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Determinants of customer satisfaction case study sun wah tower master project in business administration

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TRệễỉNG ẹAẽI HOẽC Mễ TP. HCM
HO CHI MINH CITY OPEN UNIVERSITY

UNIVERSITE LIBRE DE BRUXELLES
SOLVAY BRUSSELS SCHOOL

MBAVB

DO THI THANH VAN

DETERMINANTS OF CUSTOMER SATISFACTION
Case study: Sun Wah Tower

MASTER PROJECT
MASTER IN BUSINESS ADMINISTRATION
(PART-TIME)

Advisor: Dr. NGUYEN VAN PHUC

Ho Chi Minh City
(2010)


ACKNOWLEDGEMENTS OF COMMITMENT

I would like to commit that I have prepared and conducted this research, 
“Determinants  of  Customer  Satisfaction  –  Case  Study:  Sun  Wah  Tower”, as the
final project of MBAVB program.

Ho Chi Minh City, February 18, 2011


DO THI THANH VAN

i


ACKNOWLEDGEMENTS

The undersigned would like to acknowledge the great patience,
understanding and assistance of several people who made this project possible.
A special thanks is extended to Dr. Nguyen Van Phuc for his valuable guidance,
challenging comments and continuous encouragement throughout the study. I
would also like to thank Professor Michele Allete of Solvay University in
Belgium, Dr. Tran Anh Tuan, the program coordinator, all of Professors and the
two coordinators: Mr. Serge Bywalski and Ms. Bui Phan Bao Tran for their hard
work and commitment to the program.
I would like to acknowledge Mr. Lo Kwok Luen, General Director, Mr.
Ryan Lower, Property Manager, and all colleagues of Sun Wah Management
team for their commitment and support me to carry out the research, create
advantageous conditions for me to study and complete this project.
Finally, I’d like to mention the support and encouragement of my family,
whose patient love enabled me to complete this work.

Ho Chi Minh City, February 18, 2011

DO THI THANH VAN

ii


COMPANY’S COMMENTS


First of all I would like to show my appreciation to our Ms. Thanh Van for
bringing the idea to conduct a research about service quality to investigate
Customer Satisfaction of tenants in Sun Wah Building to my attention.

The research presents the knowledge about service quality, customer
satisfaction and what determinants of service quality impact customer
satisfaction. Through this research we have discovered what our tenants’
expectations put on us and have notified what we need to improve to meet the
demands of our tenants in the building. That inspires all of our staffs to try their
best to make Sun Wah Tower the best service provider in the office building
market.

This research is served as an asset of Sun Wah Management Office for
further study about customer satisfaction. Again, we appreciate her hard work,
her practical recommendations and we sincerely thank her for this work.

Ho Chi Minh City, February 18, 2011

RYAN LOWER
Property Manager
Sun Wah Tower

iii


Advisor’s Comments
The project is to find out determinants of customer satisfaction in the case of Sun
Wah tower. Customer satisfaction is very important in office building industry
given the fact that there is strong competition in this industry in Ho Chi Minh

City now. It plays a vital role in sales that ultimately determines profitability of
firms. The aim of the project is to answer the question what are determinants of
customer satisfaction in this industry.
The strengths of the project are as follows: 
­ It is well organised. 
­ Literature review is comprehensive. It reviews theories on customer
satisfaction and service quality. Based on this, it proposes the model for
quatitative analysis. The model has five explanatory variables: Tangibles,
Reliability, Responsiveness, Assurance, Empathy. The hypotheses are that
all these variables have positive influence on customer satisfaction. This
model is quite standard in this field. 
­ The methodology includes descriptive statistics and regression. 
­ Sample size is large enough for regression. 
­ The main contribution is the results of the regression model. The findings
indicate that there are three independent variables which are statistically
significant. These findings are sound. R-squared (0.69) is quite good.
However, there are two variables which are not significant.
The weaknesses of the project are as follows: 
­ Literature review is quite standard. There is no elaborate theory on office
building. 
­ There is lack of review of previous empirical studies. 
­ Chapter 4 depends too much on CB Richards Ellis. It is not well connected
to the whole project. 
­ The results of the regression model have two insignificant independent
variables. 
­ Recommendations at the end of the project should be more elaborate.
In general, the thesis is well written although there are some limitations as
the student admitted at the end of the thesis.
Based on the above performance, I recommend the thesis for acceptance
of public defense. 


Dr. Nguyen Van Phuc
iv 


COMMENTS OF ASSESSING PROFESSOR 
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‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐

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MBAVB1 – MASTER PROJECT – DO THI THANH VAN – 2010

DETERMINANTS OF CUSTOMER SATISFACTION
Case study: Sun Wah Tower
TABLE OF CONTENTS
List of abbreviation

x

List of charts

xi


List of figures

xii

List of tables

xiii

Abstract

xiv

CHAPTER 1 - INTRODUCTION
1.1

Problem statement

1

1.2

Introduction of Sun Wah Tower

2

1.3

Research objectives

4


1.4

Scope of the study

4

1.5

Methodology

5

1.6

Organization of the project

5

CHAPTER 2 – LITERATURE REVIEW
2.1

Service and products

7

2.2

Understanding Customer Satisfaction


8

2.3

Customer’s expectations

9

2.4

Customer satisfaction

11

2.4.1 Customer perceived value (CPV)

12

2.4.2 Total customer satisfaction

12

Customer Satisfaction Models

13

2.5.1

13


2.5

Kano model of Customer Satisfaction

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MBAVB1 – MASTER PROJECT – DO THI THANH VAN – 2010

2.5.2 American Customer Satisfaction Index (ACSI)

15

2.6

Customer Satisfaction diagram

17

2.7

Service quality

18

2.7.1

Service quality definition

18


2.7.2

Gap model of service quality

19

2.7.3

Service quality measurement – SERQUAL

23

2.8

2.9

The important of factors

29

2.8.1

30

Impact of factors

Suggested research model and form hypothesis

31


2.9.1

Proposal of study model

31

2.9.2

Initial hypotheses

32

CHAPTER 3 – RESEARCH DESIGN
3.1

3.2

Designing the research

33

3.1.1

Qualitative research

34

3.1.2


Quantitative research

35

Official research

35

3.2.1

Dimensions measuring building services

35

3.2.2

Summary variables

38

3.3

Research sample

38

3.4

Sampling method


38

3.5

Size of sample

39

CHAPTER 4 –OVERVIEW OF BUILDING MARKET IN HCMC
4.1

Market Overview

40

4.2

Supply

41

4.3

Rents

42

4.4

Vacancy


43

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MBAVB1 – MASTER PROJECT – DO THI THANH VAN – 2010

4.5

Demand

45

4.6

Future Supply

47

4.7

Outlook

48

CHAPTER 5 – ANALYSIS AND RESULT
5.1

Characteristics of research samples


50

5.2

Statistical results

50

5.2.1

Variables for measuring service quality

50

5.2.2

Variables for customer satisfaction

51

5.3

Data analysis

52

5.3.1

Reliability evaluation through Cronbach’s Alpha


52

5.3.2

Regression analysis

54

CHAPTER 6 – CONCLUSIONS AND RECOMMENDATIONS
6.1

Conclusion

58

6.2

Recommendation

60

6.3

Research limitation

62

REFERENCES


63

APPENDICES

65

Appendix 1: Discussion Questionnaire

66

Appendix 2: Questionnaire

67

Appendix 3: Descriptive statistic result

70

Appendix 4: Cronbach’s Alpha analysis result

71

Appendix 5: Regression analysis result

74

Appendix 6: Terminology and definitions

76


Appendix 7 : Criteria for Classifying Office Building

77

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MBAVB1 – MASTER PROJECT – DO THI THANH VAN – 2010

ABBREVIATIONS

sm:

Square meter

psm:

Per square meter

q-o-q:

Quarter on quarter

y-o-y:

Year on year

NFA:

Net floor area


GFA:

Gross floor area

CBD:

Central business district

CPV:

Customer perceived value

SERVQUAL:

Service quality

CCTV:

Close Circuit Television

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MBAVB1 – MASTER PROJECT – DO THI THANH VAN – 2010

LIST OF CHARTS

Chart 4.2


Total Supply

41

Chart 4.3

Rents

42

Chart 4.4

Vacancy Rate

44

Chart 4.5

Net Absorption

45

Chart 4.6

Estimated New Supply

47

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MBAVB1 – MASTER PROJECT – DO THI THANH VAN – 2010

LIST OF FIGURES

Figure 2.2

Service Quality Gap

8

Figure 2.3

Antecedents of expectations

10

Figure 2.5.1

Kano model of customer satisfaction

15

Figure 2.5.2

American Customer Satisfaction Index (ACSI)

16

Figure 2.6


Customer Satisfaction Diagram

18

Figure 2.7.2

GAP model of service quality

23

Figure: 2.8.1

Relationship between Perception and Performance

31

Figure 2.9.1

Research model

32

Figure 3.1

Research design

33

Figure 3.1.2


Data analysis processing

35

Figure 4.1

Major office clusters

40

Figure 4.2

Market Snapshot, Q.3 2010

41

Figure 4.5

Major Leasing Transactions, Q 3 2010

46

Figure 5.3.1

Refresh Study Model

54

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MBAVB1 – MASTER PROJECT – DO THI THANH VAN – 2010

LIST OF TABLES

Table 2.1

Characteristics of Service

7

Table 2.7.3.2 Determinants of quality in SERVQUAL

25

Table 3.2.1

Dimensions measuring building services

37

Table 3.2.2

Variables of Customer Satisfaction

38

Table 5.2.1


Descriptive statistics result of service quality measurement 51

Table 5.2.2

Variables for customer satisfaction

51

Table 5.3.1

Reliability Analysis

53

Table 5.3.2

Regression analysis result

55

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MBAVB1 – MASTER PROJECT – DO THI THANH VAN – 2010

ABSTRACT
The benefits of good customer satisfaction on business as well as the costs
of poor customer satisfaction have been clearly demonstrated in the research
literature. The SERVQUAL (Parasuraman, Zeithaaml, & Berry, 1985) is based
on the premise that quality can be defined by the differences between the

customer and the organization on the perceptions, expectations, and actual
delivery of service. These gaps provide information that can be used to identify
the relative strengths and weaknesses of the processes and components of
service. In turn, the business is able to implement adjustments in service delivery
that directly improve customer satisfaction and profit.
The purpose of this study was to develop a customer satisfaction survey in
Sun Wah Tower to identify and examine the key factors that influence customer
satisfaction. A modified version of SERVQUAL was emailed to 108 tenants &
142 tenants’ employees. There were 200 samples collected qualified for used.
The results show three major findings. Firstly, “assurance” has a strong
significant effect on customer satisfaction, second is “tangible” and the other is
“responsiveness”. This information gives the landlord the clear understanding of
not only what is important to their service, but also the requirements of
customers. The results provide the landlord the precious information for service
improvement to

meet customer demands.

recommendations for the organization.

xiv

The

study

concludes with


MBAVB1 – MASTER PROJECT – DO THI THANH VAN – 2010


CHAPTER 1 - INTRODUCTION

1.1

Problem statement
An expected imbalance of supply and demand in the next three years is

due to new office space coming on stream. Average rents across all grades are
decreasing and have not yet bottomed out. Grade A rents experienced a further
decline as new landlords lowered their rents to attract tenants to their buildings
and existing buildings lowered their rents in-line with the new buildings in order
to retain their existing tenants.
The Ho Chi Minh City office market is facing the crucial problems for the
first time since the establishment in 1994. Firstly the Ho Chi Minh City office
market is facing oversupply and while many felt this is a good thing as rentals
are reduced in-line with other Asian markets on the developer side it is
considered a negative as newly built buildings carry huge bank loan debt and
thus need to cannibalize tenants from the existing office buildings and attract
them to lease that their new building. The new building attracts the tenant to
lease by offering numerous incentives such as generous rent free period or a
rental holiday which means the tenant does not pay agreed upon rent during a
certain period, free car and motorbike parking, flexible lease terms such as an
early exit clause and accepting a bank guarantee letter in lieu of deposit and of
course a lower than market rental rate.
The new landlord or building has no choice as they must find tenants to
occupy their building in order to begin a revenue stream in order to pay off bank
loans and begin normal operations. With only a few tenants the operational costs
are huge and thus the new landlord needs to find tenants as soon as possible to


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MBAVB1 – MASTER PROJECT – DO THI THANH VAN – 2010

maintain cash-flow and be recognized as a new or reputable quality building in
the local market.
Secondly, problems arose with strata title tenants when prime landlords
faced internal competition when strata title owners offered their space at rates
much lower than standard building rates. Strata title can be an easy way for a
new developer to see immediate return on investment but this can also be
viewed as short-term thinking as once a floor is sold the new owner may not
want to pay the “Service Charge” for provision of Landlord services such as air
conditioning, lighting, cleaning of common areas and security as one problem the
Landlord will face. The other problem is once sold the new owner can lease for
less than what the building owner is currently leasing at and thus you essentially
have the same product but with two (02) different prices.
My report research will firstly, concentrate on the review the quality of
customer service to understand customer’s positive or negative feeling about the
value of using business service in the building. Secondly, my research will give
the recommendation for solutions to improve the service for the goal or mission
to retain existing tenants and try to attract new tenants which as mentioned
earlier are becoming increasingly more difficult to landlords.
In this research, the SERVQUAL approach is applied to measure
customer satisfaction about the service provided by Sun Wah building. The
results of the survey will be used to adjust the quality of service to meet the
expectation of the tenants.
1.2.

Introduction of Sun Wah Tower

The Sun Wah Tower is designed and supervised by Los Angeles

Architects Archeon International and built to International Standards by Japan's

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MBAVB1 – MASTER PROJECT – DO THI THANH VAN – 2010

best contractor- the Shimizu Corporation, located on an island site in the heart of
Ho Chi Minh City's central business district.
Sun Wah Tower is prosperously situated to provide the ultimate business
address, attracting into the vicinity representation from almost every global
financial and capital market member, as well as a host of the world's finest
hotels.
1.2.1 The Developers/Owners
Founded in 1965 with head office in Hong Kong, Sun Wah Group is a
diversified multinational corporation that specializes in the production and
international distribution of frozen seafood and food products, property
development and financial services business.
The Marubeni Corporation is one of Japan's leading general trading and
investment conglomerates. With almost 200 offices world-wide the group's
experience in handling global development projects has made it one of the most
widely respected in this field.
1.2.2 The Architects
The EaWes Corporation was founded in 1988 in Los Angeles and quickly
established a reputation for providing award winning design. Since that time, a
variety of projects have benefited from EaWes' unique policy of active
involvement in their projects from start to finish.
1.2.3 The Contractor

The largest contractor in the world, Shimizu Corporation has consistently
played a pioneering role in the development of construction technology. With
careful planning and a commitment to creating an enriching human environment,

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MBAVB1 – MASTER PROJECT – DO THI THANH VAN – 2010

Shimizu has made a major contribution to shaping our world throughout almost
two centuries of handling construction projects.
1.2.4 Location
Sun Wah Tower is conveniently located on Nguyen Hue Boulevard
located in District One, the very heart of the city. It is here that the central
government offices are found, many 5 star hotels and the offices of almost every
major name in global banking and finance.
It is within this prosperous environment that Sun Wah Tower provides the
ultimate business address for commercial enterprises in Ho Chi Minh City.
Within easy reach of all major hotels and a majority of the city's tourist
attractions, Sun Wah Tower is just 20 minutes away from the Tan Son Nhat
International Airport
1.3

Research objectives
The research is to find out key determinants / factors which impact

customer satisfaction in Sun Wah Tower and then find solutions to adjust so that
can be met tenants’ expectation .
1.4


Scope of research
The object of study is tenants in Sun Wah Tower. Most of them are

working in foreign-owned, Joint-Venture, Joint-Stock, private companies and
non-profit organization in a wide range of business such as: Banking, Auditing,
Finance, Law, Investment, Shipping, Airline, Oil, to even a United Nation’s
affiliation “UNICEF”.
The staffs selected for interviews are Office Managers, Administration
officers, tenants’ employees who are directly using services in the building.

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MBAVB1 – MASTER PROJECT – DO THI THANH VAN – 2010

1.5

Methodology
Desk research:
Collect data as internal data base and from internet, specialized

magazines & press, involved books and previous related research.
Survey research:
Qualitative research: This step is researching by in-depth interviews with
customers in order to discover, adjust and supplement service quality dimensions
and other involved factors. The result of this research is analyzed for designing
the questionnaire which is used for official study.
Quantitative research: This step is researching by questionnaire in which
the results are for analyzing level of customer satisfaction through SPSS
software version 16.0.

1.6

Organization of the project
Main contents of this project include 6 chapters:
Chapter 1

: Introduction. This chapter gives an overview of the

research, the purpose, the way to conduct the research; The general information
of Sun Wah Building where the research is carried out; The scope and
methodology of the study.
Chapter 2

: Literature review. This chapter includes definition of

service and products, theoretical background in terms of service quality and
customer satisfaction. This chapter also presents the GAP model of service
quality, Kano model & ASCI models of customer satisfaction from which the
study model is proposed.

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MBAVB1 – MASTER PROJECT – DO THI THANH VAN – 2010

Chapter 3

: Research design. The aim of this chapter is to introduce the

research methodology, which includes the research design, the preliminary

research result, the variable adjustment and research sample.
Chapter 4

: HCMC Office Market overview. This chapter gives an

overview of Hochiminh City office building market in Quarter 3 of year 2010.
The supply, rents, vacancy, demand and outlook about the market are mentioned
in this chapter
Chapter 5

: Analysis of research data and results. This chapter gives the

results of Descriptive statistics of service quality measurement, Reliability
analysis, and Regression analysis. The three findings impact customer
satisfactions in Sun Wah Tower are Assurance, Tangible and Responsiveness.
Chapter 6

: Conclusion and recommendation. This chapter contains a

summary of the findings, and gives some recommendations

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MBAVB1 – MASTER PROJECT – DO THI THANH VAN – 2010

CHAPTER 2 - LITERATURE REVIEW

2.1


Service and products:
Services have some clear characteristics which makes them special.

These

differences

are

described

as

“intangibility”,

“inseparability”,

heterogeneity”, perishability” (Hoffman and Bateson, 1997:22-24). The box
below gives an overview of them (Zeithaml et al., 1992: 50).
Characteristics
Effect/ Problems
1. Services cannot be stored.
“Intangability”:
“A distinguishing characteristic of
2. Cannot protect services through
services that makes them unable to be
patents
touched or sensed in the same manner
3. Cannot readily display or
as physical goods.”

communicate services.
4. Prices are difficult to set.
1. Consumer involved in
“Inseparability”:
“A distinguishing characteristic of
production
services
that
reflects
the
2. Others consumers involved in
interconnection among the service
production.
provider, the customer involved in
3. Centralized mass production of
receiving the service, and other
services difficult.
customers
sharing
the
service
experience.”
1. Standardization and quality
“Heterogeneity”:
“A distinguishing characteristic of
control difficult to achieve.
services that reflects the variation in
consistency
from
one

service
transaction to the next”
1. Services cannot be inventoried
“Perishability”:
“A distinguishing characteristic of
services in that they cannot be saved,
their unused capacity cannot be
reserved, and they cannot be
inventoried”
Table 2.1 Characteristics of Service

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MBAVB1 – MASTER PROJECT – DO THI THANH VAN – 2010

Dealing with these specific characteristics will influence the search for
defining which components of service quality determine satisfaction.
2.2

Understanding Customer Satisfaction
Understanding and measuring satisfaction is a central concern. In order to

get a better view on satisfaction, we describe some key elements in this part.
The model has underpinned the satisfaction approach is the disconfirmation
theory, which suggests that customer satisfaction with a service is related to the
size of the disconfirmation experience; where disconfirmation is related to the
person’s initial expectation. If experience of the service greatly exceeds the
expectations clients had of the service, then satisfaction will be high, and vice
versa. In the service quality literature, perceptions of service delivery are

measured separately from customer expectations, and the gap between the two,
P (Perceptions) – E (Expectations), provides a measure of service quality and
determines the level of satisfaction. 

Figure 2.2  Service Quality Gap

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MBAVB1 – MASTER PROJECT – DO THI THANH VAN – 2010

2.3

Customer’s expectations
Expectations have a central role in influencing satisfaction with services,

and these in turn are determined by a very wide range of factors.
Customer’s expectations are the needs, wants, and preconceived ideas of
a customer about a product or service. Customer expectation will be influenced
by a customer's perception of the product or service and can be created by
previous experience, advertising, hearsay, awareness of competitors, and brand
image. The level of customer service is also a factor, and a customer might
expect to encounter efficiency, helpfulness, reliability, confidence in the staff,
and a personal interest in his or her patronage. If customer expectations are met,
customer satisfaction is increasing.
Recognition of factors, which influence customer’s expectation, will help
the service supplier applying appropriate procedures to modify customer’s
expectations and to provide customers with service proportion to thereof. Given
the central importance of expectations, it is importance to understand how they
are formed (Quality Accounts Commission, 1999). The basic key factors most

commonly seen to influence expectations are described as:
· Personal needs: any customer or user of a service will have what they
regard as a set of key personal needs that they expect the service to
express. These will vary from service to service and from customer to
customer. A clear understanding of these needs is necessary to design an
appropriate service.
· Previous experience: many will have had service encounters before. Their
previous experience will in part influence their future expectations of the
service. This can include their past experience of the service in question,
but also of other services.

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MBAVB1 – MASTER PROJECT – DO THI THANH VAN – 2010

· Word of mouth communications: expectations will be shaped by
communications from sources other than the service provider itself. This
can include family, friends and colleagues, but more widely the media and
other organizations, such as audit agencies.
· Explicit service communications: statements from staff or from leaflets or
other publicity material can have direct impact on expectations.
· Implicit service communication: This includes factors such as the physical
appearance of buildings. E.g. renovation may lead the customer to expect
other service aspects to be of higher quality.

Figure2.3:

Antecedents of expectations


The impact of brand image or service (covered by word of mouth
communications above) on expectations is seen as central in a number of
building service sector studies. This would seem to be a particularly important
concern for building service, for two keys reasons. Firstly, it is argued that in the

10


×