Executive summary
Best Foods Superstores has been vending groceries for over three decades and has always operated on a store policy that states that: Should a customer suffer an overcharge at the check out, he/she should receive a full refund equivalent to the price of the commodity and get the item for free as compensation. However, according to complaints by a regular customer, the grocery chain does not practice what it preaches. When such inconsistencies are recorded, the employees are reluctant in clarifying the issue and when they do, they insist on payment of the exact overcharge. Worse still, the managers of the stores advice their employees not to raise the store policy demands unless the customer does. This depicts the chain’s desire to capitalize on the ignorance of its customers.
Background and statement of the Problem
Pantry Pride is the Best Food Superstore grocery chain branch in Victoria Street in Somewhere town. It has been in the grocery business for more than three decades and has promising future business. It runs a store policy on wrongful overcharging of commodities that requires customers to obtain a full refund and the mispriced item for free as compensation. However, unlike its competitor, Sobeys, the store is reluctant in living up to its promises. This could compromise the loyalty of its future customers causing a reduction in the profits from the branch.
The store implements the policy so as to beat competition and to demonstrate the company’s responsibility in paying for its failures to the employees. However, the implementation of the policy is marred by different problems that depict the company’s view of the customers. These include:
- Employees lack cooperation that leads to time wastage for the concerned client. For instance, in the first case, the employee is reluctant to confirm the price of the commodity and attends to personal matters before client’s (MacKenzie, 2007).
- Impolite address of customers that is depicted when the employee refers to the customers as a ‘missus’.
- Many of the employees seem unaware of the store policy and therefore think the customers should be refunded the overcharged amount rather than the full amount as illustrated in the first and third case.
- The store has an exploitative management that seeks to benefit from the ignorance of customers by paying only those who are aware of the policy. This depicts the company as dishonest.
- There is poor implementation of agreed policies between the employees and the managers. For instance, in the thirds case, the manager is surprised that the employees to not act as it had been agreed upon concerning the store policy.
The limitations that affect the company as relates to the policy are the following:
Internal constraints
- Poor employee attitude that makes them refer to customers impolitely
- Lack of cooperation amongst employees, for instance, when in case one employee is reluctant to confirm the price for the customer.
- Dishonest managers who are willing to exploit ignorant customers
- Poor implementation of agreed policies in the grocery chain. For example, though the manager questions the employee on what they had agreed previously.
External constraints
- A formidable competitor who keeps their word on a similar policy
- Cooperative environment among the employees in competitor firm
- Similar product pricing by the competitor that makes price advantage difficult
Statement of objectives
In enacting the policy, the store hoped to show its employees that it is responsible and can pay for its failures besides creating a good rapport with the customers. Employees are thus expected to demonstrate the same level of responsibility while the customers should feel more appreciated.
Situation analysis
Best Food Superstore experiences both external and internal environment factors that influence its perspective of the store policy.
External environment
The key factor is competition. The fact that Sobeys has relatively the same pricing for their commodities leaves the chain to seek for other grounds to obtain comparative advantage other than pricing. Moreover, the two stores share the same policy concerning overcharges. Should the store fail to live up to its word as Sobeys does, its customers could shift their loyalty to the competitor. The case depicts an unsatisfied customer who could easily switch sides. Therefore, the company has to utilize all the available options to ensure its customers are happy.
Internal environment
This is particularly concerned with how the employees and managers treat their customers. The store attendants do not have the urgency to attend to needs of their clients. They speak to them impolitely and are ready to exploit them at the slightest chance. This is ethically wrong and result in loss of customers or even employees. The company should educate its employees and managers on the essence of the store policy so as not to lose in the long-run
S.W.O.T analysis
In resultant effect of inobservance of the store policies, the store has different strengths, weakness, opportunities and threats that determine its future place in the market.
Strengths
- The store offers products at affordable prices.
- Large wealth of business operational strategies due to many years of operation
- Hierarchical solution of problems., for instance, employee to manager
Weaknesses
- Poor employee cooperation
- Exploitative managers
- Lack of implementation of policies
Opportunities
The store is still offered a second chance by the customers to prove its reliability and ability to pay for its failures. Meghan still does her purchases with the store despite her experiences.
Threats
The ability of its competitor to live up to its word of entire refund and free item may lead to the loss of customers as they shift to Sobeys.
Analysis of alternatives
The company faces two alternatives: to withdraw the policy entirely or to implement the policy appropriately.
Withdrawal of policy
In this case, the store saves the costs of meeting the price of all the goods that may be offered for free. Should a technical error involve large valued commodities, the store does not suffer substantial losses. However, customers who fall victim may feel, the miscalculation was intentional and fail to return for future purchases. Moreover, a mere refund of the overcharged amount shows that the company is less concerned with paying for its failures. Its reputability is thus questionable.
Retention of policy
In this case, the store has to meet the additional costs of meeting the price of free goods given away. Moreover, it has to spend time and resources educating its employees on the demands of the policy. On the other hand, it will have more repeat customers since they feel the wrong calculation was a genuine mistake. Such acts make the customer feel appreciated could lead to increased referrals which mean more business to the company. In the long-run, the benefits are enormous.
Recommendation and implementation
Withdrawing the policy may be the best option in the short run since it is cost effective. However, the benefits are soon outdone by those of retention as more and more sales are realized. Some of the costs associated with retention of the policy are fixed and therefore reduce as time proceeds. Since the store has an extensive future it should take the cheapest option in the long-run.
In implementing the policy, all the managers should be educated on the benefits of the policy when it is applicable. The education process should be done to every new employee and followed up by the manger in charge. This will save time for the customer.
Reference
MacKenzie. (2007). Letter to president of Best Food Superstores. Brock University: St. Catharines.