Styles of Building Business to Business Relationships - Essay Example

INTERNATIONAL MARKETING Introduction Business to business (B2B) relationship is a process whereby firms form strong social, economic, service as well as technological attachments over a long time. These relationships are very important and greatly determine the level of performance of a business organisation. These relationships help organisations to acquire knowledge concerning the needs and preferences of consumers and identify areas that need improvements. In addition, businesses create relationships to enable them deal with problems like complexity of products, strategic significance of the product, service requirements, financial risks as well as reciprocity. This article aims at addressing the various styles used by organisations in building relationships as well as providing a comparison between Britain and India with some recommendations concerning the best practice for dealing with cultural differences for an international marketer. Styles of building B2B relationships The various reasons for entering in B2B relationships influence the style used by the organisation in building the relationship. These styles may take the form of partnerships, strategic alliances, joint ventures, interlocking directorates, trade associations as well as the establishment of trade networks (Bagdoniene & Zilione 2009). Currently, because of the process of globalisation of world trade, most companies tend to diversify their operations and operate in more than one country and hence the establishment of networks continues to gain more popularity over the other methods. However, the organizations that intend to establish networks require the skills required for building and maintaining such networks. This means that the ability and the capability of establishing networks depend largely on the knowledge and experience of the management team. An organization deeply rooted in a country like Britain where the labour is more skillful is thus likely to develop networks more easily than an organisation deeply rooted in India where labour is less developed. This means that the necessity to acquire more skills in Britain is less than in a country like India. This means that in Britain, the move to acquire more managerial skills is lower and hence less likely going to engage in partnerships with the aim of gaining knowledge and skills. While organizations operating in India are most likely going to collaborate with a substantial organisation to acquire skills to deal with the managerial problems, it faces in the current globalised economy in which intense competition is the most describing feature (Ghemawat & Khanna 1998). In addition, the management decides to enter into partnership to spread the financial risks that it faces. This style is more relevant for the small and medium size companies. In India, where the economy is weaker, there are many small-scale players in the economy. This means that these partnerships are very important than in Britain where the number of small-scale operators is lower. In the world where the process of globalization is increasing daily because of technological developments, the establishment of networks continues to acquire more significance. Value-added networks reduce the costs of transactions and facilitate access to resources as well as capabilities. Internal markets allow companies to transfer economic resources that will help to reduce perils and ensure the survival of the network. These benefits are more evident in rising markets where the external markets are less effective. In the process of achieving these objectives, companies may adopt either collaborative networks or coordinated networks. Common characteristics of collaborative networks are outgrowth of teams for projects, high degree of complexity and great focus on expertise, invention, innovation as well as development of the market (Bagdoniene & Zilione 2009). In this method, the organisation is in terms of orchestrator and the orientation is in terms of relationship. On the other hand, the common characteristics of the coordinated form are the orientation in terms of transaction, quantity or high volume of products, organisation is around a concentrator and the outgrowth is in terms of value chains. The collaborative method is more prevalence in Britain while the coordinated is more prevalence in India because of the difference in technological development. The management of relationship in business networks is very complicated and hence needs a lot of knowledge and experience. This is because both the cooperation and the combined involvement require different methods of relationships. There are relationships that base on the portfolio of service products. These are more relevant to the organisations found in operations of higher volumes. There are also personal relationships that involve a customer and employee. This type of relationship is more prevalent in low volume or low quantity professional organisations. Indian companies mostly employ the latter while Britannia companies mostly employ the former. There are also temporary relationships established for a given period or season to perform a particular transaction or to perform a particular service (Bagdoniene & Zilione 2009). Again, some experts recognize the existence of four other types of relationships that companies use to build relationships with other companies. They include close relationship, dominant partner, discrete as well as recurrent relationship. These four types of relationships differ with each other depending on the assets contribution, communication, trust, type of cooperation, time horison, sharing of information, flexibility and norms. Regarding the ground of professional services, the forms of relationship base on various factors. These include the scope of the service that can be either broad or focused depending on the nature of the service and the company. It also depends on the diversity of the supplier that can be single or a group of suppliers. It can base on the duration of engagement that can be short engagement or a contract that will take long time to expire. It can also base on the frequency of the transaction that can be many small transactions or very few but large transactions. The relationship can also base on the range of contact with the client that can involve either a single individual or the entire organisation. Finally, the relationship can also base on the style of interaction that can be either online or face-to-face interaction (Bagdoniene & Zilione 2009). The country that is more advance in technology usually utilises the online form of interaction. Two factors determine the success of a business-to-business relationship. The first one is the level of satisfaction that a member gets from the other depending on the agreement and the expectation of each one of them. In a condition where each member in the relationship obtains high satisfaction from the other then there are high chances that the relationship is going to be successful. Satisfaction refers to the positive experience of one organisation regarding the ability of the partner to abide by the rules and meet the performance requirements. The second factor is the quantitative measure of the benefit that every member harvests from the other. Conclusively, a business-to-business relationship is successful if there is a good achievement of the goals of the relationship by each member involved in the relationship (Bagdoniene & Zilione 2009). In developed countries like Britain, strict adherence to business ethics makes most of the relationships successful. The quality of the service is specifically, a very important factor to the organisation that involve in the provision of services. This is because; this is an important factor in determining the level of profits. It also determines the costs incurred and the market share of the organisation. In addition, the quality of the service influences the intentions of doing purchases and firms can use it to position themselves strategically in the marketplace. The quality of the service also contributes to a positive behaviour of the company in the name of loyalty. Conclusively, companies struggle to build successful relationships to be able to create higher value by concentrating on the key competencies in the market and allowing partners to do the other things that that they can do more successfully. Successful relationships are a perfect tool for specialisation in business operations that in turn enhance innovation (Holm, Eriksson & Johanson 1996). Handling cultural Difference in international marketing One of the major challenges that international marketers face is the differences in culture from one region to another. Culture influences the operation of a business in several ways. The company must be capable of handling the problem as mistakes can be costly and difficult to correct and in some conditions can destroy the overall performance of the business. It is important to consider cultural awareness in all aspects of product promotional projects. This may include in selling, advertising, labeling the products, advertisement as well as product promotion. Culture includes the language of consumers or buyers, their lifestyle and the patterns of their behaviour (Armstrong 1996). More obvious, the company should derive its name from the local language of consumers. The company must also understand what the name of the brand of the product will mean to the consumers. This greatly affects the consumers’ attitude towards the brand. If the name of the brand clearly reflects to something that consumers know and it conforms to their culture, the product will appear more natural and the consumers will have the feeling of owning and accepting the product as belonging to them (Armstrong 1996). Another aspect that an international marketer must consider is the meaning of the colour that he intends to use on the brand. Colours convey message and this message vary from one group of people to another. For example, the white colour to some people may mean joy while to some other people it can be a sign of mourning. This means that the white colour will produce a positive impact when used to some people but will produce a negative impact when used to others. This means that the marketer must be very sensitive when selecting the colour that he wishes to use on the brand (Tse et.al. 1988). Another very important consideration is the customs and the taboos of the group of consumers that the business aims to reach. Each particular culture has its own unique set of taboos and customs that are very important to consider. It very important for the marketer to learn and understand the customs and taboos of the targeted group as this will assist him to identify what consumers are going to accept and what they are going to reject. The personal values of an individual come from his religious or moral beliefs (Armstrong 1996). The values then develop through the various experiences that the individual went through in his life. For example, in a country like Britain, the people will assign a very significant value on well-being in terms of material. This means that they are more likely going to purchase symbols describing their status. On the other hand, in India, the Hindu religion does not allow its followers to consume beef. This means that a restaurant that sells fast foods in Britain must adjust its operations or the products if it intends to perform well in India. To add on that, Islam does not allow its followers to consume wine and alcoholic products. This means that setting a business that distributes alcohol in a region where majority of the population are Muslims will result to a failure of the business (Tse et.al. 1988). Another important factor to consider is the price of the product. Despite the fact that the price that consumers are going to accept depend on their financial status, culture has very great influence on the price that a particular group of people is going to accept. Some cultures accept high prices for commodities because buying an expensive item is prestigious and somebody earns honour and respect. In this environment, it is not good to lower the prices to a level that will affect the product market share in a negative way. Some cultures on the other hand do not allow the idea of buying expensive things and under this condition; one must lower the price of his commodity as much as possible (Tse et.al. 1988). Conclusion In the current market where business organisations are operating, the resources embedded into business-to-business relationships are more significant than the capital or any other asset. Financial resources, knowledge, financial risk, product complexity, competition, remote market and customer needs are some of the most important reasons that influence companies into establishing long-term business-to-business relationships. The relationships come in the form of partnerships, networks, joint ventures, strategic alliances, trade associations and interlocking directorates. The success of the relationship depends on the level of satisfaction and mutual benefit. The culture of the group of target consumers is a very important factor in the process of marketing products in the international market. Bibliography Armstrong, Robert 1996, ‘The relationship between culture and perception of ethical problems in international marketing’, Journal of Business Ethics, Vol. 15, no. 11, pp. 1199-1208. Bagdoniene, Liudmila, and Rasa Zilione 2009, ‘Business to business relationships: the variables in the context of success’, Social Sciences, Vol. 4, no. 66, pp. 16-25. 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