vIrene Greaves

　　vLancashire Business School

　　vContent

　　v Strategy Clock

　　v Customer

　　v Network

　　v Customer Relationship Management

　　•Characteristics

　　•Systems

　　•Development Stages

　　v Bose Corporation

　　• Empowered Suppliers

　　• Advantages for Bose

　　• Advantages for Suppliers

　　v Partnering

　　vPricing Strategy Clock (Faulkner and Bowman 1995)

　　vCustomer (Ford et al 2003)

　　In any market,

　　vvaries widely in size, requirements and importance

　　vis not passive

　　• often has a particular problem

　　• seeks out a suitable supplier

　　• assesses supplier’s abilities

　　• persuades supplier to help solve problem

　　vmay buy from several similar suppliers

　　vare likely to operate in different ways

　　vmay also be a supplier to other firms

　　vGlobal Customer (Yip and Bink 2007)

　　Demands:

　　v global contracts

　　•Eg General Motors and Ford from Bosch and Goodyear

　　v global pricing

　　•Eg Nestle from International Paper

　　v product standardization

　　•Eg From 2003 Philips cut total no. of suppliers/centralised procurement

　　v global account relationship

　　•Eg Philip’s “partners for growth”.

　　•Eg Philishave Coolskin shaver developed soothing skin balm with Beiersdorf under Nivea brand name.

　　vThe Network (Ford et al 2003)

　　vCustomer relationship management (CRM)

　　“… a company activity related to developing and retaining customers through increased satisfaction and loyalty.”

　　(Xu and Walton 2005)

　　•Global Business Strategy

　　Selection of strategy for world market, firm:

　　oselects its value proposition

　　•In essence, it is what makes customers choose a particular firm’s product instead of the competition’s. It is part strategy, part marketing, part operations.

　　obuilds, integrates and coordinates its business system to gain/sustain competitive advantage

　　oestablishes an organisation to manage its worldwide operations

　　•Global Business Strategy Framework

　　•Global Ambition

　　•Global Strategic Ambition

　　•Global player

　　osustainable competitive position in key world markets

　　•Regional dominant global player

　　ostrong competitive advantage in one key world region

　　•Global exporter

　　osells across key world markets

　　•Global operator/sourcer

　　oprocures resources in factories outside base market but concentrates sales in domestic market

　　•Global Ambition

　　• Measured by means of:

　　oTransnational Index (TNI)

　　•ranks non-financial firms according to assets (The Economist using UNCTAD data)

　　Transnational Index

　　oGlobal Revenue Index (CNN Money)

　　•ranks firms according to distribution of sales

　　Global Revenue Index

　　o Global Capability Index (Chatterjee 2005)

　　•represents firms’ assets or personnel

　　Capability Index

　　•Global Positioning

　　•Framework for country market and industry attractiveness assessment

　　•Country Risk Assessment

　　•Global Positioning

　　Value proposition

　　oidentifies for the target customer how customer expectations are to be met.

　　ois an explicit statement of customer value attributes, including product/service characteristics and service-support features, eg design, performance, quality, price, information on use and support infrastructure.

　　oshould make clear firm’s relative competitive positioning, ie its distinctive competences relative to competitors, thus conveying to target customer the collection of distinctive competences of the value chain participants.

　　oplays part in identifying the roles and tasks of partner organisations.

　　•Value Proposition

　　•Four Quadrant Value Propositions Model (FQVP)

　　•FQVP

　　•Derived from Wholonics Model, a total value approach

　　•Means of aligning strategy and leadership

　　•Is organisation-based with value drivers leading definition of strategy

　　•Helps in determining composition of value proposition

　　BUT

　　•Differs from customer focused views based on customer value expectations (see next slide)

　　othat determine primary value drivers of value proposition

　　ovalue proposition determines core competences, processes and assets essential for a competitive edge

　　ounless all partners’ objectives are met, ie financial, market and those of individual organisations, customer value or shareholder value is likely to be achieved.

　　•Choiceboard

　　•Interactive online systems

　　•Allow each customer to design own product by choosing from range of options, eg Dell Computers

　　o attributes

　　o components

　　o prices

　　o delivery

　　•Customer’s selections sent to supplier’s manufacturing system that sets process in motion

　　•Customer is no longer passive recipient but active designer

　　•Still in infancy – just 1% of world economy – mainly PCs

　　•Collect information, so can build customer loyalty and relationships with customers more easily than rivals

　　•Global Business System

　　•Spreading value chain activities across the world

　　oInnovative activities

　　oProductive activities

　　oCustomer relationship activities

　　•By means of a network of partnerships and strategic alliances

　　•Economic changes

　　•Shift in power to the buyer

　　•Competitive saturated markets

　　•Shortened product life-cycles

　　•Fast pace of technological change

　　•Customer order volumes smaller and less predictable as to frequency

　　•Growing number of distribution channel alternatives

　　•Growth of virtual firms

　　•Organisational Success

　　•Global Architecture

　　Examples:

　　Dell’s market segment values specification, response and convenience

　　oHas minimum of capital investment in assets that they feel are better contracted out to specialist manufacturing and service companies

　　Nike is targeting a lifestyle led market influenced by fashion

　　oHas structured its organisation around design and brand management and marketing.

　　Both have moved away from traditional business model of vertically owned assets towards the virtual organisation, where their investment is in core competences, assets and processes.

　　“… is about knowing your customers better and effectively using that knowledge to own their total experience with your business, and to drive revenue growth and profitability.” (Stefanou et al 2003)

　　vCustomer relationship ladder (Gulati 2007)

　　vCustomer classification matrix (Ford et al 2003)

　　vCustomer Relations

　　1.A sale is unlikely to be a one-off easily identifiable event

　　•contact established between people in a number of functional areas in both firms

　　•information is exchanged

　　•complex offering may need to be discussed, specified, developed, ordered, delivered, modified, repeated etc.

　　2.Offerings between supplier and customer are likely to be complex and consist of:

　　•product

　　•service

　　•advice

　　•logistics

　　•adaptation to offering for other customers or its normal ways of working

 

　　Payments are also likely to be complex:

　　•initially after delivery of the offering

　　•after each delivery

　　•before or after an adaptation has been made

　　•at fixed intervals or against a specified performance level of the offering

　　•when agreed improvement in customer operations is achieved or on an annual basis or per person per day

　　NB Both will incur extra costs for interaction

　　3.Pattern of interaction can vary widely.

　　•Sale offers lots of interaction

　　•May be electronic or by telephone

　　•Offering may need extensive adaptation

　　•Delivery of all elements may take months or even years

　　•after-sales service

　　•continuing advice/upgrades

　　4.Nature and importance of customers may vary.

　　•Handful of customers represent bulk of sales

　　•Large number of others with limited sales volumes

　　•A number buy same products with different service element or logistics

　　•Some buy different products and different types of services from same supplier

　　•Others buy few products of only one type and require a more limited service

　　5.Size may not signify the importance of a customer

　　•Other reasons

　　•Part of an important group of customers with a dedicated offering

　　Nature of relationship will vary from customer to customer

　　6.Customers are involved in defining the content of a relationship

　　•Firm’s customer relationships will be influenced by changes in the supply strategies of its customers

　　•Trend towards reducing number of suppliers and outsourcing

　　7.Content of customer relationship changes over time

　　•Customers may learn of new solutions available elsewhere

　　8.Customer relationship links a complex set of resources and activities.

　　It involves:

　　•sales and purchasing functions

　　•those involved in planning, operations facilities and service resources

　　9.Supplier’s market is not defined by its products or services

　　•Quality of offering is extent to which it solves problem

　　•Quality varies between customers

　　•Change in one element, eg logistics, may

　　introduce supplier to other customers

　　vGlobal Account Management (GAM) Systems (Xu and Walton 2005)

　　vmainly aimed at improving operational efficiency

　　•data is collected, stored and organised into a customer-centric database

　　Analytical CRM:

　　vincorporates tools to process huge quantities of customer data

　　•customer profiles

　　•identify behaviour patterns

　　•determine satisfaction levels

　　•support customer segmentation

　　vAnalytical GAM for Customer Knowledge Acquisition (Xu and Walton 2005)

　　vGAM (CRM) Systems

　　Collaborative CRM:

　　vintegrated with company-wide systems to allow more responsiveness to customers throughout the supply chain

　　e-CRM:

　　vAllows customer information to be available at all touch-points within the company and among external business partners, ie web-centric approach

　　•synchronises customer relationships across communication channels

　　•enables online ordering, email, knowledge base, personalised service, generation of automatic response to email, automatic help

　　vConceptual model of GAM (CRM) development stages (Stefanou et al 2003)

　　vGlobal Customer Management (GCM) (Yip and Bink 2007)

　　vNot the same as GAM

　　vNot done instead of GAM

　　vGAM programme coordinates sales contracts across the world

　　vGCM melds GAM programme with company strategy and organisation

　　vGlobal Account Manager (gam) (Yip and Bink 2007)

　　vresponsible for the total global relationship with the account

　　vhas a network of contacts throughout the whole company

　　vGAM programme moves from a transactional strategy to true global relationship management, ie is embedded in the whole organisation

　　vGlobal Account Team (gat) (Yip and Bink 2007)

　　vwill be a mix of people from different departments, eg R&D, logistics, finance)

　　vgam will be team leader or member of gat

　　vcore gat members encouraged to build relationships with their opposite numbers in the customer company

　　•will lead to more connections and opportunities for cooperation with the customer

　　vBose Corporation (Rackham et al 1996)

　　vMaker of high-end audio systems

　　vJIT II (next step after Just-in-Time), Idea of Lance Dixon, Director of Purchasing and Logistics

　　vStarted in late 1980s

　　vInvolves “suppliers within the customer’s operating system”

　　vNow practised by 150+ firms

　　vEmpowered Suppliers

　　vCombines roles of salesperson, purchaser, planning in one supplier

　　v9 suppliers, known as “in-plants” work full-time at Bose

　　vEmpowered to act for supplier and customer

　　vAdvantages for Bose

　　vOn-site, immediate responsiveness from key suppliers

　　vCost reduction as fewer people involved

　　vIncreased expertise of top suppliers for design and production decision-making

　　v“Designing in” preferred suppliers to new products

　　vSupply standards maintained

　　vAdvantages for Suppliers

　　vFull access to Bose’s systems, personnel, design engineering meetings and R&D data

　　vAbility to influence requirements for their products

　　v“Evergreen contracts” with no end dates and no rebidding

　　vAlmost indistinguishable from Bose staff

　　vCreate a seamless team

　　vProvides competitive advantage

　　vPartnering (Rackham et al 1996)

　　vRequires fundamental shift in perspective

　　vCustomer-business oriented

　　vDeveloping common ground to create a durable collaborative partnership

　　vFocus is on creating value

　　vIncreases returns to suppliers

　　vStronger barriers to entry by outsiders

　　vPartnering Mind-set (Rackham et al 1996)

　　Based on

　　v trust – being bias-free

　　v information-sharing

　　v the partnering team

　　vInformation Sharing

　　v Reciprocity

　　v Business focus

　　v Future challenges

　　vPartnering Team

　　v Set up a Resource Team

　　•interdisciplinary group representing every function

　　•Mapping people on a one-to-one basis with those in partner’s firm

　　v Involve the customer

　　vReferences

　　Faulkner, David and Bowman, Cliff (1995) The Essence of Competitive Strategy. Harlow, Essex: Prentice Hall.

　　Ford, David, Gadde, Lars-Erik, Hakansson Hakan and Snehota, Ivan (2003) Managing Business Relationships (2nd ed). Chichester, UK: John Wiley & Sons Ltd.

　　Gulati, Ranjay (2007) Managing Network Resources: Alliances, Affiliations, and Other Relational Assets. Oxford: Oxford University Press.

　　Rackham, Neil, Friedman, Lawrence and Ruff, Richard (1996) Getting Partnering Right: How Market Leaders are Creating Long-Term Competitive Advantage. McGraw-Hill.

　　Stefanou, Constantinos J, Sarmaniotis, Christos and Stafyla, Amalia (2003) “CRM and customer-centric knowledge management: an empirical research”, Business Process Management, 9(5): 617-634.

　　Xu, Mark and Walton, John (2005) “Gaining customer knowledge through analytical CRM”, Industrial Management and Data Systems, 105(7): 955-971.

　　Yip, George S and Bink, Audrey JM (2007) Managing Global Customers: An Integrated Approach. Oxford: Oxford University Press.