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ACSI American Customer Satisfaction Index TM
Citizen Satisfaction: Public Sector and Performance Management
Forrest V. Morgeson III, Ph.D. American Customer Satisfaction Index (ACSI)
San Juan, Puerto Rico, September 5th, 2013
2 © NQRC
1. ACSI Citizen Satisfaction Overview
3 © NQRC
Snapshot of ACSI
• Established in 1994, ACSI is the only standardized measure of customer satisfaction in the U.S. economy, covering more than 235 companies in 45 industries and 10 economic sectors
• In the aggregate, ACSI represents a quarterly measure of the national economy’s health, complementary to measures such as inflation, productivity, and unemployment
• 100+ departments, agencies, programs and websites of the U.S. Federal government also measured on an annual basis
• Results from all surveys are published quarterly in various media and on the ACSI website, www.theacsi.org
4 © NQRC
ACSI and Citizen Satisfaction
• ACSI has measured satisfaction with government since the project’s inception in 1994
– Internal Revenue Service and core local government services (police, waste disposal) first measured in 1994
• In 1999, ACSI was chosen as the “gold standard” measure of
citizen satisfaction by the Federal government – ACSI was tasked with measuring 30 “high impact” Federal
agencies in 1999 and 2000, reflecting the vast majority of citizen interactions with government
• Although now relying on optional agency buy-in, participation in
the ACSI study has grown significantly since 1999
5 © NQRC
Why Measure Satisfaction with Government?
More efficient budgetary and resource allocation
Monitor and motivate public employees
Set “baseline” for customer satisfaction, measure progress, and
benchmark performance
Provide critical information for annual performance reporting
Identify areas for improving quality of service provided
to customers
Raise trust in government agencies and the
government overall Enhance government
transparency and accountability
ACSI Develop new citizen-government “feedback
loop”
6 © NQRC
2. ACSI Methodology
7 © NQRC
ACSI Methodology
• In the ACSI Model, Customer Satisfaction (ACSI) is embedded in a system of “cause-and-effect” or “structural” relationships
• All of the variables in the ACSI Model are measured using multiple indicators (survey questions), increasing their precision and reliability
• The central objective of the model is to explain what influences ACSI, and in turn what is influenced by ACSI
8 © NQRC
● A component score is a weighted average of a set of attributes, or survey questions, comprising a component or activity. Responses to survey questions are given on a 1-10 scale, which are then converted to a 0-100 scale for score reporting.
● An impact, on the other hand, predicts the increase in satisfaction that would result from a 5-point increase in a component score.
● Areas for improvement are those components or activities with a relatively low score and a relatively high impact on satisfaction.
In the simplified example shown here, Activity 2
would be a key action area due to its relatively low score and high impact.
ACSI
65 Activity 2
65
Activity 1
76
1.5
.8
Impact
Score
EXAMPLE
ACSI Methodology
9 © NQRC
3. 2012 ACSI Results and Findings
10 © NQRC
68.6 68.6
71.370.2
70.972.1
71.372.3
67.868.9 68.7
65.466.9
68.4
60
65
70
75
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
*A sampling methodology change in 2007 limits comparability to prior years. Year-to-year trending is recommended.
Aggregate Federal Government Satisfaction, 1999-2012*
11 © NQRC
● Year-on-year, the Federal Government ACSI score increased significantly, up 1.5 points from 2011, a gain of 2.2%
● This is the second consecutive annual gain for the Federal government ACSI, which is up 3.0 points since 2010, a total gain of 4.6%
Satisfaction Gains 2011 to 2012
12 © NQRC
2012 Federal Government ACSI Model
N = 1376; 90% Confidence Interval = 1.2
Customer Complaints
Agency Trust
Customer Satisfaction
(ACSI)
Perceived Quality
Customer Expectations
Customer Service
Information
Process
Confidence
Recommend
Courtesy
Professional
Clarity
Accessibility
Ease
Timeliness
71
72
80
71
75
68
71
11%
1.9
1.0
1.8
0.4
4.2
0.4
-2.2
4.7
-0.1
71
71
Website Ease
Usefulness
74
80
80
73
72
71
72
78
70
2.4
13 © NQRC
Citizen Satisfaction by Federal Department
14 © NQRC
Public and Private Sector Comparisons
15 © NQRC
The Expectations-Quality Gap
50
55
60
65
70
75
80
85
90
95
100
Federal Government
Transportation Hotel & Food Durable Goods
71
7881
87
7578
8187
Expectations
Quality
16 © NQRC
Switching Barriers and Satisfaction
Soft Drinks 84
Automobiles 84
Beer 81
Appliances 81
Personal Computers 80
Banks 77
Wireless Service 70
Local Government 69
Federal Government 68
Airlines 67
Cable/Satellite TV 66
Less
Com
petit
ion
Mor
e C
ompe
titio
n
Switching Barriers/ Monopoly Power
17 © NQRC
● ACSI measures both agency trust (confidence in the agency experienced), and generalized trust (trust in the Federal government as a whole)
● Similar to results found in other studies, trust in Washington D.C. scores far lower than trust in individual agencies experienced
● This year, both trust in Washington D.C. and trust in the performance of particular agencies increased significantly
Agency and Diffuse Trust
18 © NQRC
Agency and General Trust
30
35
40
45
50
55
60
65
70
75
Agency Trust General Trust
69
36
71
43
20112012
19 © NQRC
Agency and Diffuse Trust
Agency Trust
Customer Satisfaction
(ACSI)
1.7
4.7 Overall Trust in
Federal Government
71
68
0.2
43
● These results show that while satisfaction with an agency experience drives overall trust in the government only slightly, it has a strong effect through agency trust
-In other words, agencies that offer a more satisfying experience will build trust in their agency, but also help build (or rebuild) general trust in the entire Federal government among American citizens
20 © NQRC
4. E-Government
21 © NQRC
● It is widely agreed that government, and especially the federal government, offers poor service when compared to the private sector
● Many policymakers believe e-government – where government services are delivered using new information technologies - holds considerable potential for positively transforming government service delivery – Through legislation like the “E-Government Act,” the federal
government is working to move as many of its services to the Internet as possible, and as quickly as possible
Is E-Government the Solution?
22 © NQRC
67.868.9 68.7
65.466.9
73.4 73.975.2 75.0 75.1
75.9 76.577.3 76.9 77.5
60
65
70
75
80
85
2007 2008 2009 2010 2011
Federal Govt-Overall Federal Govt-E-Govt Private Sector
Is E-Government the Solution?
23 © NQRC
● Federal e-government comes much closer to matching the performance of the private sector than does the federal government as a whole
● The average annual gap between private sector and federal e-
government Web sites is just over two points on the 0-100 scale, while the gap between the private sector and federal government overall averages more than 9 points
Is E-Government the Solution?
24 © NQRC
● However, some recent research calls into question the quality of services provided by federal e-government (Morgeson & Mithas 2009)*
● This research, using ACSI data for federal websites and comparing them to e-business websites, shows both lower satisfaction and significantly greater variability across federal websites – While e-government may be somewhat better than “off-line”
government services, it is still well behind the private sector
*Morgeson, Forrest and Sunil Mithas (2009). “Does E-Government Measure up to E-Business? Comparing End-User Perceptions of U.S. Federal Government and E-Business Websites.” Public Administration Review, 69 (4).
Is E-Government the Solution?
25 © NQRC
Customers Expect Less of GovernmentThan of Private Sector
6.6
7.9
6.6
7.9
6.9
8.0
7.0
8.0
7.1
8.1
7.4
8.1
7.6
8.28.0
8.2 8.1
8.48.2
8.7
6
7
8
9
10
E-Government/AgencyE-Business/Company
Graph 1Overall Satisfaction: Range from Lowest to Highest Agency/Company
The range for e-government is much larger
Is E-Government the Solution?
26 © NQRC
● E-government holds considerable promise for not only providing better government services to citizens, but also for saving the federal government money (estimates place these savings at as much as $500 million per year!)
● However, while e-government seems to perform better than “traditional” government services, it does not yet match the standards set by private sector Web sites. More work is needed
Conclusions
27 © NQRC
5. IRS Case Study
28 © NQRC
Before leveraging customer satisfaction …
• Disgruntled employees • Dissatisfied taxpayers • Declining, low ACSI Scores
“As only one taxpayer representative out of thousands across the country, I have seen dozens of taxpayers severely damaged and even made homeless by the IRS collection division.”
1997 Senate Hearings:
A Tax Agency Out of Control
“The long list of IRS horribles included arbitrary collection decisions, sale of taxpayer lien property far below value, and the cavalier mistreatment of taxpayers.”
Anonymous Witness #1, IRS Employee Senate IRS Hearings 1997
Bob Zelnick, ABC Good Morning America September 26, 1997
Case Study: Internal Revenue Service
29 © NQRC
55 5450
54
74 74 72 71
0
10
20
30
40
50
60
70
80
1994 1995 1996 1997
AC
SI S
core
s
Internal Revenue Service ACSI National
Case Study: Internal Revenue Service
30 © NQRC
e-Filers vastly more satisfied … • fewer errors, quick problem resolution • earlier refunds, status tracking
505253535248
44
77787778777574
40
50
60
70
80
90
1999 2000 2001 2002 2003 2004 2005
Paper Filers e-Filers
30 points
Case Study: Internal Revenue Service
31 © NQRC
IRS hears the voice of the customer … • Commitment to customer service • Increased awareness and usage of e-Filing
Customer Satisfaction Up 13 Points
Faster Trade-Up to Electronic filing… Faster access to tax revenues?
51
56
60
6263
64 64
50
52
54
56
58
60
62
64
1999 2000 2001 2002 2003 2004 2005
All Individual Filers
Case Study: Internal Revenue Service
32 © NQRC
20%
55%
0%
10%
20%
30%
40%
50%
60%
70%
1998 2005
Number of e-filers nearly triples in 7 years
“We realize we have more work to do, but the survey is just one more indication that the IRS reorganization and its emphasis on customer service are paying off. The satisfaction with IRS e-file won´t surprise any taxpayer who has used it. When they try it, they like it. It is fast, accurate and dependable.” - Charles O. Rossotti, IRS commissioner, December 17, 2001
Case Study: Internal Revenue Service
33 © NQRC
“The IRS web site is the most popular channel for taxpayers to use to obtain information or resolve a tax matter… This web site, which has grown since 2005, along with customer satisfaction ratings for www.irs.gov from the American Customer Satisfaction Index (ACSI)...”
Internal Revenue Service,
“2010 Annual Report to Congress”
Case Study: Internal Revenue Service
34 © NQRC
ACSI
• For more information, visit the ACSI website at: www.theacsi.org
35 © NQRC
Appendix
36 © NQRC
ACSI and Financial Returns (Macro)
37 © NQRC
ACSI Macro
70
71
72
73
74
75
76
77
Base
line
Q4/1
994
Q1/1
995
Q2/1
995
Q3/1
995
Q4/1
995
Q1/1
996
Q2/1
996
Q3/1
996
Q4/1
996
Q1/1
997
Q2/1
997
Q3/1
997
Q4/1
997
Q1/1
998
Q2/1
998
Q3/1
998
Q4/1
998
Q1/1
999
Q2/1
999
Q3/1
999
Q4/1
999
Q1/2
000
Q2/2
000
Q3/2
000
Q4/2
000
Q1/2
001
Q2/2
001
Q3/2
001
Q4/2
001
Q1/2
002
Q2/2
002
Q3/2
002
Q4/2
002
Q1/2
003
Q2/2
003
Q3/2
003
Q4/2
003
Q1/2
004
Q2/2
004
Q3/2
004
Q4/2
004
Q1/2
005
Q2/2
005
Q3/2
005
Q4/2
005
Q1/2
006
Q2/2
006
Q3/2
006
Q4/2
006
Q1/2
007
Q2/2
007
Q3/2
007
Q4/2
007
Q1/2
008
Q2/2
008
Q3/2
008
Q4/2
008
Q1/2
009
Q2/2
009
Q3/2
009
Q4/2
009
Q1/2
010
Q2/2
010
Q3/2
010
Q4/2
010
Q1/2
011
Q2/2
011
Q3/2
011
Q4/2
011
Q1/2
012
Q2/2
012
Q3/2
012
Q4/2
012
Q1/2
013
ACSI 1994 to Q1 2013
38 © NQRC
Growth in ACSI and GDP: 1997 – 2013 (Q1)
Source: GDP from U.S. Department of Commerce, Bureau of Economic Analysis
-8%
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
Annu
aliz
ed, S
easo
nally
Adj
uste
d Ra
te o
f Gro
wth
% Quarterly Change in GDP
% Quarterly Change in ACSI
39 © NQRC
Growth in ACSI and Consumer Spending: 1995 – 2013 (Q1)
Source: Consumer Spending from U.S. Department of Commerce, Bureau of Economic Analysis
-8%
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
-6%
-4%
-2%
0%
2%
4%
6%
8%
Annu
aliz
ed, S
easo
nally
Adj
uste
d Ra
te o
f Gro
wth
% Quarterly Change in Consumer Spending
% Quarterly Change in ACSI (lagged)
40 © NQRC
-24%
-20%
-16%
-12%
-8%
-4%
0%
4%
8%
12%
16%
20%
Growth in ACSI and DJIA: 1995 – 2013 (Q1)
41 © NQRC
ACSI Stock Portfolio vs. SP 500 Cumulative April 2000 – April 2013
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500Ap
r-00
Mar
-01
Feb-
02
Jan-
03
Dec -
03
Nov
-04
Oct
-05
Sep-
06
Aug-
07
Jul-0
8
Jun-
09
May
-10
Apr-
11
Mar
-12
Feb-
13
Cum
ulat
ive
Perf
orm
ance
S&P 500
ACSI Stock Portfolio
$509.83
$106.60
42 © NQRC
ACSI and Financial Returns (Micro)
43 © NQRC
Measuring Customers as an Asset Aligning measures to maximize the firm’s performance
Voice of Customer Methodology-Driven Impact Analysis
Financially-Driven Strategic Guidance
-Management Perspective -Customer Interviews -Model of Satisfaction -Custom Questionnaire
-Causes and Consequences -Quantify Improvements -Special Analyses -Benchmarking
-”What to Do” -Financial Impact -Progress Monitoring -What-If Analysis
Customer Satisfaction Management System
44 © NQRC
The Satisfaction-Profitability Chain
Drivers of Satisfaction
• Expectations • Quality (Product, Service) • Value • Brand Image • Employee Satisfaction
Customer Satisfaction
Satisfaction Outcomes
• Customer Loyalty • Word-of-Mouth • Up/Cross-Selling • Share of Wallet
Corporate Financial
Performance
• Revenue Growth • Market Share • Earnings/Profitability
Stock Market Performance
• Higher Market Value • Lower Volatility • Lower Risk
45 © NQRC
What is CLV?
• Customer lifetime value (CLV) is defined as the dollar value of a customer relationship, based on the present value of the projected future cash flows from the customer relationship
• CLV quantifies the total value of the customer relationship. It recognizes that because retained customers are “cheaper” than new customers (no advertising; fewer incentives), and because the retained customer becomes less expensive in the future (the discount rate), the strength of the customer relationship matters greatly
• CLV is calculated as: Customer lifetime value ($) = Margin ($) * (Retention Rate (%) ÷ [1 + Discount Rate (%) - Retention Rate (%)])
46 © NQRC
What Role Does Satisfaction Play in CLV?
• As customer satisfaction increases, so too does the customer retention rate. In turn, an increasing retention rate means a larger CLV, with each customer bringing more profit to the firm:
• In this example, based on ACSI data, an increase in ACSI of 10-points was shown to increase Retention by 6.5%. In turn, CLV increased 33.4%, meaning that the average per-customer profitability increases by 33.4% as well!
ACSI Retention % Δ CLVACSI +0 75.0% 0.0%ACSI +1 75.6% 2.8%ACSI +2 76.3% 5.6%ACSI +3 76.9% 8.6%ACSI +4 77.6% 11.7%ACSI +5 78.2% 15.0%ACSI +6 78.9% 18.3%ACSI +7 79.5% 21.9%ACSI +8 80.2% 25.5%ACSI +9 80.8% 29.3%ACSI +10 81.5% 33.4%
47 © NQRC
$0
$100
$200
$300
$400
$500
$600
65
70
75
80
85
90
00 01 02 03 04 05 06 07 08 09 10 11 12
Apple ACSI Apple Stock
Stock Price and ACSI: Apple
48 © NQRC
$0
$40
$80
$120
$160
$200
65
70
75
80
85
90
07 08 09 10 11 12
Netflix ACSI Netflix Stock
Stock Price and ACSI: Netflix
49 © NQRC
$0
$10
$20
$30
$40
$50
$60
$70
60
64
68
72
76
80
01 02 03 04 05 06 07 08 09 10 11 12
Home Depot ACSI Home Depot Stock
Stock Price and ACSI: Home Depot
50 © NQRC
$0
$20
$40
$60
$80
$100
$120
72
74
76
78
80
82
84
00 01 02 03 04 05 06 07 08 09 10 11 12
Costco ACSI Costco Stock
Stock Price and ACSI: Costco
51 © NQRC
• ACSI data has been used and examined in more than 3000 academic research articles over the past two decades
• In one study, customer satisfaction as measured by ACSI was found to outperform other popular metrics – such as Net Promoter, customer complaints, “top-box” satisfaction, word-of-mouth/recommendation, and repurchase intention – in predicting financial outcomes
• ACSI is a leading predictor of the following measures of financial performance (among others): • Stock market returns • Total shareholder returns • Market value added (MVA) • Return on investment (ROI) • Annual sales/revenue growth • Net operating cash flow
ACSI: Academic Power and Proven Performance
52 © NQRC
Cross-National Benchmarking
53 © NQRC
Why Measure Cross-National Satisfaction?
• In 2008, 48% of the revenues of S&P 500 companies came from abroad; share of international profits as a percentage of total profits has risen from 5% during the 1960s to over 25% in 2008
• As firms globalize their operations, market research examining consumer attitudes and behaviors cross-nationally has become very common
• Similar to single-market firms, cross-national satisfaction measurement is driven by the belief that improving satisfaction will result in increased customer loyalty and the financial benefits associated with more loyal customers in all markets of operation
54 © NQRC
• Many MNCs are now implementing cross-national satisfaction measurement programs, with data collected across a dozen or more countries and results compared
• This data is now utilized as the basis for performance incentives, operational decision-making, and process improvement
• The proliferation of cross-national satisfaction measurement means that research practitioners within MNCs must be able to disentangle sources of variation in consumer satisfaction across nations in order to effectively compare and benchmark satisfaction across nations
Cross-National Satisfaction Research from ACSI
55 © NQRC
• A recent study, using data from ACSI and ACSI partner countries, examines this issue, seeking to explain sources of cross-national variation in consumer satisfaction*
• The paper focuses on three sets of broad factors hypothesized to impact satisfaction across nations: cultural, socioeconomic and political-economic factors
• The study utilizes a unique sample of cross-industry satisfaction data from 11 economic sectors across 19 nations, encompassing nearly 257,000 interviews of consumers
*Morgeson III, Forrest V., Sunil Mithas, Timothy L. Keiningham and Lerzan Aksoy
(2011). “An Investigation of the Cross-National Determinants of Customer Satisfaction,” Journal of the Academy of Marketing Science, 39(2), 198-215.
Cross-National Satisfaction Research from ACSI
56 © NQRC
Sectors and Nations Measured
Country Utilities
Transportation and
Warehousing Information
Health Care and Social Assistance
Accommodation and Food Services
Educational Services
Manufacturing (Nondurable
Goods)
Manufacturing (Durable Goods)
Public Administration
Retail Trade
Finance and
Insurance Total
United States 1 3 12 1 3 0 8 5 4 5 4 46
Singapore 0 6 2 4 5 3 0 1 0 9 1 31
Hong Kong 0 2 2 3 3 1 0 0 0 6 1 18
Japan 0 2 2 2 4 2 0 0 0 5 1 18
Thailand 0 3 2 3 3 1 0 0 0 5 1 18
Colombia 0 0 1 2 0 0 0 1 0 1 2 7
Turkey 0 2 1 1 1 1 14 5 4 4 4 37
United Kingdom 0 0 1 0 2 0 0 1 0 0 3 7
Denmark 0 1 3 1 0 1 0 0 1 0 2 9
Finland 1 1 4 1 0 1 0 0 0 1 2 11
Norway 0 0 3 0 0 0 0 0 0 2 2 7
Sweden 1 5 3 3 0 4 0 0 2 5 5 28
Iceland 1 0 2 0 0 0 0 0 0 4 2 9
Czech Republic 0 1 1 1 0 1 0 0 0 0 2 6
Russia 0 1 1 0 0 0 0 0 0 0 1 3
Ukraine 0 1 1 0 0 0 0 0 0 1 2 5
Estonia 0 0 2 0 0 0 0 0 0 1 1 4
Latvia 0 0 2 0 0 0 0 0 0 1 1 4
Lithuania 0 0 2 0 0 0 0 0 0 1 1 4
Total 4 28 47 22 21 15 22 13 11 51 38 272
57 © NQRC
United StatesSingapore
Hong Kong
Japan
Thailand
Colombia
Turkey
United Kingdom
DenmarkFinland
Norway
Sweden
Iceland
Czech Republic
RussiaUkraine
Estonia
Latvia Lithuania
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
-2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0
Trad
ition
al v
s. S
ecul
ar-R
atio
nal
Valu
es
Survival vs. Self-Expressive Values
Traditional vs. Secular-Rational and Survival vs. Self-Expressive Cultural Values by Nation
58 © NQRC
Cultural Findings
• Consumers in traditional societies (strong national pride, passive respect for authority, protectionism; e.g. Colombia, Turkey, the United States) tend to experience and express higher levels of satisfaction than secular-rational societies (e.g. the northern European countries)
• Consumers in self-expressive societies (strong interpersonal trust, high subjective well-being, post-materialist values; e.g. Sweden, Norway, Denmark) tend to experience and express higher levels of satisfaction
• These results suggest that cultural factors matter when benchmarking satisfaction results across nations, and that some cultural groups may be harder to please than others
59 © NQRC
United States
Singapore
Hong KongJapan
ThailandColombia
Turkey
United KingdomDenmark
Finland
Norway
SwedenIceland
Czech RepublicRussia
Estonia
Latvia
Lithuania
60.0
65.0
70.0
75.0
80.0
85.0
90.0
95.0
100.0
60.0 65.0 70.0 75.0 80.0 85.0 90.0 95.0 100.0
Busin
ess
Free
dom
Trade Freedom
Trade Freedom and Business Freedom Values by Nation
60 © NQRC
Political-Economic Findings
• Consumers in nations with greater international trade freedom (e.g. Hong Kong, Singapore) tend to experience and express higher levels of satisfaction
• Consumers in nations with greater domestic business freedom (e.g. Finland, Singapore) tend to experience and express higher levels of satisfaction
• Taken together, these results suggest that greater levels
of economic freedom increases the satisfaction of domestic consumers
61 © NQRC
Socio-Economic Findings
• Consumers in nations with higher average per capita GDP (e.g. Singapore, Norway, the United States) are less satisfied
• On the other hand, consumers in nations with higher literacy rates (e.g. Finland, Norway) are generally more satisfied
• These findings suggest that as a nation’s wealth grows, consumers become more demanding/less easy to satisfy. On the other hand, more literate consumers tend to be more satisfied consumers
62 © NQRC
Conclusions & Recommendations
• Marketing managers must recognize that any effort to benchmark and compare satisfaction levels across distinct nations is likely to be confounded by cultural differences
• Moreover, results suggest that efforts to improve satisfaction may have a less noticeable effect in some nations, suggesting that efforts to establish cross-national “targets” for satisfaction improvement may be difficult
• Strategically, MNCs should recognize these culturally-driven satisfaction thresholds when considering entry into new national markets
63 © NQRC
Conclusions & Recommendations
• Confirming both classical economic theory and contemporary accepted wisdom, the study finds that both free trade and business freedom positively impact customer satisfaction. Freer markets have happier consumers
• For economic and political policymakers, this finding suggests that improving customer service and satisfaction as a strategy for spurring economic growth can be achieved (in part) through expanding economic freedom
• Finally, as a nation’s wealth increases consumers become more difficult to satisfy, while an increasing literacy rate has the opposite impact. MNCs should recognize these facts as well when considering entry into developed national markets