UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Tran Thi Minh Quyen REACTIVE AFTER-SALES SERVICE OR PROACTIVE AFTER-SALES SERVICE: THE CASE OF KOBELCO CONSTRUCTION MACHINERY VIETNAM CO., LTD MASTER OF BUSINESS (Honours) Ho Chi Minh City – 2016 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Tran Thi Minh Quyen REACTIVE AFTER-SALES SERVICE OR PROACTIVE AFTER-SALES SERVICE: THE CASE OF KOBELCO CONSTRUCTION MACHINERY VIETNAM CO., LTD ID: 22140039 MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Nguyen Thi Mai Trang Ho Chi Minh City – 2016 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com EXECUTIVE SUMMARY After completing the transaction of purchase, the relationship between a seller and a buyer usually still continue because of complex growing in business to business. Customers purchase products and they hope that products will bring benefit to them as much as possible. Hence, after-sales service is indicated as a tool which providing a valuable merit to the customer and bringing opportunity to the company. After-sales services have proven to be an important element that contributes to business situation of a company.
Thus, whether post sales service is appropriate or not, actually it is a big issue should be concerned. Four major factors that affect after-sales services machinery industry are reactive after-sales service, field technical assistance, spare parts distribution and customer care. The purpose of this thesis is to identify the issue of after-sales service in Kobelco Vietnam, then to indicate the root cause led to main problem after analyzing all causes; finally it supposes the potential solutions that can be applied to resolve the problem. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENT This study was conducted as my master of thesis at the Master Business Administration Program in 2016.
This study gave me a deeper knowledge in after-sales and the qualitative research has provided me the opportunity to approach and gain an insight into organizations in real life. I would like to greatly thank a number of people who instructed and supported me during my thesis. Firstly, I would like to show my gratitude by specifically thanking my supervisor Prof. Nguyen Thi Mai Trang and Prof.
Nguyen Dinh Tho for guidance and qualitative feedback devoted to me. Lastly, I would like to thank the time and support of my friends and colleagues who participated in this research. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENTS 1. BUSINESS SITUATION OF KOBELCO VIETNAM.
CURRENT STATUS OF AFTER- SALES SERVICE AT KOBELCO VIETNAM. REACTIVE AFTER-SALES SERVICE. FIELD TECHNICAL ASSISTANCE. During and after warranty assistant.
SPARE PARTS DISTRIBUTION. Delivery of spares parts. CAUSES AND EFFECT. ALTERNATIVE SOLUTION 1: ASSEMBLING GPS (KOMEXS – KOBELCO MONITORING EXCAVATOR SYSTEM).
ALTERNATION SOLUTION 2: ESTABLISH MORE SERVICE CENTERS. ORGANIZATION OF ACTIONS. 58 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF TABLES Table 1. Ranking position of Construction Machinery brands in Vietnam (2009-2015).
Inspection schedule of machine. Warranty time of spare parts. Sources of spare parts. The significance of different factors in making decision in using the.
Cost of one KOMEXS system per year. Service Area Controlled. Service Center Expense. 36 LIST OF FIGURES Figure 1.
KCMV Organization Chart. Kobelco’s Market Share 2009-2015. Market share of Construction Machinery Brands in 2015. Level of customer’s satisfaction about after-sales service of Kobelco.
Causes and effect tree. 21 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Company Introduction KOBELCO Construction Machinery Co. manufactures, sells, service construction and transport machinery.
Its products include hydraulic excavators, mini excavators, and recycling machines. The company also offers machinery parts; and various services ranging from regular after-sales machine check-ups to inspections and advice. In addition, it resells used equipment. The company serves customers worldwide.
KOBELCO Construction Machinery Co. was founded in 1999 and is based in Tokyo, Japan with manufacturing centers in Japan, China, Thailand, and India; and parts centers in Japan and Singapore. It has operations in Southeast Asia, Australia, New Zealand, China, India, Mongolia, Europe, Turkey, Africa, the Middle East, the Russian Federation-CIS, North America, and South America. KOBELCO Construction Machinery Co.
operates as a subsidiary of Kobe Steel Ltd. Kobelco Vietnam (KCMV) is a company with 100% foreign invested by Kobelco Construction Machinery Japan, a members of Kobe Steel, one of the biggest manufacturers of construction machinery in Japan. KCMV was founded in 2004 with the head office in Bien Hoa 2 industrial zone, Dong Nai Province, in 2005 one branch was established in Tien Son Industrial Zone, BacNinh province. From 2004 to 2008, the business was restricted only in service and supply of spare parts for Kobelco machine.
After Vietnam joined the WTO, in 2008, Kobelco got the licensed LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 2 for directly import, and since 2009 we was granted the license for selling product to the end- users. In order to quickly respond to customer demand and better doing service and supply spare parts, Kobelco opened the representative offices and customer service centers in Lao Cai, Dien Bien, Nghe An, Da Nang, and Gia Lai. With the policy to better satisfy the requirements from customers, Kobelco Vietnam commits: To work and support customers’ business activity by offering Kobelco’s best quality products and services. To provide machines, service and spare parts in accordance with Japanese and international standards.
To contribute to the environment protection, saving operating costs through advanced techniques of Kobelco. LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Company structure KCMV MEMBER'S COUNCIL MANAGING DIRECTOR ADMINISTRATION ACCOUNTING SALES& MARKETING CUSTOMER SUPPORT DEPT. AFTER-SALES SERVICE TRAINING SECTION SECTION PARTS SECTION SERVICE SECTION Figure 1.
KCMV Organization Chart (Source: KCMV Administration Department) Kobelco Vietnam established head office in Dong Nai province and head office controls all operations of Bac Ninh branch and five representative offices in Vietnam. Above organizational structure is applied for Dong Nai head office managed by Member’s Council and Managing Director. There are four departments in structure like: Administration, Accounting, Sales &Marketing and Customer Support. Each department is in charge of different task but cooperate together toward missions and strategies of company.
Although Sales & Marketing brings the revenue directly to company, this department could not operate LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 4 independently without support of other departments, especially Customer Support department. This thesis focuses on the research of Customer Support department which plays an important role in the growth of Kobelco’s business. This department includes some sections such as After-Sales Service section and Training section. In After-Sales section, there are two sections: Parts section providing spare parts for machine and Service section offering technical assist and repairing machine.
Why do activities of Customer Support department like supplying spare parts, providing technical assistant, doing services after sales contribute to Kobelco business? Kobelco Vietnam is considered as a trading company that imports machine from Japan factory and Thailand factory, then sells to customers in Vietnam. Thus, the transaction between the seller and buyer can not finish with delivery, but it also includes the post sales service. The after- sales service is more professional, the customers are more interested in Kobelco’s products and highly appreciated its brand name. Moreover, while marketing programs like promotion, customer gathering or launching new product aim to increase customer’s awareness of Kobelco’s products, after- sales services maintain customer’s loyalty and increase buying intention of customers in the future.
Consequently, it could not deny that the activities of after- sales service greatly impact on operation and business situation of company. LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Business situation of Kobelco Vietnam According to Monthly/Yearly ERG Report, Kobelco did effectively business in early years after getting license for selling product to the End-users. The data of Figure 2 showed that, the market share remained highly 19% in average during 04 years from 2009 to 2012.
Unfortunately, the market share has exhibited the decline of trend since beginning of 2013. It fell dramatically to 14. The assignment of Kobelco’s Board of Director is to increase market share to 20% in following years. Therefore, it is required to find effective solutions to regain market share.
Kobelco's Market Share 2009-2015 25. Kobelco’s Market Share 2009-2015 (Source: ERG report in KISCO) LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 6 There are many construction machinery brands on the world. However, in Vietnam, Kobelco, Komatsu, Hitachi, Huyndai, Cat, Doosan, Sumitomo, Liugong are brands what are supplying excavators to Vietnam market currently. Figure 3 shows the market share of all brands in 2015.
As we can see that Komatsu was the leading company with highest market share 32.3%, followed by Hitachi with 21. Kobelco and Huyndai accounted for 15. Thus, Komatsu, Kobelco, Hitachi, Huyndai are big four companies in which total market share took over 80% while remaining brands like Cat, Sumitomo, Doosan, Liugong only took negligible share of the excavator’s market in Vietnam. Based on the corresponding market share, the main competitors of Kobelco Vietnam are Komatsu, Huyndai, Hitachi.
Market share of Construction Machinery Brands in 2015 3.2% KOBELCO KOMATSU HITACHI 15.2% HYUNDAI CAT DOOSAN 32. Market share of Construction Machinery Brands in 2015 (Source: ERG report in KISCO) LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 7 During 04 years from 2009 to 2012, compared with main competitors, Kobelco mostly remained second level in market while Komatsu was always in first position; Hitachi ranked number four in 2009 and number three from 2010 to 2012 whereas Huyndai was grated number 5 in 2009 and number 4 in the period of 03 years 2010-2012. Nonetheless, at the beginning of year 2013, the position of Kobelco dropped down to number 4 in 2013, 2014 and 2015 that ranked after Komatsu, Hitachi, Huyndai. Because Komatsu was still in first grade, Hitachi rose to second level and Huyndai also took third place (see Table 1).
Ranking position of Construction Machinery brands in Vietnam (2009-2015) 2009 2010 2011 2012 2013 2014 2015 KOBELCO 2 2 2 2 4 4 3 KOMATSU 1 1 1 1 1 1 1 HITACHI 4 3 3 3 2 2 2 HYUNDAI 5 4 4 4 3 3 4 CAT 3 5 5 5 6 6 6 DOOSAN 6 6 6 6 5 5 5 SUMITOMO 7 7 7 7 7 7 7 LIUGONG 8 8 8 8 8 8 8 (Source: ERG report in KISCO) The decrease in market share and low position are the outcome of many problems. Therefore, the purpose of this thesis is to clarify the main problem as well as find out the causes in order to have effective solutions of gaining market share and recovering ranking position. Current situation of After- Sales Service at Kobelco Vietnam After- Sales Service is a support activity after products are delivered to buyers. It is a key element of product quality and successful competition which finally depends on satisfaction LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 8 of customers.
Almost cases, the mission of after sales service should be indicated as the contribution of business cooperation. It is suggested that the supervisor of after sales service department can rise both first time and repetition sales, because of that increase market share.(1)After-sales service is considered as factor of intangible product as stated by Asugman et al. (2)After-sales service was classified as a process of business network because it affected directly to business performance and competitive advantages as stated by Earl et al. (3) Services and Sales should work together in order to understand the value that we create and to improve programs.
We will provide to our targeted customers the added value they need to maintain long-term relationships. It is suggested that service should be used as a valuable tool in our sales tool box.