Relationship asessment

1. Relationship asessment

2. ”The purpose of a business is to create and keep a customer” (Levitt, 1983)

3. Rosneft 2011

4. Relationships in business markets… • or a rainforest • Survival of the fittest • Independence • Competition • ’Zero sum game’ • Winning-losing • Tight boundaries • A jungle • Co-existence/co-evolution • Interdependence • Collaboration • + sum games • Open/multipleboundaries Cf Håkansson et al 2009 Lars Huemer, BI

5. ”Having business relationships is not a matter of choice for companies. The important choices are about which relationships to develop and how to develop them” (Blois, 1998)

6. Characteristics of relsationships • Continual change • A relationship is never stable • People have different perspectives and aims • Interplay between Activity links, Resource ties and Actor bonds • New problems always arise • Customer involvement • Customers are always involved in conjunction with or independently of the supplier • Customers are never passive • Both parties have ideas about how the relationship should be managed • Both parties will try to do it (often separately)!

7. Uniqueness • Never two identical relationships • Customers have different problems and want to be treated differently • Complexity • Complex patterns of interaction on both customer and supplier side • Combination of elements such as products, service, advice, logistics, etc. • Parties ”co-evolve” over time • Must continously assess and re-assess the relationship

8. Managing continuing relationships • Managers must ensure that offerings remain effective over time • Requires changing and reallocating resources • Needs to assess current portfolio of relationships • Needs to assess the competitors: • Products • Categories • Cannot adress this alone!

9. Developing relationships • A relationship always acts a a bridge to other relationships • Developing relatioships means building such bridges • Adaptations are necessary for a relationship to mature • Adaptations are never symmetrical: • Inside the relationship • Between the dyad and connected relationships

10. High-involvement relationships • Pros: • Facilitate communication, increase predictability, reduce problems and misunderstandings • Cons: • Only handle a limited number of high-involvement relationships at one time • Risk that potential will not be achieved • Constrains the actions of the two companies • Reduces abilities to change or switch to other more promising relationships

11. Assessing single relationships • Assess the relationship • Set the agenda • Organise the relationship

12. 1. Asess the relationship • Never a snapshot in time • More to do with the processes and dynamics of the relationship • Means looking backward and forward

13. Typical questions • History and current stage • What is the history? • What is the current development stage? • Why do we have this relationship? • What problems do it adresses? • What is the volume of business and the nature of offerings? • What is the level of involvement? • What is the ARA? • Financial performance? Value to both parties?

14. Potential of the relationship • What do we see as a potential? • What is requested to fulfill its potential? • What involvement does each company want to have? • What are the threats to the relationship?

15. Atmosphere of the relationship • How commited is each company to the current relationship? • What is the disctance between the parties? • How dependent are the parties on eachother? • What conflict and cooperation exists between the parties?

16. Network • What is the network position of the relationship from the perspective of both parties? • What is the role of the relationship in the portfolios of the supplier and customer? • Current operations • How does the current management of the relationship by the parties fit with their overall strategies? • Is the current pattern of interaction between supplier and customer appropriate?

17. 2. Set the agenda • Any unresolved issues that needs to be monitored? • What is the interplay between this relationship and others? • How does this relationship contributes to the overall preformance of the company?

18. 3. Organise the relationship • Interpersonal interaction • Information exchange role • Negotiation and adaptation role • Crisis insurance role • Social role • Ego-enhancement role

19. Fulfilment • The value to a customer is how the initial offering or promise is fulfilled • This is an interactive process • Fulfilment requires allocating responsibilities, defining priorities and resources, monitoring and feedback • Defining and redifining the offering

20. Managing a portfolio of relationships • Need decide which relationships we should prioritise? • Problematic because relationships are interconnected • Some criteria: • Expected volume of business • Expected profitability • Potential development effects on wider network

21. One example • 3 criteria: • Relationship costs • Net price achieved • Relationship value • Volume • Profitability • Technological development • Network access

22. 8 Categories • Todays profits • The ”cash cows” • Yesterdays profits • The ”old men” • Tomorrows profits • New technical and commercial requirements • Minor relationships