Discuss the notion that firms should stop doing business with customers who constantly generate losses versus the notion that the customer is always right.

Answer with its Explanation:

Notion 1: Firms should stop doing business with customers who constantly generate losses

The notion says that the firm must opt to the customers that generate higher profits if it is working at full capacity which means that the demand of our product is already high and what we must do is to generate higher profits and not to generate fewer because the primary purpose of the organization is to maximize wealth of shareholders.

The notion can also be interpreted in terms of customers who have higher bargaining power and as a result force the management to deliver them with higher value in return of fewer cost. This is though beneficial to customers but for the company it is not financially acceptable

Notion 2: Customer is always right

The notion encourages the service staff to satisfy the customer and let the customer to regret of purchasing the product. This means the staff will have to attend the complaints of the clients and will also have to resolve the issues. The notion is exagrated if we talk about the misuse of the notion which is that the customer can benefit by his dishonesty and all the service staff is to do is that they must appraise the claims of the customers and act accordingly. If the service staff starts believing the customer blindly then it is most likely that the company will suffer from the customer dishonesty. This customer dishonesty is very common in poor and developing countries.

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