An Exploratory Study of Retail Service Management in the Philippines

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AN EXPLORATORY STUDY OF RETAIL SERVICE MANAGEMENT IN THE PHILIPPINES J. Mark Munoz Tabor School of Business Millikin University Peter V. Raven Department of Management Albers School of Business and Economics Seattle University 900 Broadway Seattle, WA 98122-4340 (206) 296-5763 (206) 296-2083 fax pvraven@seattleu.edu (contact author)

Dianne H.B. Welsh Muldoon Center for Entrepreneurship John Carroll University

Keywords: Management, Retail, Service, Philippines, Southeast Asia

AN EXPLORATORY STUDY OF RETAIL SERVICE MANAGEMENT IN THE PHILIPPINES ABSTRACT The Philippines has become an important source of global middle managers as its population has become more educated and bilingual. Along with China, the Philippines attracts international enterprises seeking to establish a presence in Asia. This exploratory study examines retail small/medium enterprises (SMEs) management and employee perceptions of customer service. The results suggest that managers and employees in the Philippines behave in similar ways to those in western countries, but there are differences, probably related to cultural characteristics. The Philippines is a culturally diverse country, with historical and cultural influences from China, Malaysia, Spain, Japan, and the United States. As the Philippine market becomes more ingrained in a globalized environment, the importance of service quality increases. Global retailers stand to benefit from this study through an enhanced understanding of the mindsets and attributes of managers, employees, and customers in this region of the world. The lessons learned can be valuable in the formulation of training, sales and marketing, business development, human resources management, and strategic planning. Implications for practice are discussed. INTRODUCTION The Asian Crisis in 1997 awakened the global community to the fact that Asian economies are closely linked to international markets and that economic and business events that occur in Asia have a direct impact on Western economies. The growing number of emerging economies in the region has also attracted international entrepreneurs to the many business opportunities in this region. This study examines the nature of retail service quality in the Philippines and should help entrepreneurs better understand the Filipino perceptions of this important factor. With a growing population of around 86 million, a growth rate of 2.36% between 1995-2000, and with close proximity to other Asian markets, the Philippines is strategically appealing (Philippine National Statistics Office, 2002). Purchasing power in the Philippines is generally low, but more than 2 million consumers earn over US$1,250 per month. Other significant sources of disposable income are derived from an underground economy (30-40% of GDP) and from remittances from overseas Philippine workers amounting to more than US$ 6 Billion in 2001 (UK Trade Invest, 2004). Philippine consumers are familiar with many US products, films, music, and mass media advertising. Millions of Filipinos reside in the US and periodically travel back to the Philippines and 94% of Filipinos speak English (Philippine Franchise Association, 2004). Despite this, as the Philippines further industrializes, managers face the challenge of achieving modern results while maintaining their traditional values. Dealing with contrasts is an inherent part of the Philippine culture. As a predominantly coastal region beset with severe seasonal typhoons, Filipinos have developed a fatalistic attitude (known as “bahala na”), leaving their fate to God.

Sison (2003) points out that Filipinos have developed a knack for improvisation and a strong focus on the present. Cultural dimensions revealed by Geert Hofstede (1991; 2004) also help us to understand Filipinos and their interactions with retailers. Hofstede’s cultural values for the Philippines show relative high power distance index (PDI) and low individualism (IDV) measures. In addition, they...
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