and over-deliver”.
3-240 For example, if on a Monday you were talking to a customer about a query of
some description and you believe you can have a solution for it by Wednesday,
tell them they can expect a response by Friday (providing they are not pushing
you for an earlier resolution). When you are then able to get back to them on
Wednesday, they will perceive your customer care as excellent. You have
exceeded their expectations.

Module 3 Excellence in Customer Care
3-241 Looking at this from the perspective of ship management, write down five
actions/initiatives the company could carry out for its customers which would
constitute excellent customer care:
1. _______________________________________________________
2. _______________________________________________________
3. _______________________________________________________
4. _______________________________________________________
5. _______________________________________________________
3-242 To put another perspective on the difference between good customer care and
excellent customer care we could look at it this way:
3-243 A satisfied customer was recently heard to say:
3-244 The upshot of all this is that satisfied customers will probably place further
business with the company but might be tempted to shop around the market
place first, with the risk that they may unearth a “better deal” simply by looking.
3-245 Delighted customers will not even consider going anywhere else but will continue
to stay with the company which has exceeded their best expectations. A nice
touch is to provide every newly acquired customer with a token or memento, as
a small thank you for placing their business with your company, appreciating
however the current high level of sensitivity in respect of “gifts to customers”.
3-246 The natural tendency for all of us (if we for a moment consider ourselves as
customers) is stay with what we know, rather than invest time and effort in seek-
ing a better option. Usually we only start looking to change our source of supply
if we are unhappy about the present level of service and customer care we are
currently receiving (remember earlier in the module we quoted the statistic that
68% of customers changed their supplier for this reason).

Excellence in Customer Care Module 3
3-247 A recent example of the power of excellent customer service was where
I was personally going to buy an item of some considerable cost but at the last
minute decided not to proceed. However, all through the buying/negotiating
process I had been dealt with very professionally by the sales executive who
at no time applied any sales pressure or what might be described as underhand
methods. His level of customer service was such that I wrote to his boss
highlighting how professional he had been even though I had not purchased
the item.
Some three months later, I decided that I was now in a position to proceed and
surprise, surprise, although there were many other options where I could have
bought the item, I went back to the same sales executive and bought from him.
I told him that he really deserved the business as he had worked so hard at his
customer service and it had paid dividends in the end. My decision to proceed
had as much to do with the high level of excellent customer service from the
sales executive as it had to do with the item itself.
3-248 Another example was where I had recently switched credit cards.
In the past with my previous credit card provider, if I had to query such as an
entry on the statement, it took ages (at my cost) to get through to anyone and
then, if I wanted the item entry checked and a copy sent, I had to pay for “the
privilege”.
With my new provider, I got through straight away, was dealt with very courte-
ously and was promised it would be checked out.
Early the next day, I had a phone call from them, giving me chapter and verse on
the query at their cost, not mine. I was told more information than I actually
needed to know and was, needless to say, very impressed. The chances of me
considering a change in the future are greatly reduced or non-existent. Again, it
highlights the value of customer service over everything else.
3-249 If, as a customer, we are only satisfied, i.e. we do not have any reason for
complaint, we are more likely to be “open to offers”. If we are delighted, it is
almost impossible to prise us away from where we are.
Another phrase I frequently hear in response to a customer question or com-

plaint is: “What YOU need to do is fill out this questionnaire or YOU need to write
a letter to head office” or something similar. Rather than what YOU need to do,
wouldn’t it be great if the response was “Let’s see what WE can do for you.”
3-250 However, in a competitive environment such as shipping, other companies will

always be trying to wrest business from us. Therefore, if the level of customer
care and customer service we are providing as a ship manager is anything less
than excellent, we are then always going to be vulnerable.

8. CUSTOMER MANAGEMENT
LEARNING OUTCOMES
● learn about the importance of the employees’ personal

influence;
● know how to make the customer feel special; and
● understand how to build vital personal relationships

between your shipping services and your customers.
3-251 The Oxford Concise English Dictionary defines “to manage” as:
3-252 This is exactly what we need to do (in a thorough, positive and totally profes-
sional manner) with our customers.
3-253 When people feel they are being managed in this way on an individual basis
they are well motivated by it and perform better as a result.
3-254 Companies are no different in this respect.
3-255 Never forget that customers judge the company by the person they are dealing
with. As far as they are concerned – you are the company. It may seem unfair on
occasions but it is a reality of life. I had a recent experience of this with a well
known household name. The company concerned had made a very poor job of
delivering some furniture I had ordered. The promised delivery date kept being
put back and back to the point where I was on the verge of cancelling the order.
I would have done it sooner but the products were very good value and I could
not find a better alternative. However I eventually decided I would cancel and
phoned up to do so. The customer service person I spoke to was brilliant and
within 5 minutes she had sorted everything out satisfactorily and all the units duly
arrived in the next few days. My point being that a top class well trained customer
service representative who takes ownership of the problem and seizes the
initiative, can turn a negative into a positive in a very short time with the right
attitude. She was worth her weight in gold. She changed the image I had of the
company round full circle and she was the criteria by which I judged the company.

Customer Management Module 3
3-256 I would suggest that this is an opportunity rather than a problem. However, for
the individual concerned it is a big responsibility and not one to be taken lightly.
3-257 A company can spend millions on telling its customers how important they are
and that message can be undermined in seconds by one single person giving
out the wrong attitude.
A recent example given to me by a friend highlights the above. He was driving

his car along the highway in the States and was looking for somewhere to stop
for refreshment. He saw a sign which announced “The Sunshine Café” and
underneath it read “you are most welcome, come in, rest up and we will look
after you - the sunshine way. He entered the “Sunshine Café” to be met by the
most miserable looking girl who epitomised the very opposite of sunshine in her
approach and manner. ‘The Dream’ evaporated immediately!
3-258 We have already highlighted, earlier in the module, the importance of staff train-
ing in helping to avoid such a situation.
3-259 If you were the customer of a supplier, you would like to feel that your account
(your business) with that supplier is being well managed, not only by your reg-
ular contact but by anybody and everybody connected with the supplier.
3-260 You would want to be made to feel important at all times and that your every need,
query, enquiry, complaint, request or whatever is being managed in the fastest possible
time and with the utmost professionalism and that ‘nothing is ever too much trouble’.
3-261 The cornerstones of customer management are as follows:
● Developing strong personal relationships with all the key personnel

involved in the customer.
● Ensuring that constant regular contact is being made with the customer.
● Understanding its business and its key issues.
● Following through to a satisfactory outcome all customer issues.
● Handling customer complaints and turning them into opportunities.
● Taking a proactive rather than reactive approach to the customer (this means
anticipating and heading off any potential problems before they happen).
● Remembering at all times, who actually are your customers.
A current topical example of this is something close to my heart. As a keen foot-

ball fan and season ticket holder at a premier league club, I increasingly feel that
football clubs have become so obsessed with image and corporate entertaining
that the real fan come last in their considerations if even at all. As a consequence
of obscene salaries for the players, ticket prices are becoming increasingly out
of reach for the true fan – the lifeblood of the game. The result of all this is plain
to see as bigger and bigger gaps appear in football crowds. The customers, feel-
ing let down are ‘voting with their feet’ Once this happens, they find other less
expensive interests and are extremely difficult to win back to the game.

Module 3 Customer Management
● Ensuring that regular feedback (both formal and informal) is always taking
place to find out the customer’s perception of how good our customer care
is and checking whether there is anything else we could and should be
doing to further enhance our customer management.
● It is said that really excellent customer service is demonstrated and highlighted

by contacting your customers when there is no reason for you to do so.
8.1 HANDLING CUSTOMER COMPLAINTS
3-262 Even the best of companies cannot escape having to deal with customer
complaints from time to time. They are and always will be a fact of business life.
3-263 The key issue is how they are dealt with. Put another way, it is not so much the
problem itself, it is how the problem is dealt with. Marks and Spencer built
their reputation on their willingness to exchange goods without any questions
being asked of the customer. They were the pioneers of this customer-focused
approach and now it is common practice with most organisations.
Turning complaints into opportunities is documented earlier in the module.
3-264 The following statement may sound rather strange at first, but will make more
sense as you read on:
3-265 The reason being that complaints give us a chance to do something about a sit-
uation. Every customer complaint should be seen as an opportunity. Think about
it this way: if the customer does not complain, we will probably never know that
something has gone wrong. Even more serious is that the customer who does
not complain usually never comes back to use the service again. They auto-
matically seek another avenue for what they want and business is lost forever.
3-266 The above indicates that a good principle for any business should be:
3-267 Demanding customers drive up customer service standards and that can only
be good for the business.

3-268 A recent advertisement by Dell Computers read:
3-269 A frightening statistic shows that when a customer is dissatisfied with the service
it has (or more accurately has not) received, it may not tell you but it will tell
between 9 and 16 other people about it. This is not the sort of advertising we
need to promote the company!
3-270 The collective power of customers was highlighted recently in a situation

concerning Dell Computers. An American journalist Jeff Jarvis was unhappy
with a new computer he had purchased from DELL. He was unhappy not only
with the malfunction of the unit but particularly with the level of customer service
he received in relation to the fault.
3-271 He posted an on-line diary about his experience which attracted hundreds of
sympathizers who reported equally bad experiences with the company.
3-272 Jarvis believes that a new breed of consumer has arrived. “We spit back” he
wrote. Market researchers concluded that Dell had sustained long-term damage
to it’s brand image.
3-273 A month after Jarvis’s blog, Dell’s senior vice president for the US consumer
business said the company was opening up more call centres and improving
training for phone representatives. The company also started to scan the web
for blog complaints and make direct contact with them. “We will now go wher-
ever they are and get involved in their conversations where we try and resolve
the issues”.
3-274 Many companies make the mistake of responding to all their customer
complaints in the same way. This can have a negative effect because not all
complaints are the same and each customer wants to feel that they are an
individual. An example of how this approach can be flawed is mirrored by Air
France. In a laudable attempt to be fair to everybody, they guarantee a £100 for
a baggage delay of more than 24 hours.
3-275 However £100 to one passenger who may only need to buy some more toiletries
to tide them over, this amount is well in excess of their needs. On the other hand
as a consequence of the baggage delay, another customer may need to buy a
new suit for the important meeting they have to attend and a £100 is unlikely to
be sufficient.
3-276 A better way of handling this would be to find out the circumstances of the
individual and ascertain what they feel would be fair compensation. Air France
perhaps could consider reducing the standard amount of £100 to a lesser
figure – maybe £65 but increase it to £500 for a few customers such as the “new
suit man”.

3-277 The learning here is don’t treat everyone the same way when handling
complaints, as their circumstances and needs often vary enormously.
3-278 A recent personal example emphasises this. We changed office cleaners

because of failing standards. So we wrote a courteous letter to the company
concerned, advising them of our decision and thanking them for the work done
hitherto.
3-279 We have still not had so much as a phone call, perhaps to say how sorry they
were to learn that they had lost the contract. So when the conversation with
other local businesses turns to customer service, we obviously talk about this
negative experience.
3-280 Furthermore, in the event that the new company does not come up to scratch
we now will not consider going back to our previous company because they
have shown us that they did not value our custom in the first place.
3-281 The key message from this example is:
3-282 However, the good news is that the same statistic works in reverse. Happy
customers spread the good news to the same number of people.
3-283 I have recently been the beneficiary of just such a situation with my local car
dealership.
3-284 I took delivery of a brand-new car some six months ago. The car proved to be
something of a nightmare with a whole host of things going wrong during the
13,500 miles I had covered.
3-285 As a consequence, the dealer exchanged the car with a brand-new model at no
charge and under very little pressure from me. In fact, though I was clearly look-
ing to them to make some sort of gesture, I certainly was not expecting that they
would replace the vehicle.
3-286 The result of the above is that, not surprisingly, I have been consistently extolling
the virtues of this particular dealership to everyone I talk to as well as
highlighting it here in the customer focus.
3-287 Some interesting statistics which clearly underpin the importance of handling
complaints well are listed below:
● Up to 90% of dissatisfied customers who do not complain will never buy

from you again.
● When a customer makes a complaint and it is dealt with satisfactorily, 35%

to 45% will still not buy from you again.

● When a customer makes a complaint and it is dealt with quickly and

efficiently, however, between 80% and 95% will continue buying from you.
3-288 So what an opportunity for us if we handle the complaint properly and resolve it
to the complete satisfaction of the customer.
3-289 It is another reason why we should welcome complaints. Listed below is a tried
and tested formula for handling complaints. If done correctly it can often result
in us being in a stronger position at the end than we were at the beginning.
● Step 1
This approach is quite disarming and immediately takes the sting out of the
attack making the customer at least feel that somebody actually cares.
By apologising we are not necessarily admitting that the company was at

fault, we are merely acknowledging that we have an unhappy customer,
something we definitely do not want and wish to rectify as soon as possible.
It is also vital to avoid the blame culture, e.g. “It has nothing to do with me,
it is the people in our booking office who got it wrong, they are a pretty
useless bunch at the best of times!” Avoid the 3 legged stool syndrome
mentioned earlier.
● Step 2
Fully establish and understand exactly what has occured to create

this state of dissatisfaction on behalf of the customer.
This requires good, patient active listening skills in order to allow the
customer to explain fully their side of the situation and get their feelings off
their chest, so to speak.
All too often in my experience, and probably yours as well, the person we
are complaining to is far too quick to put their point of view and come up
with a pretty lame excuse rather than really listen to why we are upset.
In Steven Covey’s excellent book The Seven Habits of Highly Effective

People, habit number five states: “Seek first to understand before being
understood”.
● Step 3
Summarise and verify what you believe you have understood before
attempting to solve the problem.

You cannot solve the problem satisfactorily until you know precisely what
you are trying to “fix.”
● Step 4
Decide on the action you are going to take and communicate

that action clearly to the customer.
Your actions should be driven by what you feel is the best way to get the
customer thinking positively about the relationship again, whilst at the
same time protecting the best interests of the company. In most cases it
can be said that this is one and the same thing, i.e. if the customer feels
they have been treated fairly and with concern they will continue to use the
service, therefore the company gains more in the long run anyway.
Additionally, take as much personal responsibility for sorting out the

problem as is possible. People respond well to this intent whereas they get
increasingly annoyed when passed on to someone else.
● Step 5
Always try wherever possible to do more for the customer

than it is expecting you to do.
This is where and how we can very definitely change a negative situation
into a positive outcome.
We all respond favourably to such an approach and, as mentioned

elsewhere in the module, we then want to tell other people about the
positive experience we have had.
● Step 6
Follow up to ensure that whatever was agreed has been

carried out.
This is especially important when colleagues other than yourself are

involved in carrying out what you have told the customer will happen.
3-290 A hugely significant element in customer management, indeed the whole area
of customer focus, is about that little word “attitude”.
3-291 We may not always be able to handle every query or issue immediately. This is
often the case in reality, but we must at all times create the perception that we
will try our very best to do so and we will not rest until the matter is resolved to
their complete satisfaction.

3-292 Over recent years, considerable amounts of money have been expended on what is fre-
quently referred to as “CRM” – Customer Relationship Management. However, there is
a widely held view that, in spite of all this expenditure, standards are still declining.
3-293 As mentioned earlier in Chapter 5, I believe this is due mainly to the fact that
such programmes, whilst providing useful guidance on things like – What to do
if . . . – put very little if any emphasis on ensuring that the attitude of the
person /people dealing with the customer, internal or external, is warm, friendly,
concerned and helpful – no matter what the issue.
Little or no focus appears to be placed on exercising judgement. Staff are

encouraged to fall back on ‘Company Policy’ Company Policy should be a
guideline, not the absolute answer to every customer problem.
3-294 A key phrase to remember is:
3-295 Whatever people perceive to be happening is, as far as they are concerned, fact.
3-296 For example if they perceive that our customer service is poor it is no good us
telling them that it is not. We must work at changing their perception.
3-297 In this context it is vital that we always keep the customer informed and “in the
picture” about exactly what is happening as far as resolving its problem is
concerned.
3-298 Julian Metcalfe, chairman of Prêt à Manger (a very popular chain of lunchtime
food stores), takes customer service so seriously that he prints his own phone
number on the packaging of all his products inviting customers to call.
3-299 That is what I call real personal ownership of customer service at a senior level.
3-300 A recent example from the retail world emphasises just how influential a positive
attitude is. A number of consumers were asked for their reaction to the follow-
ing situation:
● Scenario I
You buy an item from a shop and the item is faulty so you take it back to
the shop. The shop is able to replace the exact item but the attitude of the
shop assistant is rather grudging towards you and you were made to feel
something of a nuisance.
The question posed was: would you go back to that shop again in the
future? Three out of six (50%) of those asked indicated that they would,
because although the attitude had not been that good, the item
had been replaced.

● Scenario 2
As in scenario 1, the item purchased was faulty so you took it back. This
time the shop was unable to replace the item because it did not have
another exact replica in stock.
However, although it could not replace the item immediately, the attitude
of the shop assistant was excellent. She was very apologetic and con-
cerned that you had been put to the trouble of having to return the goods
and promised to order a replacement as soon as possible and deliver it
personally to your home when it arrived.
When the same question was posed (would you go back to the shop in the
future?) five out of six (over 80%) of those asked stated that they definitely
would return to the shop again because the attitude of the assistant had
been so good.
3-301 The above research underpins the critical importance of showing the right
attitude to the customer and that the customer’s future buying habits are hugely
influenced by it.
3-302 A recent example which happened to a friend of mine illustrates exactly this point.
3-303 He was expecting to be picked up at the airport by a local taxi firm which he had
used before. On arrival back at Heathrow the taxi firm was nowhere to be seen
so a phone call was made to the company to check what had happened.
3-304 The person who should have made the pick-up immediately apologised and
admitted it was his fault. He had genuinely forgotten and promised to come out
to the airport straightaway, which he did. Additionally he waived the fare, which
was around £15.
3-305 The upshot of it all was that everything was sorted out satisfactorily for “the
customer” who changed from being justifiably annoyed at the start, to feeling
well treated by the time he arrived home. Most important of all, he will now
willingly use the taxi firm again.
3-306 The learnings were – an apology was made straightaway, the real reason for the
mix-up was given, rather than a “fudged excuse”, the matter was put right as
soon as possible and no fare was charged. It was a textbook example of how to
change a negative into a positive through adopting the right attitude.
3-307 Another critical factor when handling complaints is to look for consistency of
complaints. In other words the same complaint keeps recurring and it is
essential that this is spotted, investigated as to the causes and then rectified by
putting preventative processes in place.

Consider a situation in which you, as a customer, have been either

positively or negatively influenced by the attitude of the person you
were dealing with. Outline the situation in your own words below:
Situation:
_____________________________________________________
_____________________________________________________
Outcome:
_____________________________________________________
_____________________________________________________
Learning:
_____________________________________________________
_____________________________________________________
In Summary on Customer Management
3-308 Customers really do need looking after in the fullest sense of the term, and
well-managed customers, handled with the right positive attitude, no matter what
the provocation on occasions, will almost certainly remain customers for life.

9. EFFECTIVE COMMUNICATION
LEARNING OUTCOMES
● learn about regular communication with the customer;
● learn about regular internal communication on standards

and progress; and
● appreciate the need to keep communication consistent with

the overall theme.
3-309 We may have the best set of performance standards known to man and assume
that, just because of this fact, the job is done so to speak.
3-310 There are however two vitally important things we need to do in order to ensure
that customer focus always enjoys a high profile.
1. We need to regularly communicate with our customers, even when there

is not a specific reason for doing so.
2. We need to regularly communicate with all our staff internally about cus-
tomer focus good bad or indifferent.
3-311 Taking point (1) above, communicating with our customers. The advantage of
doing this when there is no reason is that it makes them feel special and impor-
tant. It lets them know that we do think about them other than when we are by
necessity required to and demonstrates how important they are to us.
3-312 By the way, whilst we are talking about communication, try and avoid like the
plague setting up one of the voicemail systems which ask you to select from a
number of options. Such systems seem designed specially to prevent you ever
making contact with a real person – heaven forbid!
3-313 Research shows that this method of handling customers is overwhelmingly THE
MOST IRRITATING facet of modern business life today.

Effective Communication Module 3
From the perspective of ship management, write in below three ways

in which you could communicate to good effect with your customer
base, when they will not be expecting you to do so.
1. _________________________________________________
2. _________________________________________________
3. _________________________________________________
3-314 As far as communicating internally with our staff is concerned, there are several
reasons why we should do this.
● We need to continually remind every member of staff just how important

the company regards “looking after the customer”. One recommendation
is that a message such as “our customers are our business” or something
similar should appear prominently on every written communication,
whether a memo, fax, e-mail or whatever.
● We need to motivate the staff to “make a difference”.
● We need to inform them of all positive initiatives the company is taking to

promote customer service.
● Advise them of congratulatory letters or awards won by the company for

excellent customer service and so on.
3-315 Every single opportunity to do this should be maximised.
3-316 It is particularly valuable when an individual or a team or a department has been

singled out for praise. This information and the names of the personnel con-
cerned should be circulated to everybody. Those directly concerned obviously
take pride in the “publicity” and others are motivated to achieve the same
recognition.
3-317 It is a truism that people seek to do what gets praised.
3-318 It is therefore essential that the highest possible focus is put on this area and as
a manager you have the opportunity to drive this message home at a local level
with your people as well as building on the corporate mission of customer focus.
3-319 Without being too negative about it, it is also important that we communicate
internally the not so good things about our customer service as well as all the
gains we achieve.
3-320 For example if we lose a valued customer due to poor customer service we
should advise our staff as to the reasons in order that they can appreciate how

Module 3 Effective Communication
easily it can happen if they are not vigilant, and it also serves as a learning
experience for the future.
3-321 Imagine that you are now in charge of “communications” for a ship manager and
the company has just lost a customer because of cargo having gone missing
and lack of communication to the customer about exactly what is happening.
The customer has stated that it is cancelling the contract.
3-322 Write a simple communication to go to staff which is intended to highlight the

problem and its consequences and is intended to motivate them to make sure it
never happens in their area of control /responsibility. The situation is negative
but the emphasis of the communication should be positive.
MEMO
To All Staff:
From:
Subject: Customer Focus

_____________________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________

10. REVIEW AND SUMMARY
3-323 We started our voyage through this module by highlighting the vital importance
of customer focus and the role it plays in all successful organisations whatever
the industry, product or service.
3-324 We have sailed through the identification of our customers both internal and
external, what their expectations of us are and how best we can not just meet
those expectations but actually exceed them. Amongst the ports we have
docked at were:
● the training/motivation of the staff to ensure that they understand the

importance of customer focus and the positive role they should play in its
achievement;
● the vital importance of understanding and then meeting customer needs;
● the need for a set of performance standards which are clearly communi-
cated and understood by every single person in the organisation;
● the essential difference between good customer care and excellent

customer care;
● customer management and all that it encompasses;
● handling complaints and turning them to advantage;
● gaining a competitive advantage through customer care;
● winning new customers;
● effective communication both internally and externally.
3-325 Every one of the above is an integral part of the total customer focus approach
and the emphasis which is put against it has as much to do with attitude as the
practical implementation of it.
3-326 In organisations where they have established a real reputation for putting the
customer first, it is an obsession with everyone who works for the company and
they never ever sit back on their laurels and think they have done it all.
3-327 Unless you are working in a business which is giving away gold bars for noth-
ing, you are in an intensely competitive market place, and ship management is
no exception to this.
3-328 There is a constant quest for achieving the optimum in customer care this has
to be the objective of every successful business entity.

PART TWO – STRATEGIC ANALYSIS
11. INTRODUCTION – STRATEGIC

MANAGEMENT
LEARNING OUTCOMES
● be able to define the term strategy;
● understand why strategy is important; and
● know what is meant by the strategic cycle.
11.1 WHAT IS STRATEGY?
3-329 Corporate strategy has been defined (ref (1) in Further Reading) as “the pattern
of decisions in a company that:
● determine and reveal its objectives, purposes and goals;
● produce the principal policies and plans for achieving those goals;
● define the range of business the company is to pursue;
● define the kind of economic and human organisation it is or intends to be;
● define the nature of the economic and non-economic contribution it intends

to make to shareholders, employees, customers and communities.”
3-330 The process of strategic analysis must, therefore, take at least all of these
issues into consideration. It should not necessarily just focus on individual tasks
carried out on the front line of the company but should adopt an holistic
approach. Although a corporate planner will obviously give some consideration
to the organisation’s various functional activities, he or she is much more inter-
ested in the linkages between them and their overall effect.
3-331 So, strategic analysis is a process which helps us understand the way an
organisation as a whole performs within its business environment. It helps us to
appreciate long-term issues so that we can better “fit” the organisation into its
developing markets. It is all about formulating “higher order” corporate goals and
translating them into realistically achievable plans.

Introduction – Strategic Management Module 3
3-332 The process aims to help the senior decision-maker:
● understand the organisation’s current competencies – where are we now?
● evaluate the organisation’s future capabilities – where are we going?
● plan for the organisation’s development – how do we get there?
3-333 This module is designed to help you understand and practise this managerial
(and leadership) skill. While working through the module you will need to adopt
the perspective of a senior manager or board member. The module introduces
you to some of the more useful models and frameworks for strategic analysis.
They are designed to help the corporate planner deal with the complexity of
information and inter-relationships in the business environment. Exercises at
the end of each chapter will ask you to apply these tools to your own organisa-
tion, or another with which you are familiar.
11.2 WHY IS STRATEGY SO IMPORTANT?
3-334 Essentially, the activities of strategic analysis and corporate planning are carried
out in order to satisfy the two most important performance criteria for any com-
mercial organisation:
● profitability;
● survivability.
3-335 One type of organisation might make a considerable short-term return on capital
employed, and typically, its corporate planning activities will also be short-term
and possibly less formal. There is nothing wrong in this if the intention is to make
a lot of money very quickly while accepting there will be a high risk of failure.
Another organisation might accept a smaller margin and balance that against
being around for a long time. Its corporate planning activities must look well
ahead and be well developed. An analogy can be found in the rock music indus-
try; compare a “one-hit wonder” with the Rolling Stones.
3-336 Corporate planning can therefore be seen as an activity which is designed to

anticipate business risks and identify business opportunities in order to strike a
balance between profitability and survivability. What determines the approach of
any one particular organisation, and the importance it places on strategic
analysis and corporate planning, will be the nature of the business risks and
opportunities within its industry sector and operating environment. Shipping
does have its “one-hit wonders” but, for the most part, there are very good rea-
sons why shipping companies look to the long-term. It is therefore necessary,
for the purposes of this module, that you not only adopt the perspective of a sen-
ior manager but also consider yourself to be a Mick Jagger among managers –
namely here to stay.
3-337 In general then, long termism is an appropriate approach for an industry like
shipping. The fact is that shipping is a capital-intensive industry and it is subject
to long business cycles. Most shipping companies will have a considerable

Module 3 Introduction – Strategic Management
amount of their value tied up in capital assets and will have very high exposure
to financial risk.
3-338 One example to illustrate this would be a cruise company with a multi-billion dol-
lar market capitalisation, an ambitious building programme, and a significant
level of leverage. This company is exposed to the risk of interest fluctuations in
the servicing of its debt, it operates in a safety and security sensitive sector, and
carries thousands of litigious passengers.
3-339 Another example would be a small tanker operator with a ship worth only
US$10 million but having an exposure to billions of dollars in pollution compen-
sation and environmental clean-up costs.
3-340 In both cases there would need to be a suitable level of commitment to

understanding the market environment and thinking ahead. Whether it is the
board, or another appropriately skilled group, there should be a team dedicated
to corporate planning, whose purpose it is to mitigate against business risk and
identify opportunities for future development.
3-341 A corporate planning team will need to have the time and the physical resources
to carry out its important function. It will also need market intelligence, the free-
dom to plan, and the authority to recommend strategies.
3-342 Commitment to the team and its activities will be reflected in the organisation’s
corporate philosophy. This philosophy is, in turn, encapsulated in the company’s
policy statements.
3-343 Policy statements will reflect the company’s approach not only to the two main
issues of profitability and survivability but may also relate to:
● innovation and product development (think of ship design and cargo

handling);
● market development and penetration (think of mergers, takeovers, brand

strength and liner agreements);
● customer care and benefits to stakeholders (think of relationships with

passengers, cargo interests or shareholders);
● quality management systems (think of safety, environmental protection,

and ISM compliance);
● people (think of crewing and training policies, staff turnover and reward
systems).
3-344 The shipping examples given above (in brackets) are not exhaustive, but the
areas listed give us our first chance to sample some of the diverse, yet inter-
linked, issues which will reflect our approach to business, and therefore, our
strategy.

Introduction – Strategic Management Module 3
11.3 WHAT IS THE STRATEGIC CYCLE?
3-345 The strategic cycle can be considered in terms of the following steps:
● define corporate philosophy;
● analyse internal and external environments;
● consider strategic alternatives;
● formulate and implement strategy;
● evaluate strategy and feedback into step 1 of the cycle.
3-346 The difficulty in discussing the strategic cycle is that, by definition, a cycle has
no beginning or end. It is a continuous process, in which each new step feeds
off the previous one and directly affects the one that follows. In the end, the
process grows with the organisation.
3-347 However, for the purposes of exploring strategic analysis as an activity, we must
select a beginning. Having discussed what is meant by corporate philosophy, this
presents a good starting point, but we must remember that this in itself is affected
by the evaluation of previous strategies and may evolve over a period of time into
something very different from when the company first started trading.
EXERCISE 1
Consider your own organisation, or one you are familiar with, and be
prepared to use this organisation for all of the exercises in Part Two
of this module. Use the templates provided in the Tutor Marked
Assignment to record your work.
1. Give a brief overview of the organisation in terms of:
● industry sector or sectors serviced;
● numbers, types and ages of ships operated;
● office locations, people employed and stakeholder interest;
● asset values and trends in financial results.
2. What provision is made for the formal process of strategic

analysis and corporate planning?
3. Outline the current philosophy of the organisation as

encapsulated in its policy statements.

12. INTERNAL ENVIRONMENT
LEARNING OUTCOMES
● have looked into organisations and seen how they work;
● understand organisational goals;
● understand organisational structures;
● understand organisational cultures; and
● have used a recognised framework for the internal analysis

of an organisation.
12.1 ORGANISATIONAL GOALS
3-348 In the simplest terms, an organisation can be seen as three inter-related factors:
● the goals of the organisation;
● its structure or form;
● its culture or feel.
3-349 The goals:
● provide guidelines for decision making;
● form a basis for planning and control;
● influence the structure of the organisation;
● determine human and physical resource needs;
● affect the organisation’s culture, morale and motivation;
● set the standards against which performance is measured;
● give the focus of present activity and future direction;
● indicate policy and business strategy.

Internal Environment Module 3
3-350 The hierarchy of goals within an organisation will be based upon the company’s
vision. A vision is normally communicated in a short statement, a paragraph or
two long, which defines where the organisation sees itself positioned within its
market towards the end of the next planning period. This planning period can be
five years, ten years, 15 years or more.
3-351 From the vision, the organisation can formulate its mission statement. This is
generally a short, sharp statement of about ten to 20 words which indicates the
overall reason for the organisation’s existence, i.e. its purpose. In recent years,
the move towards quality management systems, and in the case of shipping the
mandatory imposition of quality-orientated safety and environmental manage-
ment systems (through the ISM Code), has seen the mission statement
degraded somewhat.
3-352 Mission statements in many companies have been replaced by an array of unin-
spiring and completely generic quality statements. An example might be:
3-353 In the past few years, however, a more interesting approach has been evolving.
This involves retaining the quality policy statements to satisfy the needs of the
system (ISO 9000 series or ISM), but then introducing a mission replacement in
the form of a slogan.
3-354 A corporate slogan can communicate much to both staff and customers and it
can greatly enhance the corporate logo, branding effort and advertising cam-
paigns while avoiding the “stuffiness” of a formal mission statement. Examples
of memorable corporate slogans outside of shipping include:
Honda
British Telecom

Module 3 Internal Environment
3-355 Examples in the very competitive English Channel ferry market have been:
P&O Portsmouth
Brittany Ferries
3-356 Used in this way it is, therefore, right for the slogans (missions) to change along
with strategies in order to accurately reflect them. No doubt the ones quoted
above will have changed by the time you receive this module.
3-357 With the clearer understanding of the overall purpose and philosophy of the
company provided by these statements, it is possible to formulate more precise
organisational aims. These aims will be longer statements and will usually relate
to medium-term goals for specific products, markets, functions or operating
departments. They will broadly state anticipated end results for each area, pos-
sibly over an accounting period (three, six, nine or 12 months) and can be used
to set more specific objectives.
3-358 Objectives will be shorter term and relate to a particular area of activity. They
should be very clearly stated and concise, with assigned responsibility. They
might be on a ship or voyage basis and will set the parameters within which per-
formance targets can be agreed with individuals, allowing them to focus on the
specific tasks which need to be achieved in order to meet the aims and, in time,
the vision of the company.
12.2 ORGANISATION STRUCTURES
3-359 The structure of an organisation can be considered as its physical shape or form
and it tells us the following:
● how the organisation works;
● which are the main activities;
● which are the support activities;
● what resources and communication links exist;
● where responsibility and authority lie;
● what roles and relationships exist;
● what are the divisions of labour and spans of control.

3-360 The overall purpose of the structure is to provide the organisation with the
mechanisms necessary for the efficient application of resources and it is gener-
ally a function of the size of the organisation and the operational activities it has
to perform.
3-361 The simplest form of structure is the “functional” structure. It is generally found
in smaller organisations or as a part of a larger organisation. This structure has
the following characteristics:
● a core operation supported by functional /technical departments;
● it forms a typical triangular hierarchy;
● control and decision-making is centralised at the apex;
● clearly defined lines of communication, authority and control exist.
3-362 The structure on board a ship is typical of a functional structure within the larger
structure of a shipping company.
Figure 1
Functional Structure

3-363 When the organisation grows or becomes too complex for a centralised control
mechanism, the following problems may arise:
● information flow suffers as communication lines lengthen and weaken;
● managers of technical support functions become more influential and the

traditional authority of managers in the core activity is undermined;
● inter-departmental conflict causes a general deterioration in working rela-

tionships and possibly a breakdown in discipline;
● the leader of the organisation finds it difficult to delegate authority over

smaller operational decisions, due to the internal problems;
● the leader’s attention is drawn away from the wider, long-term issues
affecting the organisation;
● the organisation may become vulnerable within its competitive environ-

ment as its ability to respond to change is compromised;
● the organisation ends up becoming rather introspective as managers are

too busy solving internal problems to plan ahead.
3-364 The above points suggest that, as an organisation develops, control should be
decentralised and the various functions given an appropriate degree of auton-
omy. Although overall corporate control of policy, strategy and corporate finance
will generally remain at the apex, some organisations will move to adopt a
“divisional” structure.
3-365 Divisionalised organisations have more scope for development and, as the
divisions evolve they will have:
● budgetary control and operational autonomy;
● profit accountability and contribution targets where their own external mar-
kets have been identified;
● their own support functions and the ability to operate as separate busi-
nesses with the freedom to be slightly more entrepreneurial;
● the scope to grow into profit centres or strategic business units.
3-366 In shipping, P&O is a good example of an organisation which divisionalised in the

early 1970s in order to become more efficient and to allow discrete business units
within the organisation to develop as contributors to the whole. It made the
contribution of the “bulk”, “passenger”, “ferry”, “general cargo” and “construction”
divisions very much more transparent and this information, in turn, helped the
strategic analysis and corporate planning function. In fact, P&O give us a won-
derful insight into the evolution of strategy. In very general terms, we can see the
divisionalisation strategy of the 1970s turn into sector rationalisation in the 1980s
(witness the demise of “bulk shipping” and the expansion of ferries). Sector growth
and partnership followed in the 1990s (in the cruise market and with Stena across
the Channel). This has more recently moved towards divisional sell-off and a
return to “core” passenger activities for the beginning of the new millennium.

Divisional Structure
Figure 2

3-367 By definition, a divisionalised structure tends to divide an organisation and can

result in a number of problems:
● lack of unity and loss of common identity;
● duality of purpose leading to internal competitive rivalry and problems in

co-ordination, control and standardisation;
● conflict related to funding, contribution levels and income targets.
3-368 One way to solve these problems is to re-identify people with the organisation by:
● revitalising or reinforcing the vision and purpose of the organisation;
● creating a new identity and developing a new logo and slogan;
● relaunching the organisation;
● improving company livery and staff uniform;
● running staff seminars and conferences;
● introducing appraisal and training schemes;
● enhancing staff leisure facilities.
3-369 These strategies, if successful, will avoid the need to restructure the organisa-
tion, and a number of shipping companies have used such things as staff sem-
inar programmes, training and appraisal schemes to revitalise their organisation.
3-370 If restructuring is necessary at this stage, there are a number of options:
● split the organisation into smaller federated companies;
● sell or merge certain parts of the business;
● introduce a “matrix” structure to strengthen the organisation.
3-371 The latter involves adopting an organisation-wide project orientation, and with
this structure it is possible to:
● enhance horizontal communication lines;
● cross-fertilise and improve co-operation between divisions;
● reintroduce common purpose with project focus;
● improve relationships in general.
3-372 Interestingly enough, one of the key project areas which can bond an organisa-
tion with this structure is that of corporate planning. Ship management companies
lend themselves to this form of structure. This has less to do with their size and
more to do with the way they operate, that is, as a sort of consultancy service.

Figure 3
Matrix Structure
3-373 However, organisations with complex matrix structures, while very flexible and
proactive, are difficult to control and co-ordinate. Managers need to be aware of
possible difficulties which may include:
● over-dependence on a particular project;
● a project team’s inability to gain project support;
● increase in administrative overheads;
● over-stretched physical and human resources;
● over-delegation of authority and accountability;
● poor definition of span of control;
● role ambiguity;
● demotivation of staff upon project completion and return to normal role.
3-374 Management systems, whether formalised through the ISO 9000 standard or
not, will help the manager to cope with the complexities and problems listed
above. The additional administrative overhead, workload and information may
feel cumbersome to a manager never before exposed to such a system, but the
benefits can be significant. As well as counteracting the problems listed above,
the organisation will benefit from improved customer perception and a good
source of hard data for the corporate planning team.
3-375 Examples of systems include, but are not limited to:
● health, safety and environmental protection;
● recruitment, selection and training;
● consultation, appraisal and reward;

● corporate communication and PR;
● planned preventative maintenance and stock control;
● market research, promotion and sales;
● financial planning and budgetary control.
3-376 The systems generally mirror the departments within an organisation and define
the processes which exist within each operational area. They should also pro-
vide for the formal links between activities in one department and related activ-
ities in another.
3-377 Where management systems are concerned, it is essential to remember that we

create them to assist us. We own them; they don’t own us. Review and improve-
ment should be an integral part of a systems approach.
12.3 ORGANISATION CULTURE
3-378 If an organisation’s structure relates to its physical shape and is reasonably easy
to define, then its “culture” is more difficult to define and relates to its dominant
attitudes and the values of individuals and groups. To appreciate the differences
between organisation cultures and sub-cultures it is best to use simple symbolism
(ref (2) in Further Reading).
3-379 The temple is the symbol used to illustrate the values of an organisation, and the
attitudes of people, in normal, steady-state operations. This is called “role
culture” and is characterised by rigidity.
Figure 4
Role Culture

3-380 It suggests that, within the organisation as a whole:
● these values and attitudes are typical of those found within a functional or
divisional structure;
● the pillars exist only to support the pediment with their specialised, and
vertically orientated, strength;
● control, therefore, lies with the pediment;
● job, or role, descriptions are very important;
● rules, procedures and programmed work routines (bureaucracy) dominate

the way work is carried out.
3-381 This culture will form the basis for values within most organisations.
3-382 Individuals who fit comfortably within such a culture see themselves as the
pillars which support the temple. If they deviate from the norm, they can cause
the temple to become unstable and so they tend to adopt attitudes and values
which reflect:
● predictability, dependability and security;
● little time pressure on activities;
● consistent outcomes which minimise risk;
● devolution of decision-making upwards;
● limited innovation and creativity.
3-383 Due to this, an organisation with a dominant role culture tends to be relatively
slow to respond to change, which in turn makes it vulnerable, especially in mar-
kets dominated by leading-edge technologies. The larger the organisation gets,
the longer the (notional) pillars become.
3-384 The longer the pillars, the more unstable the organisation, and the more the
formality of communications stifles flexibility. This type of culture can mean
that an organisation will be less effective in a more dynamic market due to this
inflexibility.
3-385 Adopting a “task culture” can add flexibility and the ability to respond to a more
dynamic market or a problem. It may exist throughout the organisation or in
small pockets. The task culture is illustrated by a net, which is made up of many
close-knit strands to give it strength, flexibility and an efficient matrix of commu-
nication links.

Figure 5
Task Culture
3-386 It represents the values and attitudes which are typically found in a matrix
structure or in the committees, project teams, production cells or steering groups
of organisations which do not necessarily have a matrix structure.
3-387 The task culture enables an organisation to:
● use its strong team ethos in bringing together the appropriate people for a
particular task;
● break down traditional barriers to effective communications both within

teams and between teams;
● increase its efficient use of resources, especially information;
● be flexible, decision-orientated and accept that it is judged by results;
● respond quickly to market changes through the empowerment of individu-

als and through group autonomy;
● function smoothly by maintaining only that amount of protocol which is

necessary for normal control and accountability.
3-388 Corporate planning teams or safety committees are examples of task cultures.
3-389 Individuals in a task culture are:
● able to respond quickly to change;
● results orientated and good communicators;
● willing to be involved with decision-making and resource allocation;
● flexible team workers with good problem-solving abilities.

3-390 By its very nature, this culture has its downside as it:
● changes individual roles, status and expectations;
● is more challenging for the individual;
● is resource intensive;
● can dilute specific skill areas (jack of all trades, master of none);
● can encourage individuals to feel more important than the team or the task.
3-391 This final point can lead to “person culture” which is where individuals within a
group develop and perform independently, supported by a common administra-
tive infrastructure. There is very little interaction between individuals save an
occasional professional consultation.
3-392 These individuals tend to be slightly self-serving and are sometimes repre-
sented as a cluster.
Figure 6
Person Culture
3-393 The culture is unusual in shipping circles, but ship agents and pilots are exam-
ples of areas where it can occur.
3-394 This culture can make relationships difficult within the work environment as
individuals only bounce off one another periodically. They might mix more on a
social basis than on a vocational one. Person sub-cultures, then, generally exist
where the individuals concerned have very specific, focused and highly developed
areas of expertise.
3-395 At the other end of the scale from the role culture and steady state, we have the
crisis or unstable situation. This requires its own set of values and attitudes
which are designated as “power culture” and are represented by a spider’s web.

Figure 7
Power Culture
3-396 In the same way as other cultures, this can permeate the whole organisation,
which will then become:
● sensitive and immediately responsive to change;
● proactive rather than reactive;
● dynamic, flexible, innovative and creative;
● aware of urgency and that failure is unthinkable;
● highly flexible in terms of its systems;
● quick to communicate and pass information;
● controlled by a centralised power source and decision-maker;
● aware of risk yet able to accept it;
● free of bureaucratic burdens.
3-397 The values and attitudes of power culture can also exist in small pockets or
cells, groups or teams within an organisation, even one which exists within a role
culture. Examples in shipping might be the board when the company is under
threat of a hostile takeover or, at the other end of the scale, a hose party fighting
a fire on board a ship.
12.4 FRAMEWORKS FOR INTERNAL ANALYSIS
3-398 The simplest and most widely used framework for analysing an organisation’s
internal environment is the SW part of the SWOT analysis. This involves draw-
ing up two lists which specify the organisation’s Strengths and Weaknesses; a
sort of “pros and cons” list. It is very quick and easy to use and is quite effective
in an elementary sort of way.

3-399 A better approach is to use this as the first dimension of an analysis within
another framework. For instance, the McKinsey Company developed its “7S”
Framework in order to guarantee that consultants considered all of the key inter-
nal factors which affect the way an organisation functions. Each of the 7Ss in the
framework, and the linkages between them, can then be analysed in terms of
the organisation’s strengths and weaknesses.
3-400 The “7Ss” are:
Figure 8
McKinsey “7S” Framework
3-401 An alternative but slightly more complicated approach is Porter’s “value chain
analysis” (ref (3) in Further Reading). Michael Porter suggests that an organi-
sation can be viewed in terms of its Primary and Support activities. Once these
are defined, the strategic analyst can focus on each discrete activity, and its link-
ages with other activities, and consider whether it contributes to the organisa-
tion’s distinctive competitive advantage.

Porter’s Value Chain

Figure 9

3-402 Consider the “round the world” liner shipping sector. The legal department is a
support activity within a company which is party to the conference. This depart-
ment will make an indirect contribution to the distinctive competitive advantage
of that company by being responsible for any slot-sharing agreement which is
drawn up under the conference.
3-403 Consider the cruise industry. Marketing and sales is a primary activity. The qual-
ity of promotion and ease of booking offered by the department will make a direct
contribution to the distinctive competitive advantage of the cruise company.
3-404 So, if each link in the chain can add some value to the process, and subse-
quently increase margins, then applying the “strengths and weaknesses”
approach to the value chain can be a powerful tool in strategic analysis.
3-405 It can help the corporate planning team to identify the underlying “generic”
strategies which exist within an organisation and determine new and appropri-
ate strategies for the future.
3-406 They will have a clearer understanding of whether they have products which are
based on “cost leadership” (mass market cruising, for example) or whether they
are “differentiated” in some way (five-star and six-star cruising).
3-407 It can also help to define the importance of each internal link between the vari-
ous activities and can tie in with frameworks for analysing the external business
environment.
EXERCISE 2
We are going to build our strategic analysis based on the organisa-

tion identified in Exercise 1 and using the templates provided.
1. Based on the philosophy of the organisation defined in

Exercise 1:
● in a short paragraph, what is the vision of the company?
● reproduce or invent the organisation’s corporate slogan.
2. Make a simple sketch of the structure of the organisation, indi-

cating each department or function, and try to identify the
various cultures which exist within it. Try inserting small cul-
ture symbols on your structure sketch.
3. Transpose the primary and support activities into Porter’s

value chain framework and conduct an internal strengths and
weaknesses analysis relating to each activity’s contribution to
the organisation’s distinctive competitive advantage. Don’t
forget the linkages between activities.

13. PRODUCTS AND SERVICES
LEARNING OUTCOMES
After successfully completing this chapter, you will understand:
● generic strategies;
● the BCG matrix; and
● life cycle curves.
13.1 TARGET AND ADVANTAGE
3-408 The bridge between internal and external environments is the company’s
product /service portfolio. Understanding how each product is placed plays an
important role in the process of corporate planning, and “product portfolio analysis”
is the tool used to build that understanding. Each product in the portfolio can be
viewed in terms of its overall generic strategy and in terms of its life cycle.
3-409 The generic strategy adopted with a particular product is illustrated in a simple
matrix, again attributable to Michael Porter. One axis relates to the Strategic
Target (broad or focused market) and the other axis relates to Strategic
Advantage (cost leadership or differentiated and premium priced).
Figure 10
Generic Strategies

Products and Services Module 3
3-410 Examples in shipping are:
● Broad market /cost leader (panamax dry bulk, mass market cruising, RTW
liner services).
● Focused market /cost leader (offshore supply and drilling, shortsea freight
ferry, ULCC).
● Broad market /differentiated (five-star cruising, fast ferry services).
● Focused market /differentiated (offshore heavy-lift and accommodation,

deepsea salvage).
3-411 Marketing effort and pricing are the two main strategies affected by generic
product positioning, but the importance of market growth and market share
cannot be ignored. We use portfolio analysis to complete the picture.
13.2 PORTFOLIO ANALYSIS
3-412 Products normally need time to evolve, and the significance of market share and
growth rate is recognised in the Boston Consulting Group (BCG) matrix.
Figure 11
BCG Matrix
3-413 This designates a product in the following way:
● Dog (low market growth /low market share).
● Problem Child (high growth /low share).
● Star (high growth /high share).
● Cash Cow (low growth /high share).

Module 3 Products and Services
3-414 The BCG matrix can be compared directly to the standard product life cycle
curve which also indicates a time element.
Figure 12
Life Cycle Curve
3-415 Although both ends of the curve represent the characteristics of a dog, the term
is only really appropriate for the right hand end of the curve. The left end repre-
sents product start-up, where costs might be high (research, development and
initial marketing) but will be pushing the product towards the point at which the
curve begins to rise steeply.
3-416 This section of the curve represents a problem child (sometimes called “ques-
tion mark”) which needs nurturing (promotion and loss leader strategies) to take
full advantage of its potential for growth.
3-417 The top end of the rising curve represents the star product which already has a
high market share but is still rising dramatically.
3-418 As the curve levels off, it represents the position of the cash cow which,
although in a market that has levelled off, enjoys a high market share and a
potential for substantial income.
3-419 As the curve falls off on the right, the product is losing its market share and its
potential to generate income. It needs revitalising in some way, so that it regains
its cash cow status, or it needs replacing with an alternative cash cow. A well-
managed product portfolio should identify the need for these strategies early
enough to avoid any severe troughs in the cycle.

Products and Services Module 3
EXERCISE 3
Use the product life cycle template provided to:
1. identify each of your organisation’s products/services in terms

of its market share, market growth potential and age.

14. EXTERNAL ENVIRONMENT
LEARNING OUTCOMES
After successfully completing this chapter, you will have:
● considered the external factors affecting strategy;
● studied the STEP factors; and
● considered Porter’s five forces framework.
14.1 EXTERNAL FACTORS
3-420 The external factors which affect organisations and dictate the state of the
market environment are the “STEP” factors or, if you are a bit of a cynic, you
may wish to remember them as the “PEST” factors. They are:
● politics;
● economics;
● social attitudes;
● technology.
3-421 All these are inter-linked in the same way as the internal factors considered in
Chapter 12 of this module.
3-422 “Politics” include such things as inter-governmental relationships, trade agree-

ments, legislative controls, protectionism, fiscal policies, subsidies and funding.
3-423 Examples in shipping include the ISM Code, OPA 90 in the United States and
the subsidised newbuild markets.
3-424 “Economics”, on a macro and micro level, relate to such things as the distribu-
tion of mineral wealth, trade patterns, demographics, earning and spending
power, consumption, debt and investment strategies.
3-425 This is, of course, at the very heart of shipping; the reason it exists in the first place.
Look at any ship on any trade and, with the possible exception of national strate-
gic (military or defence) needs, basic economics is the underlying driving force.
3-426 “Social attitudes” tend to relate to environmental issues (such as nuclear

power and waste, noise, light, dust, smell and other pollutants) and can link to

External Environment Module 3
politics through special interest groups such as gun owners, animal welfare,
environmental issues. Think of port location and development, the voyage of the
Global Mariner in 1999 carrying out the work of the International Transport
Workers’ Federation (ITF), attitudes toward the transport of nuclear fuels and
the effect of pollution incidents on community groups.
3-427 “Technology” includes communication and information systems, computing

hardware and software, advances in materials and equipment design. In
shipping we can see tremendous developments in bridge equipment but more
significant are changes to trading methods and information transfer.
3-428 Examples are Internet chartering or freight purchasing, and electronic waybills
which facilitate through transport systems.
3-429 The complex interaction between these factors results in an ever-changing

business environment and leads to considerable pressures on individuals at all
levels of an organisation. For the corporate planner involved in the analysis of
the external environment they pose even more of a problem with the need to
predict and forecast movements for each over the whole planning period.
3-430 For this reason, the importance of good intelligence on all of the above issues,
and on the activities of others operating in the same or connected markets,
cannot be stressed highly enough. In the same way that we treat financial
accounts and fiscal policy, internal and external sources of PEST and market
data need to be tapped and channelled to the corporate planning team.
Strategic analysts should be like information sponges.
14.2 FRAMEWORKS FOR EXTERNAL ANALYSIS
3-431 Using the OT, or Opportunities and Threats, part of the SWOT analysis applied
to the PEST factors, can be seen as an effective but elementary level frame-
work for the strategic analysis of external factors. However, it fails to cover all
the issues of importance to our organisation.
3-432 The work of Michael Porter again provides us with an extension to the PEST
approach by offering us a framework for analysing our industry/competitive
environment in terms of five forces (ref (4) in Further Reading).
3-433 The five forces are:
● the central issue of existing competitive rivalry;
● the threat of new entrants;
● the threat of substitutes;
● the power of suppliers;
● the power of customers.

Module 3 External Environment
Figure 13
Porter’s Five Forces
3-434 Competitive rivalry will exist between organisations which are active in the same
market /product sectors. It requires the application of results from our internal
analysis to our understanding of the same factors for our competitors. This is a
form of benchmarking, where the analyst will compare:
● product /service focus and market shares;
● product development and market penetration plans;
● asset values, debt and other financial ratios;
● cost structures and relative economies of scale.
3-435 For an example in shipping, think of the two companies whose slogans were
quoted earlier in the module; P&O Portsmouth and Brittany Ferries. These com-
panies compete directly for cross-Channel freight and passenger markets in the
middle English Channel. They have to watch each other very carefully and
respond aggressively to competitive positioning strategies such as fluid pricing,
for example. Recently, we have seen P&O’s approach to this “cost sensitive”
competitive position reflected in its partnership with Stena being dissolved and
administration overheads being controlled by the amalgamation of the
Portsmouth office with that of Dover.
3-436 The threat of new entrants is less of a serious threat in capital-intensive indus-
tries such as shipping. Companies which become firmly established in a trade,
and have the right kind of tonnage, are a natural barrier to new entrants. Other
barriers to new entrants are the knowledge and expertise which goes along with
being well-established. This means that, in shipping, entry into a new market is
more likely to be made by takeover or merger. A classic example of this was

External Environment Module 3
Carnival’s and Sun Cruises’ attempted entry into the mid-class European cruise
market through a difficult joint takeover of Norwegian Cruise Lines in early 2000.
Carnival wished to extend its European involvement from the five-star sector
(Cunard Seabourn), and Sun wished to break into Europe for the first time and
at its normal operating level. More recently, we see Carnival changing its
strategic position to counterbid against RCI for P&O Princess.
3-437 Threat of substitution is also not so great in shipping. Substituting something

else for a ship is very difficult as was demonstrated by the failure of the Dracone
to take over from normal tankers in the carriage of oil. In this instance there is a
clear link between that difficulty and political and environmental considerations.
3-438 The nearest example is the substitution of normal ferry services with fast ferry
services, but this is typically carried out by a company which is already involved
in a trade, to improve competitive advantage, rather than by one trying to take
over a trade.
3-439 The power of suppliers refers to the purchasing of products and services which
enable the company to do business. An ability to order in quantity, in effect,
weakens the supplier’s power base and can bring cost and delivery benefits. As
a supplier’s commitment to a company grows, so the company can dictate
preferential terms and demand higher quality. This effectively increases margins
by reducing costs. Once more, clear examples can be found in the relationships
between manning services and the airlines which provide seafarer flights at
preferential rates, and also in cruise line hotel booking arrangements.
3-440 The power of the customer is diminished if choice in a particular market is

removed. In other words, an organisation which dominates in a particular
competitive environment will be able to further increase margins through
premium pricing and increased market share.
EXERCISE 4
Continuing with your chosen organisation, use the results of your

internal and portfolio analysis to assist you in your external analysis.
Use the PEST and Porter’s five forces template to record your analy-
sis relating to:
1. Opportunities and threats within the area of existing competitive

rivalry.
2. Threat of new entrants/substitutes and barriers to prevent

these.
3. The relative power of suppliers to, and customers of, your

organisation.

15. STRATEGIC OPTIONS
LEARNING OUTCOMES
● understood how to identify the options available; and
● considered the generic possibilities.
15.1 GENERIC BUSINESS STRATEGIES
3-441 The strategic analysis process to this point has helped us understand our
chosen organisation in terms of:
● its philosophy and goals;
● its own internal strengths and weaknesses;
● its product portfolio;
● its competitive and industry environment.
3-442 It is now time to take all of these into consideration and identify what our options
for improvement are in terms of generic business strategies. At first, our choice
of options might appear rather limited – after all improving the company’s
performance can only really be done in one of two ways:
● improve profitability (reduce costs/increase prices);
● increase volume of sales.
3-443 However, underlying these two areas of improvement are many different possi-
bilities and they are best illustrated by one of the most widely used frameworks:
Ansoff’s Matrix. The matrix focuses our attention on possibilities for:
● dealing with current products and markets;
● developing new products and/or new markets;
● diversifying.

Strategic Options Module 3
Ansoff’s Matrix
Figure 14

Module 3 Strategic Options
15.2 CURRENT PRODUCT/MARKET STRATEGIES
3-444 Ansoff suggests four main possibilities:
● do nothing;
● withdraw;
● consolidate;
● penetrate the market.
3-445 Doing nothing sounds like a negative step but could simply mean waiting until a
promotional campaign pays off. The lead-in time for a new product might mean
“hanging in” is the best strategy. The new product might be a “problem child” and
might be approaching “rising star” status.
3-446 Withdrawal might be the most appropriate strategy for a product which has
reached the end of its life cycle as a “dog” or presents too great a business risk
to continue. Anticipating the possibility of withdrawal early might present the
opportunity to divest the company of the product, thus squeezing every last drop
of value from it. After the Exxon Valdez grounding, for example, Texaco withdrew
from what was already a marginal activity and began to charter vessels to carry
the company’s oil.
3-447 An alternative to withdrawal is consolidation, which will require a certain amount

of retrenchment and some additional expenditure (time, effort and capital) in
order to differentiate or rejuvenate the product in some way. The P&O
Stena partnership on the English Channel helped to consolidate in the face of
competition from the Channel Tunnel. As freight traffic has increased and the
competitive strengths and weaknesses of the tunnel have been assessed, the
partnership and mutual support is no longer seen as necessary.
3-448 Consolidation can often give new life to sales, making the product more attrac-
tive to existing customers and poaching the customers of competitors in the
same market. It may also make the product more interesting to potential
customers in the same market segment, penetrating that market and rebooting
the product’s life cycle.
15.3 PRODUCT OR MARKET DEVELOPMENT
3-449 Effective research and development activities should identify any opportunities
for product and market development. New products can be developed internally,
they can be developed out of existing products through licensing or franchising
agreements, for example, and joint ventures can create new and sometimes
innovative products lines.
3-450 An example of product development is the Disney cruise. This attracts the exist-
ing family market segment to extend what might normally be one week in Orlando
to a two-week holiday which includes a Disney cruise to a Disney island.

Strategic Options Module 3
3-451 Market development can occur by entering new demographic or geographic

segments. This can be achieved through the use of new promotion and distri-
bution channels but, either way, it means converting traditional non-users of the
product into users.
3-452 An example, in the future, could be:
Well, maybe not!
15.4 DIVERSIFICATION
3-453 Diversification can follow two routes:
● related or vertical integration;
● unrelated or horizontal integration.
3-454 Vertical integration is where the organisation becomes involved in either upstream
(backwards/supply) activities or downstream (forwards/distribution) activities. For
instance, there might be clear advantage in taking over another organisation which
supplies your own with raw materials, goods or services. The result might be that
the cost can be reduced and the quality focused on the needs of your company
and not others. It might also be possible to undermine a competitor’s supply line.
3-455 An example might be the operator of hovercraft services buying into the com-
pany which manufactures hovercraft skirts, or a containership owner having
interests in the manufacture or repair of the containers themselves.
3-456 Similarly, an organisation might see benefits by becoming involved in the

onward processing of its products or services.
3-457 For example, a shipyard might see ship ownership as a way of guaranteeing its
own future activity. There are many other examples of integration in shipping.
Many of the oil majors are fully integrated from exploration through to the High
Street filling stations. Mitsui OSK is an example of a Japanese company with
interests in the mining of iron ore, its carriage, its smelting and steel manufacture,
through shipbuilding and repair to shipping its own iron ore – the complete cycle.
3-458 More risky is unrelated or horizontal integration. This is where an organisation

broadens its portfolio of activity in an industry service or product sector which is not
related to its core activities. The risks lie in the fact that the organisation might not
have the expertise nor the hardware required to be successful in the new business
area. These issues are the barriers referred to under Porter’s “new entrant”, in the
industry analysis of para 3-394. The safest way is, therefore, to “buy a company”,
as P&O did with Bovis in the early 1970s, instead of developing one from scratch.

Module 3 Strategic Options
EXERCISE 5
After Exercise 4, you should have a good feel for your chosen
organisation. Continue by using the templates provided to outline
one strategic option for each of the following:
1. Hang in, Withdraw, Consolidate or Penetrate.
2. Develop new product or market.
3. Diversify through related integration.

16. IMPLEMENTING CHANGE
LEARNING OUTCOMES
● considered the implementation of change to meet a

strategic plan;
● practised a force field analysis; and
● completed your assignment.
16.1 THE CHANGE CYCLE
3-459 New strategy means change, and implementing a change programme, especially
one which might affect the whole organisation, can be a complicated and difficult
process. Planning, preparation and resourcing will all be critical to its success.
3-460 In the first instance, it may be necessary to realign corporate philosophy and
long-term goals to the new strategy. As the process continues, there will typi-
cally be a number of setbacks which might test the whole organisation’s com-
mitment. Change tends to follow a cycle which initially shows a fall in perform-
ance, but provided clear standards are set and performance criteria are moni-
tored to track progress, underlying problems can be identified early and dealt
with as appropriate. If the strategic analysis and corporate planning process is
sound, then there should be a high level of confidence that the process can be
managed and planned outcomes can be achieved.
Figure 15
Change Curve

Module 3 Implementing Change
16.2 FORCE FIELD ANALYSIS
3-461 The force field analysis as an extremely simple but useful framework for assisting
the corporate planner to:
● summarise and present the reasons for change;
● define the likely barriers to change.
3-462 It is basically a “for and against” list but, if analysed and presented correctly, can
help to focus the mind on potential problem areas and possibilities for overcom-
ing them.
3-463 Our analysis of our organisation’s strengths and the market opportunities will
indicate to us the forces for change. Our analysis of internal weaknesses and
external threats will help us anticipate the key barriers to change.
3-464 Maybe the McKinsey 7S framework can help in defining some of the key barriers
to change, which are likely to relate to:
● physical resource requirements – changes in structure, plant and

equipment;
● process changes – introduction of new systems or work routines;
● people issues – communications, relocation, misinformation, fear, skills.
16.3 WAYS AND MEANS
3-465 There are many quality management tools available for planning but one tool
which is extremely useful in defining an overall change process, or project, is the
ways and means framework. This framework begins with the final objective and
asks the planners to ask themselves the question: “if we wish to achieve this,
what do we need to do?” Continuing to ask this question results in a chain of
activities leading back from the final objective to the very first tasks which need
to be performed.
3-466 Essentially this is a middle management tool, not a strategic one, but it is impor-
tant that the corporate planners feed into it at least the key objectives. This will
act to give the direction needed for an effective consultation process, which is
essential if staff are to buy into the new strategies, and can indicate the time and
resource requirements for the whole change process. In turn it forms the basis
for carrying out each operational activity.
3-467 Management information systems must be in place so that the organising, mon-
itoring and evaluation of progress will be reported up through the organisation,
allowing the corporate planners to complete the cycle by measuring the success
or failure of new strategies.

Implementing Change Module 3
EXERCISE 6
To complete your assignment, use the force field template provided

to illustrate the key forces for and against just one of the strategic
options identified in Exercise 5, and suggest some strategies for
overcoming the forces against.
3-468 Finally, this module has taken you step by step through the process of strategic
analysis, and presented you with some of the more widely used frameworks, in
order to help you develop your corporate planning skills.
3-469 We have only occasionally discussed finance, and then only in broad terms, as
the subject is covered in a dedicated module.
3-470 Having studied the Finance Module, remember that cost – benefit analysis,
sensitivity testing, sources of financing, the cost of capital, ratio analysis and
operational budgets are all tremendously important areas, and it is essential that
the corporate planner understands them.
3-471 Remember also the messages in the first few sections of Part Two of this module.
The two most important features of a successful organisation are profitability and
survivability. Shipping is capital-intensive, has high levels of business risk and
suffers from long cycles. Excessive cost cutting for the short-term bottom line
rarely works out to the satisfaction of the stakeholders. Market overcapacity and
excessive financial gearing has been the downfall of many well-known shipping
concerns in the past 30 to 40 years.
3-472 In the end, the value of effective strategic analysis and corporate planning can
be summed up by considering the relative merits of decisions made on the basis
of qualification and quantification compared with those made on the basis of
speculation.

RECOMMENDED READING
Understanding Organisations should be read by every manager.
Any of the following texts will provide comprehensive information on strategic management:
(1) Mintzberg, Quinn & Ghoshal: The Strategy Process (Prentice Hall International
(UK) Ltd, 1995) ISBN 0 13 149626 3
(2) Charles B Handy: Understanding Organisations (Penguin Books Ltd, 1985) ISBN
0 14 009110 6
(3) John L Thompson: Strategic Management – Awareness & Change (Chapman &
Hall, 1990) ISBN 0 41237500 1
(4) Gerry Johnson & Kevin Scholes: Exploring Corporate Strategy (Prentice Hall,
1997) ISBN 0 13525635 6

TUTOR-MARKED ASSIGNMENT
● PART ONE
1. Find out as much as you can about “the customer strategy” of your cho-
sen shipping company and write up your findings in no more than 150
words.
2. Develop and write up a customer satisfaction survey process on ship man-

agement. Consider the following:
● What should be the overall purpose and objective?
● What questions do we wish to ask and how should the questions

be phrased?
● How large a sample of customers do we wish to involve?
● What method will we use to establish the information, i.e. face-to-face

interviews or completed questionnaires?
● How many people from our company should be involved in the

implementation and at what level?
● Should we use an external consultancy to carry out the project?
● How should the responses be collated and analysed?
● How will we ensure that the feedback is acted upon?
● Should we carry out a further follow-up survey and, if so, how soon?

Module 3 Tutor-Marked Assignment
Give your reasons for the conclusions you have reached and explain, what
actions need to be taken, to get ahead of the game and meet the challenge.
● PART TWO
Please note that the Tutor-Marked Assignment template for Part Two has been
produced as a separate document and should be completed according to the
instructions within Exercises 1 to 6 at the end of Chapters 11 to 16 of this mod-
ule.
Short Style Questions – as compulsory
1. Devise an impactful ‘Slogan /Strap Line for a Shipping Line e.g Tesco’s
slogan is “Every little helps”.
2. Describe what you think, in ship management terms, would be the single
most important criterion for a Charterer seeking to place business.
3. If there was one thing above all else a Ship’s Captain could do for his/her
staff to motivate them in improving their customer focus, what would it be?
(apart from doubling their salary!!)
Longer Style Question – not compulsory
Describe (in 100 words ) what changes you feel will evolve in the coming three
years, in Ship Management.
For candidates taking the Diploma option, a Tutor-Marked Assignment must be completed
for each core module. There is a minimum pass mark for each assignment and candidates
will be expected to reach this minimum standard. Collectively, the assignments represent
a possible one third of the candidate’s final mark.
On the cover page of your assignment, could you please include the
following information:
● Your Name
● Course Name – Ship Management
● Course Code – FLP2233

Tutor-Marked Assignment Module 3
To speed the processing of assignments, please return your typed assignment by post,
fax or email directly to the TMA Administrator:
Post: Mrs Parmjit Gill

TMA Administrator
The School of Maritime Operations and Logistics
North West Kent College
Lower Higham Road
Gravesend
Kent
DA12 2JJ
United Kingdom
Tel: +44 (0)1322 629684
Fax: +44 (0)1322 629667
Email: mol@nwkcollege.ac.uk
Remember to keep a copy of your completed assignment in case of loss in the post.
Please also state if you would like confirmation of receipt of your assignment. If so, you
must include your email address, as confirmation by post or fax is not possible.
Emailing assignments will only be accepted if they are sent as attachments to the email
message.
You should attempt to complete each assignment within four weeks of receipt of the
module.
In order to be able to sit the exam, at least 50% of the assignments must be submitted
three months before the exam and 100% of assignments must be submitted one month
prior to the exam.
Please see your Course Handbook for full details.

ADDENDUM
Example Questionnaire – Customer

Expectations/Needs
● QUESTION 1
Describe the most important expectations you have of a supplier in general.
● QUESTION 2
Which are the most important expectations you have specifically of a ship manager?
● QUESTION 3
What needs do you feel suppliers in general need to understand about your business?
● QUESTION 4
What are the two most important needs which we as a ship manager are required to
meet or exceed on your behalf in order to retain your business?

MODULE 3 – PART TWO
STRATEGIC ANALYSIS
TUTOR-MARKED ASSIGNMENT
Name:
EXERCISE 1: TEMPLATE
1. Brief Organisational Overview
2. Provision for Corporate Planning
3. Outline Corporate Philosophy

Module 3 – Part Two Tutor-Marked Assignment
1. Vision
Slogan
2. Structure and Culture

Tutor-Marked Assignment Module 3 – Part Two



1. Hang In, Withdraw, Consolidate or Penetrate
2. Develop New Product or Market
3. Related Integration

1. Force Field
Forces For Forces Against
2. Implementation Strategies for Overcoming Forces Against

FLP2233 Module3 Website

Uploaded by

Copyright:

Available Formats

You might also like

FLP2233 Module3 Website

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

FLP2233 Module3 Website

Uploaded by

Copyright:

Available Formats

DIPLOMA IN

PART ONE – CUSTOMER FOCUS

1 THE IMPORTANCE OF CUSTOMER FOCUS 6

2 IDENTIFYING WHO IS THE CUSTOMER 11

2.1 External Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

3 IDENTIFYING CUSTOMER NEEDS 18

3.1 What do they Expect? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

4 MEETING CUSTOMER NEEDS 26

4.1 What are the Needs of the Customer? . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

5 TRAINING AND MOTIVATION OF STAFF 32

5.1 Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

Diploma in Ship Management 2012 / 2013 (FLP2233) 3-1

5.3 Training Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

7 EXCELLENCE IN CUSTOMER CARE 42

8.1 Handling Customer Complaints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

10 REVIEW AND SUMMARY 58

PART TWO – STRATEGIC ANALYSIS

11 INTRODUCTION – STRATEGIC MANAGEMENT 59

11.1 What is Strategy? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59

12.1 Organisational Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63

13 PRODUCTS AND SERVICES 79

13.1 Target and Advantage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79

14.1 External Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83

3-2 Diploma in Ship Management 2012 / 2013 (FLP2233)

15.1 Generic Business Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87

16.1 The Change Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92

MODULE 3 – PART TWO STRATEGIC ANALYSIS

© Copyright IIR Limited 2012. All rights reserved.

Diploma in Ship Management 2012 / 2013 (FLP2233) 3-3

Continuing along the theme of developing management skills, Module 3 takes

Shipping is a service industry, and as such is totally dependent on satisfying its

So what went wrong? Undoubtedly somewhere in the service chain the

What the above example illustrates is that it in a complex service business it

Strategic planning is an essential part of the duties of the senior management

3-4 Diploma in Ship Management 2012 / 2013 (FLP2233)

Diploma in Ship Management 2012 / 2013 (FLP2233) 3-5

1. THE IMPORTANCE OF CUSTOMER FOCUS

After successfully completing this chapter, you will:

● understand the role of customer service in the overall

● recognise the main function of the shipping company as a

● appreciate the need for it to be customer-focused at all

3-6 Diploma in Ship Management 2012 / 2013 (FLP2233)

● the company is well thought of and its reputation continues to grow;

Diploma in Ship Management 2012 / 2013 (FLP2233) 3-7

A useful way to complete a SWOT analysis is to view Strengths and

3-8 Diploma in Ship Management 2012 / 2013 (FLP2233)

The results were as follows:

Diploma in Ship Management 2012 / 2013 (FLP2233) 3-9

Remember, everyone is someone’s customer.

1. the reasons why; and

2. what lessons can be learned from these experiences and

3-10 Diploma in Ship Management 2012 / 2013 (FLP2233)

After successfully completing this chapter, you will:

● understand how to recognise all those entities who can be

● know more about customers’ motives for choosing your

● learn how to find out the customers’ perception of your

● know how to identify your “target market”.

2.1 EXTERNAL CUSTOMERS