CUSTOMERS PORTFOLIO AS MANAGEMENT REQUIREMENT Essay

CUSTOMERS PORTFOLIO AS MANAGEMENT REQUIREMENT - Essay Example The implementation of these strategies must however be done in a manner that can guarantee that the strategic management plans of the companies are up to date with changing situations on the market (Levinsohn and Williams, 2004). This means that the search and implementation of strategic management plans must be undertaken as a holistic process that includes all stakeholders who have a role to play in the success of the company. In relation to this argument, Labovitz (2005), identifies the place of the customer in having a very formidable strategic management plan for the modern global economic market. It has been said that the customer is no longer a passive member of the corporate society but an active member of it (Khurana, 2002). Because of this, the need to always include customers in the planning of the company is very relevant and inevitable. With this understanding in mind, the current report is prepared to identify the place of the customer in a typical modern business and o utline ways in which companies can make use of the all new concept of customer portfolio to maximise the benefits they can make of their customer base. 2.0 Theoretical Framework A waterfall approach to the theoretical understanding of the concept of customer portfolio is developed. This approach involves the strategic review of what exists in literature as the place of customers in business entities. After this understanding has been developed, there will then be a deduction of what the definition of customer portfolio is, based on what is deduced in literature. 2.1 Customers as assets Writing on the place of customers in a typical business entity, Kets de Vries (2003) explained that the best way for companies to make the best out of their customers is to understand the place of customers as assets to the company. Commonly, the assets of companies are judged as either being tangible or intangible, with much emphasis and focus on those things that can be utilised by the company for r evenue generation purposes (Nutt, 2004). Labovitz and Rosansky (2007) laments that hardly are customers envisioned and classified as having the potential of generating revenues for the company. What companies have done over the years is to see the customer as the source of revenue, rather than a generator of revenue. But this perception is said to be erroneous, especially in cases where companies want to make the best out of their customers. As assets, customers will be seen as tangible resources that ought to be managed so as to ensure that they are transformed into revenues (Morrison and Milliken, 2000). Giving a practical explanation of how customers could act as assets, Roberts, Swanson and Dinneen, J. (2004) said that every company that has a formidable database of its customers would realise that each customer has a specific fiscal wealth they account to the customer. Since assets are also quantified as fiscal wealth, customers can be said to be assets. 2.2 Customers as stakeh olders Farrell (2004) joins a school of thought that argues that customers may best be seen as stakeholders if companies want to make the most of them. As stakeholders, customers have been explained as people, having a say in the planning and decision making process of the company. This way, customers may be included in decision making in two major ways. The first of these ways is active inclusion, which requires companies to have a mechanism by which views of customers will be collected and considered while taking management level decisions (Sankar, 2003). There is also a passive inclusion of customers as stakeholders in decision making, where the company uses a strategy to identify the views and thoughts of customers about the company and make decisions that