Part One
Copyright
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2-1
Chapter 2
The Character of
Business Marketing
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CESSNA AIRCRAFT COMPANY
TURNAROUND STRATEGY
INTEGRATED THREE CRITICAL PROCESSES:
1.
NEW PRODUCT DEVELOPMENT
2.
STRATEGIC SOURCING
3.
SUSTAINING PRODUCTION
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SUPPLY CHAIN MANAGEMENT
SCM INVOLVES . . .
INFORMATION SHARING
JOINT PLANNING
COORDINATION OF EFFORTS TO
•
ELIMINATE WASTE
•
BE INNOVATIVE
•
IMPROVE QUALITY
•
PROVIDE FLEXIBILITY
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BUSINESS TO BUSINESS:
WHAT DETERMINES A
SUCCESSFUL RELATIONSHIP?
MOTIVATION !
•
THE SELLER’S MOTIVATION TO RELATE
•
THE BUYER’S MOTIVATION TO RELATE
IF THEY AREN’T EQUALLY MOTIVATED IT
WON’T BE AN EQUAL RELATIONSHIP
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BUSINESS TO BUSINESS:
THE TYPES OF RELATIONSHIPS
WHEN SELLER’S MOTIVATION TO RELATE IS
HIGH
LOW
RESULTS IN
BUYER’S
ADVANTAGE
RESULTS IN
STRATEGIC
PARTNERSHIPS
TRANSACTIONAL
RELATIONSHIPS
SELLER’S
ADVANTAGE
HIGH BUYER’S MOTIVATION TO RELATE IS
LOW
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THE REALM OF RELATIONSHIPS
Seller’s motivation to relate
High
Buyer’s Market
Seller-maintained relation
Joint relationship maintenance
Low High
Buyer’s motivation to relate Buyer-maintained relation
Discrete exchange
(spot contracts)
No exchange
Seller’s market
Low
EXHIBIT 2-2
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STRATEGIC PARTNERSHIPS
OCCUR WHEN BOTH PARTIES HAVE
MUTUALLY STRONG INTERESTS
IN MAINTAINING AN
ONGOING EXCHANGE
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JIT RELATIONSHIPS
A SUPPLIER PRODUCES AND DELIVERS
PRECISELY . . .
•
THE NECESSARY QUANTITIES
•
AT THE NECESSARY TIME
•
WITH THE NECESSARY PERFORMANCE
SPECIFICATIONS . . .
EVERYTIME
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GOING FOR HIGH
PERFORMANCE RELATIONSHIPS
SELLERS
Want to:
Sell Large
Volumes
Sell similar amounts over time
Manage their selling and support expenses
DEVELOP
A
COMMON
GROUND
BUYERS
Want:
Reliable delivery without interruptions
Reliable products with low rejection and defect rates
Efficient lead times
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REQUIREMENTS FOR HIGH
PERFORMANCE RELATIONSHIPS
GOES BEYOND THE FINANCIAL CONSIDERATIONS:
•
INTEGRITY
•
FAIRNESS
•
LOYALTY
•
FLEXIBILITY
•
INPUT INTO YOUR PARTNER’S STRATEGY
•
PARTNER’S INPUT INTO YOUR STRATEGY
•
COMPLIANCE WITH PROCEDURES AND AGREEMENT
•
HONOR COMMITMENTS
•
STAND BEHIND YOUR PRODUCTS
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THE RELATIONSHIP DEVELOPMENT PROCESS
Relationship phase
1. Awareness
2. Exploration
3. Expansion
4. Commitment
Attraction
Communication
& bargaining
Norm development
Power & justice
Expectations development
Shared values and decisionmaking structures support joint investment in relation .
Phase characteristics
1 No interaction. Unilateral considerations of potential Partners.
2 Interaction between the parties occurs. A gradual increase in dependence reflects probing and testing. Termination of this fragile association is simple
3 One party has made a successful request for adjustment. Both parties are satisfied with some customization involved. Additional benefits from products, services, or terms are sought from the current partner rather than from an alternative partner.
4 Some means of sustaining the relationship result contracts, shared ownership, social ties, inputs are significant and consistent. Partners adapt and resolve disputes internally
0 Seller’s dependence on buyer Buyer’s dependence on seller 0
Source: Adapted from F. Robert Dwyer, Paul H. Schurr, and Sejo Ob, “Developing Buyer-Seller Relationships.: Used with permission from the
Journal of marketing , published by the American Marketing Association, vol 52 (April 1987), p.21.
Exhibit 2-4
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TWO CHOICES FOR STAYING
IN A BUSINESS RELATIONSHIP
1.
YOU WANT TO.
•
THE REWARDS ARE FINANCIAL,
STRATEGIC OR PSYCHOLOGICAL
2.
YOU HAVE TO.
•
THE COST TO EXIT IS TOO HIGH
OR THERE ARE NO ALTERNATIVES
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SUGGESTIONS FOR MAKING BUSINESS-
TO-BUSINESS RELATIONSHIPS LAST
•
MAKE ON-SITE VISITS TO YOUR PARTNER
•
TRADE PERSONNEL AND OFFICES
•
MANAGE TOTAL DEPENDENCE WITH AN
ALTERNATE SUPPLIER
•
MAKE THE PLEDGE OF CONTINUOUS SERVICE
•
DEVELOP A RELATIONAL CONTRACT
•
PROVIDE OWNERSHIP BY BRINGING FUNCTIONS OR
TECHNOLOGY WITHIN BOUNDARIES OF PARTNER’S
FIRM
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