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Analysis of an Issue # 2


ESSAY QUESTION: “As technological development continues to intensify business competition, the quality of customer service is likely to become the only sustainable source of competitive advantage.”

Explain what you think this quotation means and discuss the extent to which you agree or disagree with it. Develop your position with reasons and/or specific examples drawn from history, current events, or your own experience, observations, or reading.

YOUR RESPONSE: Many people think that as technological development continues to intensify business competition, the quality of customer service is likely to become the only sustainable source of competitive advantage, while other people disagree. The issue is a controversial one, but a closer examination reveals that intense technological development does not render customer service as the only sustainable source of competitive advantage for several reasons.

One reason for that is that the pace of technological development and the even greater pace of feedback to the manufacturers have nearly left customer service redundant. With the customers becoming more and more informed there is a growing sense in the industry to get their product right the first time. The iterations in the development stage have become faster with the result that the customers get a near perfect product the first time, which renders the role of customer service to be negligible. The hundreds of new models of cars we get per year is a prime example. These cars hardly ever need maintenance or face problems and hence the diminished role of customer service.

Another reason is the increased amount of research that goes into technological development. Technology companies have realized that the market is too big for all of them to go after the same pie. Hence the branding of the technologies sets them apart and each caters to a particular segment, creating fierce brand loyalty. The video-game industry is a great example to highlight my point. The Playstation continues to be aimed for hardcore gamers who want the latest in technology, Xbox caters to gamers who can settle for a little less technology if the price is right and the Wii is lapping up the family gaming market. With such segments being marked out by the technology companies for their products, the competition is less intense then it seems from the outside and hence the smaller role for customer service.

Perhaps the best reason is that no matter how fast is the pace of development there will always be a ‘first mover’ advantage in the market. For example the recent developments of iPod, iPhone and iPad by Apple were immediately followed by a spate of similar launches by the competitions. But as Apple was the first to the market it created a novelty value for itself and the others just remained imitations. Furthermore Apple’s customer service is not renowned for its nimbleness, yet Apple retains a lion’s share of the market in each of the above devices. This goes to prove that there is a clear benefit in being the technology which is first to the market.

In summary, while there are arguments to be made for both sides, it is clear that there are greater advantages to being faster in your production cycle and getting your product right the first time, creating a brand identity for yourself and being the first to the market. Certainly the reasons against the claim far outweigh the reasons for it, and hence that intense technological development, does not make customer service the only source of competitive advantage.

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