CRAVENS PIERCY 8 e Mc Graw-Hill Irwin 2006 The

CRAVENS PIERCY 8/e Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved.

7 -2 Chapter Seven Strategic Relationships Mc. Graw-Hill/Irwin © 2006 The Mc. Graw-Hill Companies, Inc. , All Rights Reserved.

7 -3 Strategic Relationships 4 The rationale for interorganizational relationships 4 Types of organizational relationships 4 Developing effective relationships between organizations 4 Global relationships among organizations

7 -4 Strategic Relationships

7 -5 Mapping the Path to Market Leadership Market-Oriented Culture and Process Organizational Change Relationship Strategies Positioning with Distinctive Competencies Superior Customer Value Proposition

Strategic Relationships Between Various Organizations 7 -6 Channel Member Competitor Company Customer Supplier

Drivers of Interorganizational Relationships 7 -7 Value Enhancing Opportunities THE RATIONALE Skill and Resource Gaps Environmental Turbulence and Diversity

Illustrative Inter. Organizational Relationships 7 -8 Strategic Alliance Supplier/ Manufacturer Collaboration M M JV Joint Venture W R EU Distribution Channel Relationship

7 -9 Growth in Strategic Relationships By 2001, the top 500 global businesses had 60 major strategic allainces each By end of 1990 s, U. S. alliances had grown more than 25 percent annually for previous 5 years Accenture suggests nearly one-third of companies expect alliances to account for more than one-third of market value by mid-2000 s Reliance on alliances is high (20 -30% of revenue) in U. S. and European companies

7 -10 The Logic of Collaboration 4 Is partnering a promising strategy? 4 How essential is the relationship strategy? 4 Are good candidates available? 4 Do relationships fit our culture?

Types of Organizational Relationships 7 -11 Supplier Partnerships Goods Suppliers Internal Partnerships Services Suppliers Lateral Partnerships Business Units Employees Functional Departments Competitors Focal Firm Intermediate Customers Nonprofit Organizations Government Ultimate Customers Buyer Partnerships Source: Robert M. Morgan and Shelby D. Hunt, “The Commitment - Trust Theory of Relationship Marketing, ” Journal of Marketing, July 1994, 21.

7 -12 Illustrative Partnering with Customers Company/Brand Customer Partner Harley-Davidson (motorcycles) Harley Owners Group with over 100, 000 members Marriott Partnering with corporate customers Boeing (commercial Involving airlines aircraft) in design of Boeing 777 (hotels) System Soft (PC Card software) Partnering with PC makers and Intel

7 -13 Strategic Alliances 4 Success of alliances – failures in logic – failures in process 4 Kinds of alliances 4 Alliance success requirements 4 Alliance vulnerabilities

Motives Underlying Entry of Firms into Strategic Alliances 7 -14 1. Market entry and market position-related motives 2. Product-related motives 3. Product/market-related motives 4. Market structure modificationrelated motives 5. Market entry timing-related motives 6. Resource extension- and riskreduction related motives 7. Skills enhancement-related motives Source: P. Rajan Varadarajan and Margaret H. Cunningham, “Strategic Alliances: A Synthesis of Conceptual Foundations, ”Journal of the Academy of Marketing Science, Fall 1995, 285.

Relationship Management Guidelines 4 Planning 4 Trust/Self Interest 4 Conflicts 4 Leadership 4 Flexibility 4 Technology Transfer 4 Learning 7 -15

7 -16 How Strategic Relationships Enhance Value 4 Improved market vision and learning by pooling the knowledge and experience of the partners 4 Enhanced customer value by integrating the partner’s unique competencies 4 Joint analysis of what is required to create superior customer value for specific market segments 4 Capitalizing on value migration opportunities that are not feasible for a single organization 4 Reforming organization structure to gain efficiencies and greater adaptability to change

7 -17 Strategic Relationship Issues 4 The role of strategic relationships in marketdriven strategy 4 Moving from hierarchies to process driven structures 4 Fit of relationship strategy with organizational design 4 Marketing and organizational change

7 -18 Global Relationships Among Organizations 4 Types of global organizations – the network corporation – trading companies 4 The strategic role of government – single nation partnership – multiple nation partnership – government corporations – government legislation