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Lecture Nine: Outline. Relationship Management The Spectrum of Buyer-Seller Relationships The Stakeholder Value Model: the Ideal A Realistic View of Stakeholder Value Models? Stakeholder Models Guide to Selecting Partnership Options in Value Chain Decisions

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Lecture Nine: Outline

  • Relationship Management

  • The Spectrum of Buyer-Seller Relationships

  • The Stakeholder Value Model: the Ideal

  • A Realistic View of Stakeholder Value Models?

  • Stakeholder Models

  • Guide to Selecting Partnership Options in Value Chain Decisions

  • Stakeholder Performance Expectations

  • Shareholder-Stakeholder Interests

  • Identifying Partner Stakeholder Interests

  • A ‘Relationship Management’ Led Organisation


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Relationship Management

  • Walters (2002) asserts that relationship management is the managerial activity which identifies, establishes, maintains and reinforces economic relationships with customers, suppliers and other partners with complimentary (and supplementary) capabilities and capacities so that the objectives of the organisation and those of all other partners may be bet by agreeing and implementing mutually acceptable strategies


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Relationship Management (cont’d)

  • Hutt and Speh (1998) explain that “relationships in the business market are often close and enduring. Rather than constituting the end result, a sale signals the beginning of a relationship”.


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Relationship Management (cont’d)

  • Much the same approach is becoming more common not just in business markets, but also in consumer or end-user markets


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Relationship Management (cont’d)

  • Additionally, the same basic philosophy can be extended to include all stakeholders to the company, with monetary transactions being replaced by exchanges of information between some stakeholder groups and the company


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The Spectrum of Buyer-Seller Relationships

According to Hutt et al (1998), this ranges through (from top):

  • Pure transactions

  • Reciprocated transactions

  • Long-term relationships

  • Buyer-seller relationships

  • Strategic alliances


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The Spectrum of Buyer-Seller Relationships (cont’d)

  • Traditional View

    • Purpose of marketing is to make a sale

    • Sale is the result and measure of success

    • Business is defined by its products and factories; price is an input

    • Communications are aimed at aggregates of customers

    • Marketer is valued for its products and prices

    • Objective: to make the next sale, find the next customer


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The Spectrum of Buyer-Seller Relationships (cont’d)

  • Relationship View

    • Purpose of marketing is to create a customer

    • Sale is beginning of relationship; profit is a measure of success

    • Business is defined by its customer relationships

    • Price is determined by negotiation and joint decision making; price is an outcome

    • Communications are targeted and tailored to individuals

    • Marketer is valued for its present and future problem-solving capability

    • Objective: to satisfy the customer you have by delivering superior value




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Stakeholder Models

Source: Walters (2002)



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Dividend growth Decisions

Employment continuity

Competitive prices

Profitable transactions

Share price

appreciation

Economic cash flow

Job satisfaction

‘Fair rates’ of pay

Product/service performance

Service Support

Ongoing relationships

Growth and market volume advantages

Stakeholder Value Criteria

Shareholders

Employees

Customers

Partners

(Suppliers and Distributors:

Value Added Resellers)

Stakeholder Value Expectations

Economic Cash flow

Profitability

Productivity

Growth Rate

Stakeholder Value Drivers

Ratio of ‘business’ growth rate to growth rate of the ‘market’

(‘Market’ management)

Discounted value of all cash flows expected from current and future sales

(Investment and financial management)

Ratio of current and future sales to total assets

(Asset base management)

Profit margin on current and future sales

(Margin management)

Stakeholder Performance Expectations

Source: Walters (2002)


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Shareholder-Stakeholder Interests Decisions

Source: Walters (2002)


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Identifying Partner Stakeholder Interests Decisions

Source: Walters (2002)


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A ‘Relationship Management’ Led Organisation Decisions

Source: Walters (2002)


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Discussion Questions Decisions

  • What kind of relationship is the most profitable for business in a stable environment? Why?

  • How can a company effectively manage stakeholder priorities? Which stakeholder group should be the company’s highest priority?

  • What kind of company should be relationship led? Why? Give examples.


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