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LYCEUM OF THE PHILIPPINES GRADUATE SCHOOL

OPERATIONS MANAGEMENT
CASE ANALYSIS California Auto Club Reengineers Customer Service
By Richard B. Chase & F. Robert Jacobs

Submitted by:

MICHAEL LOUIS N. FLORORITA


Group 4

Submitted to:

DR. MARJORIE ROLA


Professor

CASE : California Auto Club Reengineers Customer Service

A.

BACKGROUND California State Automobile Association (CSAA) is a multibillion-dollar travel, road services, and insurance company. At the time of this project, it was the second largest member in the American Automobile Association (AAA) federation. With its $3.2 billion in assets, CSAA would rank on the Fortune 500 list of Americas largest diversified financial companies. Its 5,700 employees operate in a network of 72 district offices throughout its membership territory in Northern California and Nevada. CSAAs diversified operations range from tour books and emergency road services to airline ticketing, auto and homeowners insurance, and travelers checks.

B.

TIME CONTEXT
February 1991

C.

VIEWPOINT Gregory A. Smith, Vice President and General Manager of Insurance Operations

D.

STATEMENT OF THE PROBLEM What is the best strategy for California State Automobile Association (CSAA) to improve its customer service?

E.

OBJECTIVES MUST To improve CSAAs customer service while maintaining its close relationship with members and among its employees.

WANT To reduce baseline expenses by as much as 20 percent and enrich jobs and career growth for employees within 2 years.

F.

AREAS OF CONSIDERATION Internal Environment Strengths: It has three million members US$ 3.2 billion in assets Has 5,700 employees Operating in a network of 72 district offices throughout its membership territory in Northern California and Nevada; Diversified operations range from tour books and emergency road services to airline ticketing, auto and homeowners insurance and travelers checks; Its management acknowledges the need for some fundamental changes in the organization CSAA has best practices in the past Weaknesses: Weak telephone service Varies activities and difficult to understand its range of services Highly segmented services Outdated customer service External Environment Opportunities: Increasing number and needs of customers; Emergence of information technology Threats: Competition

G.

ALTERNATIVE COURSES OF ACTION

ACA 01 Extend the reengineering customer service operation to online transaction services. Advantages Very convenient to all members specially to busy clients Good training ground for cross-trainees Timely, faster, efficient, innovative and responsive customer service Less hassle for the employees More systematic Disadvantages Longer preparation High cost investment (acquisition software, training etc)

ACA 02 Come up with a loyalty card with rebates promo for the customers Advantages Disadvantages Customers will feel important Short-term effect Will encourage more Would need additional transactions/ services from employees to manage customer customers rebates

ACA 03 Have a lane for customers with multiple transactions Advantages Disadvantages Transaction specialization will Might require additional be institutionalized employees Might hinder career growth Will require additional space

H.

ANALYSIS Based on analysis, I recommend ACA # 1. It has been chosen because of its adaptability to the fast changing world, effectiveness, efficiency and systematic approach in handling the huge number of customers. Thus, meets all the requirement of the objectives. Criteria Effectiveness Acceptability Timeliness Relevance Economical ACA 01 5 5 3 5 3 ACA 02 3 3 4 3 5 ACA 03 3 3 4 4 4

TOTAL J.

21

18

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Rating Scale: 1-5 (Lowest-Highest) PLAN OF ACTION:

Plan of Action: Extend the reengineering customer service operation to online transaction services. Action Steps 1. Consolidation of services and processes 2. Sourcing for a Software development supplier 3. Software Development Stage Action Steps 4. Training of the employees for the new system and crosstraining 5. Pilot implementation headquarters 6. Marketing/Promotion 7. Full implementation filed offices 8. Monitoring and evaluation Responsible Person Operations and Marketing Managers Operations Contractor/Supplier Responsible Person HR Manager Operations and HR Managers Marketing Manager Marketing and Operations Department Marketing and Operations Department Timetable Within two (2) days Within two (2) weeks Within (3) months Timetable Within one (1) month Within one (1) month Within two (2) weeks Within two (2) weeks Within six (6) months after the full implementation