Luận văn thạc sĩ UEH inefficient after sale service performance at samsung system air conditioner

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

Trƣơng Hồng Chuyên

INEFFICIENT AFTER-SALE SERVICE

PERFORMANCE AT SAMSUNG

SYSTEM AIR CONDITIONER

DEPARTMENT

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – Year 2018

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

Trƣơng Hồng Chuyên

INEFFICIENT AFTER-SALE SERVICE

PERFORMANCE AT SAMSUNG

SYSTEM AIR CONDITIONER

DEPARTMENT

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: DR. TRẦN PHƢƠNG THẢO

Ho Chi Minh City – Year 2018

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Inefficient after-sale service performance at Samsung system air conditioner department 1

Table of Contents

Executive summary ............................................................................................................3

CHAPTER 1: PROBLEM IDENTIFICATION..............................................................4

1.1. Company overview..................................................................................................4

1.2. Problem mess ..........................................................................................................6

1.2.1. Symptom..................................................................................................................6

1.2.2. Situation analysis.....................................................................................................8

1.2.3. Initial cause-effect map .........................................................................................10

1.2.4. Updated cause-effect map .....................................................................................11

1.3. Problem identification ...........................................................................................14

1.3.1. Possible problems..................................................................................................14

1.3.2. Main problem validation .......................................................................................15

1.3.3. Main problem definitions and measurements .......................................................16

1.3.4. Consequences of the problem................................................................................18

CHAPTER 2: ALTERNATIVE SOLUTION................................................................21

2.1. Cause validation ....................................................................................................21

2.1.1. Lack of service and product training.....................................................................21

2.1.2. Lack of human resource number...........................................................................22

2.1.3. Shortage of technical capability of the service team.............................................23

2.2. Final cause-effect map...........................................................................................27

2.3. Alternative solutions..............................................................................................28

2.3.1. Internalizing...........................................................................................................28

2.3.2. Outsourcing ...........................................................................................................30

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Inefficient after-sale service performance at Samsung system air conditioner department 2

2.3.3. Partnering ..............................................................................................................31

2.4. Solution selection ..................................................................................................32

2.5. Action plan in the organization .............................................................................34

2.5.1. Recruit technical engineers ...................................................................................34

2.5.2. Select and sign contract with dealer service centers.............................................36

2.6. Action plan ............................................................................................................37

CHAPTER 3: SUPPORTING INFORMATION ..........................................................40

3.1. Interview guide......................................................................................................40

3.2. Transcript...............................................................................................................46

3.3. Data for the existence of inefficient after-sale service performance.....................64

References..........................................................................................................................67

Appendix............................................................................................................................73

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Inefficient after-sale service performance at Samsung system air conditioner department 3

Executive summary

The intensely competing market called for the shift from primary product offer

to more customized solution package.5,6 After-sale service played an equally important

role in the value chain of the company45 to enhance customer value,46 which

eventually benefited the organization in higher competitive advantage,14 long-term

customer relationships, and sales effectiveness.6

The objective of the research was to

identify the central problem happening at the Samsung system air conditioner

department, to explore the causes and effects of the issue on the performance of the

company, and to provide the direction for a solution.

In this study, the research method comprised of literature review and interviews

with different informants (the head of the department, the manager and the technical

engineer in the service team, and two customers). The findings from the interviews

suggested that the company encountered inefficient after-sale service performance,

which affected the competitiveness of the end-to-end service solution to attract a

higher number of large projects, and eventually on the sales effectiveness of the

department.

Based on the main cause, the alternatives for the shortage of human resource

number included internalizing, outsourcing, and partnering options. An action plan for

the 14-month project of improving the efficiency of after-sale performance of all three

regions was developed, which would cost about 71,000 USD. By doubling the number

of internal engineers and dealer service centers, the expected result of the project was

to reduce the average time responding to service requests by 50%. From financial

perspective, the outcome of the project would expect to increase sales and profit for

end-to-end service solution by 390,000 USD and 319,000 USD respectively.

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Inefficient after-sale service performance at Samsung system air conditioner department 4

CHAPTER 1: PROBLEM IDENTIFICATION

1.1. Company overview

Headquartered in Seoul, Korea, Samsung was one of the largest conglomerates

in Korea. Since its establishment in 1938, Samsung expanded its business from a small

trading company into numerous fields including food processing, insurance, securities,

retail, electronics, construction, and shipping. After the founder passed away, Samsung

was divided into four business groups: Samsung, Shinsegae, CJ, and Hansol. Since the

1990s, Samsung Group focused its activities in electronics, mobile phones, and

semiconductors on a global scale. Among many subsidiaries of Samsung, Samsung

Electronics was the largest electronics company based on revenue and the fourth

largest brand in the world in 2012.

Since its arrival in Vietnam in 1996, Samsung contributed significantly to the

Vietnamese economy regarding job creation, GDP growth, and export volume. By

2018, Samsung invested total 17 billion USD in Vietnam, contributed 25% to

Vietnam’s total exports and created 110,000 jobs. Samsung had four factories, namely

Samsung Electronics Vietnam (SEV), Samsung Display Vietnam (SDV) in Bac Ninh

province, Samsung Electronics Vietnam Thai Nguyen (SEVT) in Thai Nguyen

province, and Samsung Electronics HCMC CE Complex (SEHC) in Ho Chi Minh

City. These factories were responsible for manufacturing electronic devices,

communication equipment, and display panels. These products were exported to 52

countries, which generated 61 billion USD in revenue and 6 billion USD in profit

equivalent to 30% of the global revenue and 16% of the global net profit of Samsung.

In addition to major factories, located in Ho Chi Minh City, Vietnam, Samsung

Vina Electronics (SAVINA) was one of the most critical business entities of Samsung,

which was responsible for all sales and marketing activities of Samsung’s products and

services in Vietnam. The company followed the business structure of the headquarter

and included two major business divisions: consumer electronics (CE) and information

technology and mobile communications (IM). CE division included audio and visual,

digital appliances, system air conditioner, remote and microphone, and display units

while IM division consisted of mobile and network units (Chart 1 – Appendix).

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Inefficient after-sale service performance at Samsung system air conditioner department 5

Besides, in order to support the operation of the company, there were customer

service, marketing, management support, product inventory, human resources, general

administration, and strategic sourcing teams (Chart 1 – Appendix).

System air conditioner (SAC) department belonged to the consumer electronics

division. Hence, the head of SAC department reported to the director of the CE

division and managed five business functions including sales, product management,

business development, customer service, and admin. Product management was

responsible for inventory management, pricing, ordering, and marketing activities.

Business development was responsible for system design drawing, design software

training provided to partners and university students as well as relationship

establishment with technical departments of partners. Customer service was

responsible for system installation, training, repair, and maintenance. Admin was

responsible for administrative tasks. There were total four managers and 22 employees

(Chart 2 – Appendix). Except for project sales, business development and admin teams

having only staffs, other teams had a manager and at least one staff. All teams in the

SAC department were expected to cooperate well with each other and commit towards

the goal of growing SAC revenue and profit.

The product portfolio of air conditioners consisted of room air conditioners

(RAC) and system air conditioners (SAC). Based on the product type, RAC was

usually seen hanging on the wall with one indoor unit and one outdoor unit, so it was

best suitable for a room. On the other hand, SAC was a system that connected multiple

indoor and outdoor units. It included technical solutions such as commercial air

conditioners (CAC), free joint multi-air conditioners (FJM), digital variable multi-air

conditioners (DVM), heating, ventilation and air conditioning (HVAC), which was

suitable for residential houses with multiple rooms, small to medium-sized commercial

buildings, or high-rise buildings. Between the two product types, SAC contributed the

higher share of 95% to the total sales compared to 5% of RAC (Table 7 – Appendix).

Based on the customer type, the company utilized a distribution network to sell to

retailers and business customers such as contractors, installers and investors of

construction projects including but not limited to residential houses, luxury

apartments, hotels, office buildings, shopping malls, retail stores, restaurants, galleries.

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