Case Study: (10 Marks)

At most companies, employees don't have any idea what their firm's return on invested

capital is, let alone the returns on specific customer segmentsand even if they knew,

they'd be powerless to anything about it. But according to authors Larry Selden and

Geoffrey Colvin, a few companies, such as Dell, Best Buy, and Royal Bank of Canada, have

been solid stocks for shareholders through the years because of their customer-centric

approach.

According to these authors, customer-centricity means that all employees understand how

their actions affect share price. Selden and Colvin maintain that customer-centric

companies are a good bet for investors because they hold an advantage that can lead to a

jump in share price. To determine whether a company is truly customer focused, Selden

and Colvin suggest asking the following five questions:

1. Is the company looking for ways to take care of you? Only a few companies identify

customer needs first, and then create ways to meet them. Too many companies try

to make customers buy the products and services they al- ready offer. Royal Bank of

Canada is an example of a company that found a customer segment with unique

needs and met those needs. Many of the bank's customers were Canadians who

spent winters in Florida or Arizona. Those customers, who tended to be affluent,

wanted to borrow money in the United States for homes and get a U.S. credit rating

that reflected their Canadian record. They also wanted to be served by employees

who knew the United States as well as Canada. To serve those customers, the bank

opened a branch in Florida through its U.S. subsidiary. The results were

exceptional: customers signed up in droves, and the new branch was profitable in

months rather than the typical years. Opening new branches aimed at specific

customer segments represented a growth opportunity for the bank's shareholders.

2. Does the company know its customers well enough to differentiate between them? True

differentiation means knowing who your various customer segments are, what each

group wants, where the groups are shopping, and how to serve the customers

individually. For example, Best Buy configures some stores to serve its "soccer-

mom" customer segment and others to entice a segment of affluent entertainment

lovers with stores that have home-theater demo rooms.

3. Is someone accountable for customers? At most companies, various departments own

pieces of customer segments, but no one owns any specific one. At companies

with customer-centric approaches, however, things are different. At Best Buy, for

example, one manager is account- able for the "soccer-mom" segment across

multiple stores.

4. Is the company managed for shareholder value? If a company is managed for

shareholder value, employees know about earning a return on invested capital that

exceeds the cost of capital, plus investing increasing amounts of capital at that

positive spread and maintaining that spread for as long as possible. Customer-

centric companies apply those criteria to customer segments. They know how much

capital they've invested in a segment and how much return they earn on it. They

maintain the positive spread by creating and reinventing enduring customer

relationships.

5. Is the company testing new customer offers and learning from the results? Constant

learning about what customers want and a formal process for sharing it are critical

to customer-centricity. 7-Eleven Japan has done this well. Every week, employees

from all over Japan would meet to discuss hypotheses tested and verified in the

stores. Ideas such as changing the lunch menu for the next day based on the

predicted weather (like serving hot noodles on a cool day) were heard throughout

the company.

Question:

What is customer centric? Provide appropriate example. Based on the case study,

evaluate whether "Shwapno" is a customer centric company or not.