Overview of business and knowledge

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1.0 Introduction

1.1 Overview of business and knowledge

In the real business world, there are many implements to fulfill a business prospective; using information technologies, information systems, management information systems, and so on. Aksu and Tarcan (2002) mention that “developments in today’s information technologies are dazzling and using information technologies results in having advantages in competition, decreasing costs, gaining time, and getting and sharing information. Also, an information system is an important tool and management solution for creating and increasing firm value (Laudon, 2004). In addition, management information systems provide information to managers so as to support managerial tasks according to their functional area and management level in order to work more efficiently (Griffin, 2005).

In other words, all processes based on knowledge management concerned with identification and development of available knowledge use knowledge assets to achieve the organizational objective of profitability through the service quality (Berawi, 2004). Indeed, the most important point is how companies can use their knowledge parallel to technologies to develop successful, relationships with customers and increase long-term profitability.

Knowledge management has had a role in increasing company’s success. Businesses have sought for strategies to gain their competitive advantages related to customer satisfaction. Gebert et al., 2003 assert that both knowledge management (KM) and customer relationship management (CRM) focus on supporting business activities relevant to customer needs. Especially, in the hospitality industry, maintaining customers is the main source accomplished a company prospective. How can companies build and maintain customer relationships? CRM is an important part of service approaches which can raise customer relationships and provide enormous long-term valuable benefits.

1.2 The view of Customer and company needs is based on operational objectives and CRM

In order to achieve organizational objectives, companies must figure out exactly what customers want and give it to them. Customers as “demands” and companies as “suppliers” have different attitudes. Companies want to invest in low-cost but high benefits. In contrast, customers prefer having high-quality goods and services. Under operational organizations, suppliers should know the needs of customers In hospitality, the customer need is to get a service quality which is the same as and/or more than their expectation (Schermerhorn, 2004). Nowadays, many hotels use the internet as a channel to give customers more details about hotel information and other relevant documents. They are able to know the right information to answer their queries. Further, companies can use customer details as databases from the web site based on CRM. The relationship between customers, companies, and CRM shows in figure 1. Then, suppliers or hotels can add or change operational activities according to organizational resources; people, structures, technologies, products and services which reflect to customer demands (see figure 2).

2.0 Literature Review

2.1 Information Technology (IT)

Lawrence et al., (2004) mentioned that “new information technology will give the firm the opportunity to exchange information more quickly and accurately”. Also, Klein and Werther, 1999 stated “IT is used both for the internal product creation process and for the external linking,i.e., distribution and marketing means” so IT is a group of component supporting sources and people can use it in order to improve their ability.

2.2 Information System (IS) and Management Information System (MIS)

An information system acts as components of information technology that collect data, process, store, and use information to support management in decision making, managing resources, and coordination. As well as, this helps an organization to maintain and develop information. Managers and employees can improve communication and find out problems. Information system activities show as input, processing, and output (see figure 3). Input collects data from internal and/or external organization. Processing changes the data from input into a meaningful form and distributes that data to be information and give it to people or the person who use it. The system also requires a feedback to ensure companies know that output is in the right position. The organization can evaluate and improve the input step to collect the right data (Laudon,2004).

A Management Information System is created to provide the necessary information for managers to plan, organize, staff, direct, and control operations (Cahill and Kasavana, 2003). Managers can use their information for specific needs. Also, an information system can be designed and created to manage application systems in order to support other activities such as decision making or operational performance.

2.3 Data, Information and Knowledge

“Data are raw facts or observations that are considered to have little or no value until they have been processed and transformed into information”(Bocij, 2003) while, information “is data organized into meaningful patterns. Information is transformed into knowledge when a person reads, understands, interprets, and applies the information to a specific work function”(Lee and Yang, 2000). Hence, data and information are the basis of knowledge structures. Stamm (2003) mentioned that “knowledge consists of truths and beliefs, perspectives and concepts, judgment and expectations, methodologies and know-how”. Knowledge is deeper than information and can become more visible and valuable when people learn and put their experiences into their practice lessons (Pearlson, 2001). Figure 4 shows the relationship and relevance between data, information, and knowledge.

2.4 Types of knowledge

According to Nonaka (1991), there are two types of knowledge, tacit and explicit. Tacit knowledge is not easily expressible. It is difficult to communicate to others and to explain what its form is exactly. It can demonstrate in someone’s feeling about something as an individual’s commitment. It can be personal and undocumented information. Conversely, explicit knowledge is formal and systematic. It can be easily communicated and shared. It is highly personal and hard to formalize. It can be verbal, textual, and visual, taking form of presentation, or lectures, books and magazines, databases and software programs. “In short, explicit knowledge is public (to varying degrees), whereas tacit knowledge is private” (Kreitner, 2004).

2.5 Definition of knowledge management

The term KM describes the merging of people in an organization and technical knowledge assets (Scott, 1999 cited in Plunkett et al., 2005). Also, Bhatt, 2001 mentioned KM as “a process of knowledge creation, validation, presentation, distribution, and application” (cited in Yahya and Goh, 2002). The main aim of KM is to secure ‘insight judgments and understanding’ (Daveport and Prusak, 1998 cited in Rowley, 1999) so as to create and develop specific organizational knowledge involving tacit knowledge and can add unique value to business activities distinct from competitors.

2.6 Customer relationship management (CRM)

When the internet age has boomed CRM has evolved and generated (Kotorov, 2003). CRM still has many definitions because it is a new concept. Greenberg and others identify CRM more than 10 ways. The term CRM definitely relates to a component of knowledge management (Stefanou et al., 2003). CRM has become a necessary implement for every business part. Feinberg et al., 2002 stated “CRM is a comprehensive business and marketing strategy…” CRM also is “a customer service approach that focuses on building long-term and sustainable customer relationships that adds value for the customer and the company” (Turban et al., 2004). Then, CRM uses knowledge as an implement of competitive advantages so as to focus on serving customers and gain more customer satisfaction according to a company prospective.

2.7 Types of CRM

According to Turban et al., 2005, CRM can divided into three main areas; operational CRM, analytical CRM, collaborative CRM. All relate to activities. Operational CRM concerns typical business functions to customers. Analytical CRM relates organizing customer data and analyzing them as needed. Collaborative CRM leads to cooperation and contacts between customers and companies. In addition, there are other ways to classify CRM. Classification of CRM Programs by Tan et al., 2002, or as applications by The Patricia Seybold Group, 2002 (cite in Turban et al., 2004). According to Tan et al., 2002, there are loyalty program, prospecting, save or win back, and cross-sell/up-sell in CRM programs. The loyalty programs aims to add more customer loyalty. In another way, prospecting programs are intended to win new and first-time customers.

Save or win back program focus on keeping customers, holping they will return. Cross-sell/up-sell programs offer more choices to customer preference. On the other hand, classifications of CRM applications by the Patricia Seybold Group, 2002 are in three groups; customer-facing applications are connecting between customer and companies areas such as call centers. Customer-touching applications are involving with application such as self-service and e-commerce applications. Customer-centric intelligence applications are using databases and analyze the process results from operations to develop CRM applications. Turban et al., 2004 added online networking and other applications involving to provide personal relationship areas in business, for example chat rooms and discussion lists as the fourth type of CRM applications

2.8 Electronic customer relationship management (E-CRM)

Feinberg and Kadom, 2002 stated e-CRM as a place providing CRM functions on the internet trough the web site. CRM also is “the use of Web browsers, the Internet, and other electronic touchpoints(e-mails, POS terminals, call centers, and direct sales) to manage customer relationships” (Turban et al., 2005). According to Feinberg and Kadom, 2002, they identified features of e-CRM into 36 areas, the main part of e-CRM such as personalized web pages, FAQs, e-mail and automated response, chat rooms, call centers, and troubleshooting tools.

2.9 Involving between KM and CRM based on technological innovation and competitive advantages

Since the twentieth century, technologies have changed in many ways such as mix multimedia and electronic communication systems. Simon (2001) mentioned that “the use of computers has become an integral part of our business and personal lives and has had a significant impact on our society”. Griffin (2005) also supported “Technological changes are becoming increasingly important to many organizations”. Technologies have changed then organizations truly have been changed. Dixon (2000) showed, in managerial sections, knowledge management implies that, this is managerial change and people should be involved in the exchange as well as generation of knowledge.

After all, those are driving forces and lead to adapt management in organizations. Managers can use new technologies to adjust and create their knowledge to the advantages of company competition (see figure). Since, the mid-1990s, CRM technology has developed in many ways. The term e-CRM was appeared when users started using web browsers, the internet, and other electronic touch points (Turban et al., 2004). In addition, not only KM but also CRM are suitable approaches to gain competitive advantages. KM focuses on using knowledge assets as an essential achieved factor, while CRM focuses on managing relationship between companies and customers as a key to achieve (Gebert et al., 2003). In other word, KM and CRM assist each others in order to reduce failure and produce competitive advantages.

3.0 Case overview

3.1 About Dusit group

The Dusit group has been developing its properties by using knowledge management with innovation and service quality, as the result, the local company had been promoted to one of the international chain hotels. In recent years, there are many branches launched out to a hospitality market mainly in Thailand and Asia. The Dusit group has luxury hotels and resorts not only all Thailand’s major destinations such as Bangkok, Chiang Mai, and Phuket but also has overseas properties such as Dubai, Indonesia, Myanmar, and the Philippines.

3.2 The vision and objectives of the Dusit.com web site

Bringing world-class standards of comfort and convenience under the authentic service quality of Thai Hospitality is a vision of all Dusit hotels and resorts. The objective is to provide information for customers who have used facilities in hotels and resorts in Dusit group and also for travelers who plan traveling which would be benefits in advance.

3.3 Focus on target groups and the Dusit.com web site

The target groups of the Dusit.com are divided into 2 main segments; Business and leisure travelers. The web site provides more information about facilities, activities, traveling and special promotion into 3 main sections; hotel network, travel network, and travel info. For example, in order to fulfill demands of business and leisure travelers, the Dusit Thani hotel forms general hotel profiles such as the hotel location, room types, restaurants, and other facilities. It also offers the price of connecting internet in rooms, room rates, the details of meeting and convention center, and facilities in the hotel such as the spa center, the fitness center, the golf club all including the location, opening hours. Especially, in the restaurant section, it provides chef’s profile, capacity, and type of each restaurant. It illustrates visitors and helps them make a decision to choose and book a table on the internet. In addition to assessing this web, it allows visitors to organize a smart travel plan. Travelers can check the suitable time for their trip according to seasons and an event calendar. All above, customers or guests can receive the right information. Mainly profitable, customers can search a room type including the price whatever they wish and make a room reservation or cancel it by themselves.

3.4 Databases and the web site

Managers including top executive design and develop Web Sites’ Dusit.com, by making decision and providing information on web pages containing text, sound, video, and graphics using a hypermedia database. The hypermedia database approach to huge information management stores of information in the form of nodes connected by links the user specifics. The nodes can contain text, graphics, sound, video, or other computer programs. Users can search their interest on a Web site based on the hypermedia database approach (Laudon, 2004). The Dusit Group has used high levels of multimedia techniques such as video and flash. Also, it has designed the digital communication channels; e-brochure, the web and e-mail, to manage customer relationships and offer visitors a one-to-one marketing strategy.

3.5 Connecting databases and the web

Connecting to databases is a particular sector of organizations. The connection technology aims customers to access the room types and make reservations or request specific data on a web browser. Linking with web partners such as the asiatravel.com web site or connecting to hotels and resorts of Disit Group web pages enable companies to share databases, pooling information together including a company’s front and back-office sections which based on CRM, as shown in figure 6 (Turban et al., 2005). Some partner leads customers to Dusit hotels and resorts details and visitors able to check room rates and special promotions or go trough the Dusit.com home pages and Dusit news via this web site. (See examples on appendix 2)

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