Academic journal article International Review of Management and Business Research

Study on the Performance Measurement of Taiwan Railway Service Quality through Grey Relational Analysis

Academic journal article International Review of Management and Business Research

Study on the Performance Measurement of Taiwan Railway Service Quality through Grey Relational Analysis

Article excerpt

(ProQuest: ... denotes formulae omitted.)

Introduction

Nowadays, enterprises should establish and maintain good interaction with customers even in an environment with increasing competition, declining profit, and continuous innovation of products and technology. Enhancing the customers' loyalty is a good way to establish a good long-term relationship with customers. With the support of loyal customers, enterprises can achieve continuous development and sustainable management. The railway is the artery for Taiwan's in-land transportation, shouldering the weight and responsibility in transporting passengers and cargo for over a hundred years. The transport function of the railway is located at the "Intercity Railway Transport Service." About 73% of the railway ticket revenues is for short-distance travel, whereas over 76% is for medium- and long-distance travel. However, Taiwan's high-speed rail began to operate in 2007, becoming the railway's largest competitor for medium- and long-distance travel. Other than the high-speed rail, the railway also faces a competition with land transport and mass transit system for short-distance travel. Therefore, seeking the most favorable development in the highly competitive transportation market is currently an important issue for Taiwan's railway system.

For enterprises, customers have become the most important strategic resources, and their survival depends on their good long-term relationship with the customers (Armstrong and Kotler, 2000). The most important way of establishing a good long-term relationship with customers is by enhancing customer loyalty. Customer loyalty refers to a sense of belongingness or the identification of persons, products, or services that will directly affect customer behavior (Jones and Sasser, 1995). Customer loyalty is also reflected in the frequency of customer visits (Bowen and Shoemaker, 1998). According to Reichheld and Sasser (1990), an increase of 5% in customer retention rates will raise the average value of each customer to the enterprise by 25% to 100%. This finding indicates that loyal customers can bring about more profits and lower maintenance costs. Customers' loyalty is influenced by their satisfaction, and these two concepts are positively correlated. The higher the customers' satisfaction, the higher their loyalty is. Likewise, the lower the customers' satisfaction, the lower their loyalty is (Day, 1977; Kasper, 1988; Lin et al., 2007; Yeh and Wu, 2014). Customers' satisfaction is an overall measure of how much value they put in a purchased product or service (Woodruff et al., 1983; Fornell, 1992). Satisfied customers will begin to develop a high degree of loyalty that will increase their willingness to repurchase, thus affecting the operational performance of enterprises and further allowing enterprises to obtain higher revenue (Reichheld and Sasser, 1990).

Customers' satisfaction comes with the content and quality of the enterprises' service. The customers' satisfaction is higher when the quality of service is better and meets the customers' expectations (Hennig-Thurau et al., 2002; Huang, 2012). The SERVQUAL scale can be used to measure the gap between the customers' expectations and cognitive service for enterprise (Parasuraman et al., 1988). In this study, the balanced scorecard (BSC) was used to transform corporate vision and strategies into measurable and implementable action (Kaplan and Norton, 1992). In conjunction with the corporate vision and departmental objectives, the evaluation of the enterprises' operational performance does not merely come from the data of financial reports. Besides focusing on the "financial dimension," it also emphasizes non-financial indicators, such as "customer dimension," "internal business process dimension," and "learning and growth dimension," and connects these four dimensions with causal relationship to establish a set of systematic tools of measuring satisfaction and loyalty (Butler et al. …

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