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Sultan Qaboos University College of Economics and Political Science Department of Operations Management & Business Statistics POMG 3715: Service Operations Management Spring 2020 Midterm Exam (35%) Total 40 Marks Date: 4/5/2020 Duration: Monday 8:00 am to Wednesday 8:00 am Instructor: Dr. Samiya Al-Jabri • You must write your name, Course Code, Instructor Name and ID # on the answer sheet. • All your answers must be typewritten with font size 12, 1.5-line space and margin of 2” on the right. • Your answers must be uploaded as PDF format in Moodle. • You are fully responsible for to solve the exam by yourself and not to share your answers with any of your colleagues. • If you have any inquiries then don’t hesitate to contact the instructor. Page 1 of 12 CASE STUDY Dog-walking startup Wag raised $300 million to unleash growth. Then things got messy By Sara Ashley O'Brien, CNN Business Updated 1635 GMT (0035 HKT) September 27, 2019 (CNN)At the start of 2018, Wag looked like tech's next Big Thing. In January, the founders of the dog-walking startup announced they had landed a $300 million investment from SoftBank's Vision Fund. The world's largest tech investor, SoftBank had $93 billion at its disposal and a network of global connections second to none. Unlike almost any other venture capital firm, it was capable of single-handedly supercharging businesses and shaking up entire industries. Launched in 2015 at the height of the on-demand boom, Wag was founded by brothers Joshua and Jonathan Viner, along with Jason Meltzer, who previously ran a traditional dog walking business. Together, they followed Uber's playbook: connect pet owners with Wag's network of dog walkers, who work as independent contractors. The startup attracted endorsements from celebrities including singer Mariah Carey and actress Olivia Munn, who is also an investor. By the time of the SoftBank deal, Wag had reached 100 US cities. With SoftBank's backing, and the appointment of a veteran CEO around the same time, Wag looked primed to become a global pet care services leader. More than a year and a half later, SoftBank and Wag have fallen short. Wag has gone through multiple rounds of layoffs, endured management changes, and shuttered its customer service hub in the Hollywood Hills, according to interviews with 17 former employees who've recently left Wag, some as part of layoffs. Most spoke with CNN Business on condition of anonymity, citing nondisclosure agreements or fears of retaliation. Page 2 of 12 Some of the former employees claim that Hilary Schneider, a veteran tech executive who joined Wag as CEO in January 2018, has yet to get a handle on fundamental issues facing the business -- including growth, safety of pets, and customer service. Wag's stumbles highlight the challenges that startups face in trying to apply the popular on-demand model to upend a range of industries in pursuit of rocket ship growth, even with a war chest of funding. It comes amid broader doubts about SoftBank's strategy to pump vast amounts of capital into flashy tech startups. Two of SoftBank's other large investments, Uber and WeWork, have received pushback from public market investors. "Senior leadership [at Wag] was disengaged from the company and product and didn't have a good understanding as to the strategy needed to make it viable long term," said Eric Weinmann, who was responsible for analytical reporting, strategy, and analysis concerning growth and user acquisition from August 2018 to July 2019. "Wag never appeared to have a coherent way to measure successes and failures." In a lengthy statement in response to a detailed list of questions from CNN Business, a Wag spokesperson said its "senior leadership is highly intentional with its direction of Wag, using a data-driven approach to guide strategy and growth, while also improving the customer experience." The company also repeatedly stressed that it is working to "grow thoughtfully" to add "long term value for the business," while focusing on "driving customer retention and loyalty." The company's once compelling growth has declined while Rover, its main competitor, continues to see increased sales and to dominate over Wag, according to data provided by research firm Second Measure. Page 3 of 12 Softbank Group CEO Masayoshi Son has pumped billions into flashy tech startups, including Uber and WeWork, through the Vision Fund, a massive technology investment fund. But some of these bets, like Wag, have not performed as well as expected. While Wag started as a dog-walking startup, Rover launched four years earlier as a boarding service for canines -- a more costly but typically less frequent need for pet owners. Both now have expanded upon their original offerings to become directly competitive. This year, Rover branched out to include services for cats. After the SoftBank deal, which rocketed Wag's valuation to north of $600 million according to Prime Unicorn Index, which tracks valuations of privately-held companies, Wag was gaining market-share over Rover. It held nearly 23% in the first quarter of 2018. However, it now holds about 16% of the market compared to Rover, data from Second Measure shows. Wag's struggles since raising hundreds of millions of dollars casts doubt on SoftBank's ability to declare winners in the market with its checkbook alone. It also highlights the challenges of trying to scale an Uber-style business that impacts not just real customers, but their beloved pets. Runaway growth — and dogs In the wake of the Great Recession, entrepreneurs raced to build every type of app-based, on-demand service they could think of — from grocery delivery and meal kits to at-home manicures, laundry pickup, house cleaning and, of course, getting a ride. So why not dog walking? That's how Jonathan Viner described the lead-up to founding Wag in a podcast interview published last fall. His brother, Josh, had wanted to get a dog for years but was told by family members that he was too busy to take care of one. "[Josh] got really excited about an opportunity to build an app that was a button on the phone for dogs. He felt like, if he had this problem then many, many other people that want to own and rescue dogs also [would have this same] problem," Jonathan said in the podcast. The brothers had started businesses together before, most recently a social dating service ChirpMe, which reportedly sold for an undisclosed amount in Page 4 of 12 2013. Mike Walsh, a general partner at Structure Capital, which was an early investor in Wag, described the brothers to CNN Business as "so smart" that it's "almost difficult to communicate" with them. Wag was built to be "a button on the phone for dogs," according to one of its founders. Even with its massive cash infusion last year, the app has struggled to keep pace with rival Rover. With Wag, their aim was to help dog owners access its vetted local dog walkers at any time. Pet owners can request a lockbox from Wag that allows dog walkers to let themselves into the home with a simple code to retrieve a dog for a 30-minute or 60-minute walk, or a 20-minute check-in. A 30-minute walk starts at $20. Capitalizing on the popularity of animals on social media, Wag uses its social platforms to post irresistible photos of dogs taken by walkers on the job. Wag faced all the usual pain points of an on-demand startup relying on contract workers, including questions about its background checks and its ability to thoroughly train its workers. On top of those, though, it had added a uniquely challenging element: the unpredictability of dogs and how they'll react to strangers leashing them up for a walk. Local publications across the country have chronicled a long list of concerning incidents including lost dogs and even some dogs dying in the care of Wag, and competitor Rover's, service. In response to an incident on its platform, Rover recently said that incidents are "rare" but should one occur "our team will conduct an in-depth investigation and take appropriate actions, such as removing users from our community." Wag has had at least five allegations made public of dogs being abused or dying in its care in the past year. The company didn't directly address CNN Business' questions about safety incidents in its statement but in response to a recent incident, Wag said that it cares "very deeply about the health and safety of the dogs walked on our platform." In a blog post earlier this year, Schneider addressed backlash related to how it has handled some of these issues in the past. From the start, the Viners had to deal with runaway dogs, a problem that only became more frequent as the company scaled. The team, which initially Page 5 of 12 operated on laptops out of the Viners' home in Los Angeles, would drop everything to search for dogs that had gotten off leash while under the care of its walkers, according to one early employee. The rest of the time, the Viners were relentlessly focused on growth -- adding more walkers to provide more and more walks, the early employee told CNN. The Viners did not respond to request for comment for this story. Some former employees looked back fondly on the early days, describing a love for dogs and a sense of mission to build up Wag. They also described the culture as that of a fast-growing startup with some not uncommon issues. For one, the company didn't have a dedicated human resources person on staff until around the time the SoftBank deal was announced. And, at least two of the individuals CNN spoke with mentioned inconsistency in salaries, with managers at times making less than those in inferior roles or in the same roles, for instance. When they started expanding, that's when things got messy. A FORMER WAG CUSTOMER SERVICE EMPLOYEE "When they started expanding, that's when things got messy," a former customer service employee, citing growth that began really ramping up in 2017. "We couldn't handle our volume, we weren't trained properly, there were no expectations when it came to incidents. The more clientele we had, the more incidents that would arise." Incidents include dogs getting off-leash, injured, or worse. Customer service workers were tasked with calling local shops around town "hoping someone would see the dog," but weren't supposed to reveal that Wag was calling, according to one former employee in the department. "You'd have to say, 'my friend's dog is lost and we're looking for it,'" the former customer service employee said. SoftBank's investment and Schneider's appointment were viewed as steps necessary to steer a scrappy startup and its internal processes towards maturity. After naming Schneider as CEO, the brothers officially departed six months later, sharing plans to launch an investment fund. Page 6 of 12 WeWork CEO Adam Neumann is stepping down Earlier this year, the two launched a scooter startup called Wheels. They've recruited at least a few former Wag employees and their website notably touts their ability to raise nearly $400 million in capital at Wag. Cofounder Jason Meltzer, who stayed on after the Viners, told CNN Business he is also no longer at Wag but did not state when he left. He said he has started a new company in the entertainment space, and is advising startups. He did not respond to a list of questions sent over about his time at Wag but said he plans to write a book about the early days at some point. A veteran leader takes the reins Before joining Wag, Schneider had most recently led LifeLock through its $2.3 billion acquisition by Symantec in 2016. Prior to that, Schneider had been executive vice president at Yahoo! Americas. After LifeLock, Schneider wasn't sure if she would take on another full-time role, she said in an on-stage interview at the Spark 2019 conference. She added that Wag fell into a slim category of companies that would give her the ability to work on building a consumer brand and doing good for the world. "The founders of Wag reached out -- and it was like, 'What an incredible opportunity,'" said Schneider. SoftBank had knowledge that Schneider was being tapped for the role as part of its due diligence process around the deal, a source familiar told CNN Business. Hilary Schneider, a veteran technology executive seen here during her time at Yahoo, joined Wag around the time of the SoftBank investment. Some former Wag employees say she has been disengaged. After the Viners left, there were a slew of departures of early Wag employees, and Schneider started appointing new leadership in the Bay Area, where she lives, some of whom have already departed the company. Under her, the company's Los Angeles operations, once the heart and soul of its business, have been effectively left behind in favor of its Mountain View office and its office in San Francisco, some former employees said. Operating out of a Page 7 of 12 different city from Wag's original headquarters, Schneider is viewed by some employees as disengaged. "We invented on-demand dog walking in 2015 in Los Angeles and remain committed to our Los Angeles headquarters location," according to a Wag spokesperson. Schneider hosts weekly internal video conferences called the Weekly Bark where she addresses staff and solicits Q&A from employees in a bid to stay connected, some former employees said. While the typical playbook for fast-growing startups that receive a large investment is to spend on marketing to fuel growth, three former employees say Schneider broadly cut back on marketing soon after she took the job. The rationale for the cutbacks, according to one source, was to manage cash flow concerns following a struggle to accelerate growth after the SoftBank investment. Some of the former employees said Schneider didn't seem intimately familiar or concerned with growth metrics in a practical sense. "I don't feel like they have all their ducks in a row," said one former employee who left the company earlier this year for another job. "I have doubt in the product and doubt in the leadership." The company's user and new customer counts, as well as walk volume has been declining since the fall of 2018, but became more pronounced in the spring of 2019, a former employee said. Data provided by Second Measure shows that the company's sales were down nearly 12% in the second quarter of 2019 compared to one year earlier. SoftBank's big tech ambitions in doubt as it loses billions on WeWork and Uber Schneider held a series of several-hour meetings throughout April, May and June with a small group of trusted employees to investigate the declining volume of walks, a former employee told CNN Business, but there weren't any clear paths forward. After a roughly two-hour presentation on the business, the employee said Schneider wasn't interested in or didn't understand ideas presented to her, such as spending more on acquisitions to grow volume, or Page 8 of 12 increased discounting, and some left the meeting frustrated and defeated, the employee said. Wag did not directly respond to or dispute this and other claims included in the list of questions CNN Business provided to its spokesperson. The company instead touted its expanded product offerings, optimizing customer experience, and "new opportunities for expansion" including hardware and "strategic partnerships." According to a landing page on Petco's website, the two have a partnership launching soon. Perhaps the most glaring evidence that the startup's ambitions have been tempered: Wag's anticipated global launch has yet to happen. "They were definitely planning to use some of [the Softbank investment] for global expansion -- that's what the Viners told me," said Structure Capital's Walsh, who also invested in the Viner's latest startup, Wheels. Walsh added that he is no longer close to Wag since the Viners' departure and doesn't have knowledge into Schneider's thinking. I really thought the company was going somewhere. It became apparent that the ship was sailing back to port. ERIC WEINMANN, A FORMER WAG EMPLOYEE At the time of the SoftBank investment, SoftBank Vision Fund managing partner Jeffrey Housenbold referred to Wag as the "clear leader in the rapidly growing global market for pet care services." But since the investment, Wag has added 10 new cities to its operating list, all within the US. SoftBank declined to comment on the state of Wag's business since its investment. "I had very high hopes when I joined Wag. I really thought the company was going somewhere. It became apparent that the ship was sailing back to port," said Weinmann. Customer service woes No department at Wag has seen more change, or had more questions, since the SoftBank deal than its customer service operation, a vital unit for a company dealing with family pets. In mid-2018, Wag opened up a call center in the Philippines, which infuriated some customers calling under the belief they'd be speaking to someone local. Page 9 of 12 To help open the Philippines call center, some Los Angeles-based employees went overseas to train workers. Meanwhile, customer service employees in Los Angeles weren't warned by management their jobs could be at stake, according to two former employees of the department. Last fall, employees were notified in an email that Wag would be opening a Phoenix customer care operations. Phoenix is a popular location for customer service centers due to factors including a lower cost of living. Companies including Uber and DoorDash also have hubs in the city. "We thought we were expanding," said one former employee, who added that employees in Los Angeles were given the "opportunity" to apply to work in Arizona. But the company wouldn't pay for relocation fees or guarantee offers, the employee said. A couple months later, Wag began terminating employees in the Los Angeles customer service department. In early 2019, Wag shuttered its Hollywood Hills office completely where customer service had been located, effectively shifting the majority of its customer service operations to Arizona Stressed out and at risk: Inside Uber's special investigations unit At least 92 employees were laid off this year in Los Angeles — with the most recent round of layoffs, in June, primarily hitting its walker activation, dispatch and promotions teams — according to filings with the California Employment Development Department viewed by CNN Business. Wag's spokesperson confirmed that it has "centralized" its customer service team in Arizona, "where we could draw from a base of seasoned customer service professionals." Page 10 of 12 Although some of the former employees CNN spoke with said they're hopeful the company succeeds, a number of them also said they weren't confident in its future given how the past nearly two years have shaped up. By all accounts, it should have been a period of exciting growth. WHO LET THE DOGS OUT? October 10, 2019 Corinne M. Karuppan, Ph.D. Like many other start-ups, Wag has been overwhelmed by its own success. Wag is a dog-walking service that, like Uber, links pet owners and a network of walkers online. Launched in 2015, it seemed poised for rapid growth, especially after benefiting from an enormous injection of capital. However, growing pains started hurting the company, and it lost market share. Former employees put some of the blame on new management for failing to understand the company and develop a sound strategy. Page 11 of 12 Exam Questions (Total: 40 Marks) Question 1: (10 Marks) a- Define the concept of service-dominant logic. (2 Marks). b- Mention six distinctive characteristics of service and then using the given case study company explain each distinctive characteristic of service of the company. (3 Marks). c- In general, there are three basic options to be taken by the operations manager to face the variable demand and time perishable capacity to provide the service, state those basic options. (2 Marks). d- In the light of the operations manager three basic options to provide the service (in part c above) explain how Wag in the given case study applied those options in its service operations management. (3 Marks). Question 2: (7 Marks) a- Referring to the given case study, explain how the company understood the competitive environment of services by explaining the competitive services strategies adopted by the company. (3 Marks). b- Based on the services market environment highlighted in the case study, does the company developed the right competitive services strategies in the market? Reflect the company strategies on each element of the strategic service vision by drawing a table showing the elements of the company strategic service vision. (4 Marks). Question 3: (9 Marks) a- State the nine criterias to win customers in marketplace. (2 Marks). b- Referring to the case study company, analyse and explain how the company competitive strategies been affected by each of the nine criterias. (4 Marks). c- Based on the given case study, do you think the company competitive strategies been well focused on wining customers? Explain. (3 Marks) Question 4: (7 Marks) a- Draw the NSD process cycle for the case study company from the start of the company till the launch of its services and explain details of each stage of the process. (4 Marks) b- Use the NSD process cycle which you drawn to explain the company strategic positioning through the process structure. (3 Marks). Question 5: (7 Marks) a- In terms of service system design, which generic approach had been adopted in Wag? Explain with details from the given case study. (3.5 Marks). b- Highlight the suitability of the generic approach adopted by Wag to the market service environment. (3.5 Marks). End of Exam Page 12 of 12 TABLE 2.1 Elements of the Strategie Service Vision Source: Adapted and repainted by permission of I. L Hesket WE Smac, and L & Schlesinger, The Service Program Service Delivery System What are important features of the service delivery system including: The role of people? Technology? Equipment? Layout? Procedures? Operating Strategy What are important elements of the strategy? Operations? Financing? Marketing? Organization? Human resources? Control? Service Concept What are important elements of the service to be provided, stated in terms of results produced for customers? Target Market Segments What are common characteristics of important market segments? On which will the most effort be concentrated? What capacity does it provide? Normally? At peak levels? How are these elements supposed to be perceived by the target market segment? By the market in general? By employees? By others? Does the service delivery system support the operating strategy? What dimensions can be used to segment the mark Demographic? Psychographic? How important are various segments? What needs does each have? Where will investments be made? How well is the service concept positioned in relation to custom- ers' needs and com- petitors offering? To what extent is the value of results and process quality for customers leveraged over cost to the service provider? To what extent does it: Help ensure quality standards? Differentiate the service from competition? Provide barriers to entry by competitors? How will quality and cost be controlled? Measures? Incentives? Rewards? How do customers perceive the service concept? How well are these needs being served? In what manner? By whom? What results will be expected versus competition in terms of: Quality of service? Cost profile? Productivity? Morale/loyalty of servers? What efforts does this suggest in terms of the manner in which the service is: Designed? Delivered? Marketed? Omand Customer Criteria for Selecting a Service Provider Availability (24 hour ATM) te Convenience Site location) Dependability (On-time performance)ftirling Personalization (Know customer's name) resude ) - Price (Quality surrogate) Quality (Perceptions important) Reputation (Word-of-mouth) Safety (Customer well-being) Speed (Avoid excessive waiting) Knoto 31 as individuals than is for person peneric Approaches to Service Design • Production-line • Limit Discretion of Personnel . Division of Labor • Substitute Technology for People • Standardize the Service Customer as Coproducer . Self Service • Smoothing Service Demand . Customer-Generated Content Customer Contact • Degree of Customer Contact • Separation of High and Low Contact Operations • Sales Opportunity and Service Delivery Options Information Empowerment • Employee • Customer 100 Yen Sushi House Questions 1. Prepare a service blueprint for the 100 Ye House. 2. What features differentiate 100 Yen Sushi and how do they create a competitive adv 3. How has the 100 Yen Sushi House incorp the just-in-time system into its operations surges in activity. As many students know, flights home are often booked months in advance of spring break and the year-end holiday. Faced with variable demand and a time-perishable capacity to provide the service, the manager has three basic options: 1. Smooth demand by: a. Using reservations or appointments. b. Using price incentives (e.g., giving telephone discounts for evening and weekend calls). c. Demarketing peak times (e.g., advertising to shop early and avoid the Christmas rush). 2. Adjust service capacity by: a. Using part-time help during peak hours. b. Scheduling work shifts to vary workforce needs according to demand (e.g., call cent- ers staff their operators to match call demand). c. Increasing the customer self-service content of the service. 3. Allow customers to wait. The last option can be viewed as a passive contribution to the service process that car- ries the risk of losing a dissatisfied customer to a competitor. By waiting, the customer permits greater utilization of service capacity. The airlines explicitly recognize this by offering standby passengers an unsold seat on the departing flight.
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Explanation & Answer

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Q1 (a) what is service dominant logic concept
It is the understanding that services are exchanged for services and takes into the account value
co- creation and value in use. The main concern is not about products but the customer value,
making practices or methods whereby value emerges for clients and always perceived by them.
Therefore the major weight of marketing lies in value creation but not value dissemination,
(Gummersson et, al 2014)
b) six distinctive features of service in relation to the case study.
intangibility; they can not be seen or touched or felt by the customer i.e. according to the case
study, the dog walking- start up was a service being provided by the brothers.
Inseparable, services cannot be separated from their specific providers since they are produced
and consumed at the same time. This makes them not to be stored for a very long time for
consumption.
Perishability; Services cannot go bad very easily. In other words they do not rot.this is evident by
the dog walking start up services
Variability; they differ in the quantity, quality and even standards from one service to the other.
Lack of ownership; most of the services are not owned by individuals. They tend to vary from
one person to another depending of the quality and flexibility or even speed.
User participation, the service cannot be separated from the provider. In this case, the services
provided by the Wag brothers enabled people to bring their dogs to be kept and looked after by
them.
c) basic options to be taken by the operation manager.

Quality management. The services and goods provided should be of high standard depending on
the preference of the customer
Locations strategy. The location where the business organization is situated will dictate the time
taken for goods or services to reach the market in good condition and speed.
Information technology and customer service; technology in sector of service delivery enhances
the production level depending on the customer preferences. It also assisted Wag to open up a
call center in Philippines to solve customers’ woes. It helped them to expand their boundaries
d) how Wag applied operation management options.
For the operation to operate well Wag employed all these all the above-mentioned techniques to
thrive in the services he provided. Quality management at Wag was not satisfactory therefore it
led to the issues like dogs getting off- leash, injury and this got worse, employees were sacked
from their jobs, some call centers were closed. The location favored the company as most of the
people were willing to bring their dogs into the cage. They even opened numerous branches in
the los angeles, it was a great business opportunity for them. The information and technology
system at Wag did not meen the minimum requirement as most of the employees were not
engaged well some were sacked and the new customer care centre services were declined and
closed. Soft bank provided them with the capital which they did not put into proper use. They
even declined to comment about Wags business status. When asked, they reply “I had very
hoped when I joined Wag, I though the company was going somewhere but it became vivid that
the ship was sailing back to port” said Weinmann.
Q2 competitive service strategies.

There are three main competitive strategy that can be employed in the business and they were
adopted in the Wag business. They included i.e. differentiation strategy, cost leadership and
focused strategy.
To start wit cost advantage strategy is avenue that requires the service provider to lower the cost
of production for goods and services in order to meet a larger market, thei was evident by the
Wag dogs start up business. Although in real sense, for professional services, it is not convenient
to lower the cost to a minimum level than the others, this damages the market value. It addition it
is not easy to maintain overtime. Specialization/ focus strategy, in this case study of Wag
business, the market gap existed and the brothers took advantage of it. The dog walking start up
was a business not ventured by many. Differentiation strategy; In this the business strive to
maintain a meaningful but healthy difference between other farms and market forces or other
competitors.
b) the company detailed vision statement was to grow thoughtfully all round and provide a
working model and to add a long-time value of the business. While also maintaining a driven
customer retention and loyalty. The strategy guiding the business to see its growth at the same
time putting in mind improvement on the customer experience. The main aim of starting the
business was therefore to see the dog’s owners to access cost effective, reliable vetted local dog
walkers at nay duration. Wag business faced challenges in demand and also issues in training its
workers. The business had no idea and never measures it success and failures. It therefore
straggled `with finance challenges like upraising hundreds of millions from soft banks.
Therefore, the company lacked a market based competitive market strategy in its operation.
Q3 the following are the criteria to win customers in the market place



Proper identification of target consumers



Using the right channel



Deliver quality goods and services



Building trust



Proper communication



Maintenance of a consistent brand identity



Quick reaction to consumer queries



Knowing of consumers expectations



Maintaining customer loyalty



Acting on consumer feedback

b) how the company competitive strategies been affected by the nine criteria’s
they include the following, differentiation, cost advantage and the focus strategy. Differentiation
affected the company in terms of the customers preferences where the producers must
understand what the customer requires in terms of quality ant time of delivery. Cost strategy was
also affected in the case of Wag business since its prices fluctuated every time raising a concern
and that lead to it failure finally focus strategy was also affected by the nine criteria since the
company lost it main focus while doing the business. They did not consider the consumer
expectation and even how to relate to the consumers.
c) based on the company competative strategy of the case study provided about Dog-walking
start up, they have not been able to fully exploit the market competitive strategies to win
customers. They had a weak system that did not intergrate differentiation, cost advantage and
focus strategies. It lead to a lot of issues between the farm, the ccustomers and the employees.

The environment was therefore not favorable yo more customers. A lot of issues were reported
as Dogs got injuries, some got lost and employees were disengaged and wo...


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