acknowledgements
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Presented at XI International Academic Conference on economic and social development, SU-HSE on 8 April 2010
1
Towards a customer oriented network
Olga A. Tretyak, Ekaterina V. Buzulukova, Alexander G. Rozhkov, Nikita I. Popov, Marina Weck
8 April 2010
Presented at XI International Academic Conference on economic and social development, SU-HSE on 8 April 2010
2
Acknowledgements
This study is part of the wider project called STROI-network, implemented jointly by researchers from Finland and Russia
Presented at XI International Academic Conference on economic and social development, SU-HSE on 8 April 2010
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Introduction: the research project and its scope
This research was one of the perspectives of the STROI-network project
P1: Business sector P2: Vision P3: Learning
and growthP4: Internal development
P5: Customer orientation and Marketing
P6: Finance and Performance
Growth bigger than average
Vision is based on derivative action
Leadership and learning in network.
Growth and strategic dev. of network
Customer oriented network.
Developing ability to contest
Activities on profitable sector
Visions are based on customer needs
Conditions for work are able compete
Agile and learning network
Working CRM and risk management
System for performance measurement
Objectives of network
Results
Partners
Perspective (P1 - P6)
BSC dimensions (P3 - P6)
Presented at XI International Academic Conference on economic and social development, SU-HSE on 8 April 2010
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Introduction: the research project and its scope
This research was focused on interfirm customer orientation, which is a subfield in a continuum of available approaches to managing market relationships
Market orientation
Customer orientation Competitor orientation
Market domination
Presented at XI International Academic Conference on economic and social development, SU-HSE on 8 April 2010
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Introduction: the research project and its scope
The project included several interrelated questions…
What is a market-oriented interfirm network?
How to cope with the risks involved?
Managing customer relationships (B2B)
Managing supplier relationships (B2B)
How to engineer a customer-oriented network of partners?
1
5
2 3
4
Stage 1Setting the framework
Stage 2Relationship facet
Stage 3Network development
Stage 4Study of risks
Presented at XI International Academic Conference on economic and social development, SU-HSE on 8 April 2010
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Introduction: the research project and its scope
… distributed among researchers
Olga Tretyak
Marina Weck
Alexander Rozhkov Nikita Popov
Ekaterina Buzulukova
Presented at XI International Academic Conference on economic and social development, SU-HSE on 8 April 2010
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Outline of the research project
A preliminary framework of market-oriented interfirm network was proposed, based on literature review and company interviews
Market knowledge sharing
Network information
systems
Motivation and control for market orientation
Control structures and shared values
Cross-firm planning of CRM,
SCM and NPD
Network collaboration
structures
ROUTINES AND PROCESSES
SYSTEMS AND STRUCTURES
Presented at XI International Academic Conference on economic and social development, SU-HSE on 8 April 2010
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Outline of the research project
A simple method to evaluate network’s degree of customer orientation
higher
lower
Reactive approach Proactive approach
cost cutting
uncertainty avoidance
market share growth
cost management
risk management
value creation
Presented at XI International Academic Conference on economic and social development, SU-HSE on 8 April 2010
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Outline of the research project
The field research consisted of several interviews with managers and aimed to concentrate on firm triads (focal company, one buyer and one supplier)
Participant supplier
(RU)
Participant buyer (FI)
Participant supplier
(FI)
Participant supplier
(RU)
Participant buyer (RU)
Focal company
(FI)
Participant buyer (FI)
Existing customer
Existing customer
Loyal customer
External supplier (FI)
External supplier (RU)
New customer
New customer
New customer
Potential customer
Potential customer
Loyal customer
Loyal customer
External supplier (FI)
External buyer (RU)
SuppliersTier 2
SuppliersTier 1
DistributorsTier 1
Finalcustomers
Presented at XI International Academic Conference on economic and social development, SU-HSE on 8 April 2010
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Findings from the field study
The top ten: main findings (1)
•Investigated companies exhibit relatively low level of customer orientation, and don’t measure customer satisfaction;
•Investigated companies exhibit relatively low level of CRM tools and policies usage;
•When securing customer company’s commitment becomes possible, companies don’t pay due attention to it;
•Customer companies pass through relationship stages individually, and success in reaching commitment stage mainly depends on particular manager’s knowledge and experience;
•Companies have developed systems to evaluate performance of suppliers and the products supplied, but not of supplier relationships;
•Some firms are buying from suppliers which disregard final customers’ needs and have poor purchasing capabilities, and this prevents these firms’ ability to translate its own customer knowledge into tailored value propositions;
Presented at XI International Academic Conference on economic and social development, SU-HSE on 8 April 2010
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Findings from the field study
The top ten: main findings (2)
•Successful implementation of three types of market entry strategies can be observed;
•As perceived by firms, trust, honesty, willingness to conduct open dialog, readiness to adapt and great wish to work account for relationship stability (over and above economic returns);
•Main difficulties of companies are macroenvironmental factors (such as bribes, obsolete standards, changing legislation);
•While many firms maintain strong relations with their suppliers (often also Finnish firms), few firms develop strong customer relationships.
Presented at XI International Academic Conference on economic and social development, SU-HSE on 8 April 2010
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Findings from the field study
Different entry strategies to Russian market employed by Finnish companies were found
Parent Finnish Company
Subsidiary
Parent Finnish
Company
Russian Company
Finnish (Russian) Company
Finnish Company
Russian Company
RussianCompany
Presented at XI International Academic Conference on economic and social development, SU-HSE on 8 April 2010
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Findings from the field study
Finnish companies experienced many difficulties in Russia. Several groups can be outlined
Construction norms, regulations
Construction norms, regulations
Business partnersrelations
Business partnersrelations
AccountingAccounting
State institutionsrelations
State institutionsrelations
Managing personnelManaging personnel
High uncertaintyHigh uncertainty
Russian MarketDifficulties
Presented at XI International Academic Conference on economic and social development, SU-HSE on 8 April 2010
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Findings from the field study
While companies maintain strong relationships with suppliers, strong customer relationships are not pursued
Customer
Customer
Customer
Customer
Customer
Customer
Customer
Customer
Company
Customer
Supplier
Supplier
Supplier
Supplier
Supplier
Maintaining relationships with former customers is, generally, not a priority
Customer satisfaction is not monitored
Level of customer orientation if low
CRM tools and policies are almost absent
Extending ‘global’ relationships with suppliers to the Russian market is a must
Market information sharing with trusted suppliers is extensive
Evaluation of supplier performance is in place
Presented at XI International Academic Conference on economic and social development, SU-HSE on 8 April 2010
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Findings from the field study
On the customers side, Russian sales staff is the main adaptation instrument at every stage of relationship development
Russian salespeople as a main vehicle for problem solving
Initially very strict requirements for on-time delivery and quality assurance
Coordination challenges when the deal has been secured
Stage 1Initial contact
Stage 2Initial transaction
Stage 3Repeated transactions
Payment delays
Contract fulfillment
Very high entry barriers
Difficult to embed into existing relations
Dealing with complex construction legislation and certification
Customer representatives demanding bribes
Loyal customers
Solutions:
Customer intelligence
Getting straight to the CEOs
Bribery reporting to CEOs of customer companies
Solutions:
Signaling to suppliers
Securing suppliers’ commitment
Solutions:
Getting a sense of customers’ occasion
Reaching compromise
Presented at XI International Academic Conference on economic and social development, SU-HSE on 8 April 2010
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Findings from the field study
Several factors appeared to act as drivers of relationship stability
STABILITY
Business relations turnover
Relationshipatmosphere
Economic bonds
Readiness to adapt
Interest in relationships
Technical bonds
Knowledge bonds
Socialbonds
Customer firm turnover
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