strategic relationships and networks: building the infrastructure to deliver the strategy lecture 8
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A route-map for market-led strategic change
Value-basedmarketingstrategy
New marketing
meetsold
marketing
Strategicthinking and
thinkingstrategically
Customer valuestrategy andpositioning
The strategic pathway
Strategicmarket choices
and targets
Market sensingand learning
strategy
Strategicrelationshipsand networks
Change strategy
Strategicgaps
Organizationand processes
for change
Implementationprocess and
internalmarketing
Part ICustomer value
imperatives
Part IIDeveloping a value-based
marketing strategy
Part IIIProcesses for managingstrategic transformation
The Customeris always
right-handed
The strategic pathway
Marketsensingandlearningstrategy
Strategicmarketchoicesandtargets
Customervaluestrategyand positioning
Strategicrelationshipsandnetworks
Strategic thinking andthinking strategically
Strategictransformationand strategyimplementation
Agenda
• Customer relationships• Competitor and contingent relationships• Collaborator relationships• Co-worker relationships• The network of key relationships
Strategic relationships and networks
Strategicrelationshipsand networks
Customerrelationships
Competitorand contingentrelationships
Collaboratorrelationships
Co-workerrelationships
Customer relationships
• Do we know what we want the customer relationship to be?
• Do we have that relationship or can we get it?• Can we deliver that relationship?• Do we understand the link between the strength of the
customer relationship and the attractiveness of that customer’s business?
The dancehall dilemma
Customer relationship
Customerattractiveness
Strong Weak
High
Low
Prime targetcustomers -
achieve synergy aswe retain the “best”customers (we hope)
Targets forconversion -
are they attractiveenough to be
worth chasing?
Stickycustomers -
they want us, wedon’t want them,
so what do we do?
Mutualantipathy -
they don’t want us,we don’t want them,
end of discussion
Competitor and contingent relationships
• Some fundamental issues:– every organization has competitors– every company says “we know who our competitors
are” and frequently get it wrong– most think that “competitors are in our industry” – see
back to the Competitive Box to dispel that myth
Competitor and contingent relationships
• Really understanding the competition– conventional analysis develops a competitor response
profile– the psychology of competition may be just as
significant – e.g., how ugly are the competitors around here?
Competitor analysis
Competitor’s goalsWhat are they tryingto achieve in thismarket?
Competitor’s strategyWhat is this company’scurrent strategicposition?
Competitor’s strategicassumptions - How does managementlook at the market?
Competitor’scapabilities - What aretheir strengths andweaknesses
Competitor’s response profileIs this competitor satisfied with its current position?What are the likely moves they may make?Where is this competitor most vulnerable?What is this competitor sensitive about, what ismost likely to provoke a competitive reaction?
Adapted from: Michael E. Porter, Competitive Strategy, New York: Free Press, 1980.
How ugly are the competitors around here?
Competitive reactionto our move?
Competitiveaggression
Yes No
High
Low
Fight tothe death
Showdisdain
Weakcounter-attack
Ignoreus
Competitor and contingent relationships
• Where is the competition coming from in this market?– can we predict the strategic moves of our competitors and
maintain our competitive advantage?– do we recognise new potential competitors and new
technologies?– does our value proposition give us a specific positioning thatb
plays to our strengths and avoids head-on competition?
Competitor and contingent relationships
• Critical contingents:– shapers of opinion– regulators– recommenders– gatekeepers– suppliers– supply chain partners
Collaborator relationships
• From outsourcing to alliances and networks– outsourcing– partnership– alliance– vertical integration
Types of collaborative relationship
Short-term
Long-term
Permanent
Jointventure
Verticalintegration
Arm’slength
Outsourcing
Partnership
Alliance
Ownership
Closeness ofrelationship
Low
High
Nature of the relationship
Purchase of goods and servicesfrom outside the company, possiblyover the long term
Short-term focus, but coordinatedactivities between partner companies
Longer-term focus with integration ofactivities between partner companies
“Permanent” arrangement withpartner companies highly integrated
Shared ownership in an operationwith a collaborator company
Full ownership of the activities or operations
Collaborator relationships
• Advantages in collaboration:– cost efficiency– customer service– marketing advantage– strategic advantage– profit stability and growth
Collaborator relationships
• Network organizations– a new organization form: the hollow or networked
organization
The Calyx & Corolla hollow, networked organization
Calyx & Corolla
Customers
FederalExpress
Flowergrowers
1. Customer orders fromcatalogue: phone, fax,mail, e-mail
2. C&C notifies orderto Federal Express andthe chosen flower growerby computer
3. Federal Expresscollects flowers
4. Federal Expressdelivers flowers
Collaborator relationships
• Collaborations that crash– synergy or “ygrenys”
• Managing partnerships and collaborations– corporate compatibility– management style and techniques– mutuality– symmetry
Collaborator relationships
• Partnership-based strategy should consider time and cost in:– establishing the partnership– monitoring the partnership– strengthening the partnership– getting out of the partnership
Co-worker relationships
• Can and will employees/managers in the company/alliance deliver the promise of the value proposition to the customer?– do not assume everyone will think our strategy is
great and buy-in– be realistic about capabilities
• Link to internal marketing strategy
The network of key relationships
• Relationships with customers, competitors, contingents, collaborators and co-workers are connected
• Challenge is to test market choices and value propositions against the network’s capabilities
British Airway’s relationship network
Competitors and contingents Virgin antagonism continues;low cost operators attackingthrough courts; European regulator investigates;no help from government
Collaborators USAir alliance crashed; American Air alliance stalled;travel agents are hostile;
Customers Customer satisfaction levelsfalling; premium passengersswitching brands; higherservice image weakened
Co-workers Climate surveys go down; newbranding is resisted; industrialaction takes place and moreis threatened
BAStrategy
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