Flayton Electronics - Relationship in Business Networks - Case Study Example

Relationship in Business Networks Table of Contents Outline Table of Contents………………………………………………………………..2 Cover letter………………………………………………………………………3 Executive Summary………………………………………………………………4 Introduction………………………………………………………………………..4 Statement of the Problem………………………………………………………….4 Research Questions………………………………………………………………..5 Research Methodology……………………………………………………………5 Research Findings: Relationships in the Conventional Business World………….6 Relationships in the Contemporary Business Environment……………………….9 The Reciprocity of business……………………………………………………….11 Conclusion………………………………………………………………………….13 Recommendations………………………………………………………………….14 List of References…………………………………………………………………. 16 TO: Director RE: UNDERTAKING OF A STUDY TO ESTABLISH THE UTILIZATION OF RELATIONSHIP IN BUSINESS NETWORKS AT FLAYTON ELECTRONICS Owing to the importance attached to the establishment of relationship in business networks, there has been need to review how Flayton Electronics fares in this area. The study that is being undertaken seeks to present ways that Flayton Electronics can utilize to take full advantage of the business networks that are available to its business operation. This will be achieved through the presentation of recommendations on what Flayton Electronics needs to do in the light of the presented research. For this study to be successful there is need for cooperation especially among the senior management to which the study is directed. Thank you. Sincerely, 03 June 2013 Executive Summary Despite the fact that most if not all business organizations realize the need of creating relationships in their business networks, very few of those relationships end up being created. This aspect of business is often replaced with the more favoured aspect of professionalism and skills development. Since the inner workings of an organization are not immediately visible to the untrained eye, it becomes hard to determine whether a business enterprise is utilizing the relationships available for them. This research proves that Flayton Electronics has not taken advantage of the relationships at its disposal in the serious manner that they ought to. This has led them to lose numerous opportunities in terms of expanding their business and even retaining qualified staff. The report will recommend that Flayton Electronics make use of the presented social networking to better its business operations. 1.0 Introduction The worth of building relationships in business realm is often disregarded mainly in favour of advanced and specialized skills and experience ideal in the commerce industry operations. Nevertheless, forming proficient association is very critical determining factor in ensuring success of a business success. This model can be analysed by manipulating conceptions and practices for instance social capital as well as social networks inquiry. The increased internet usage recently has led to the dynamic business relationships nature and changes in expertise and features essential to build and uphold these relationships. These answers to these questions are critical if an organization is to attain the full benefits of running a profitable business enterprise (Palmatier, 2008). 1.1 Statement of the Problem The importance of relationships in business networks cannot be underscored. Although many business organizations understand the importance of relationships in business networks, many of them do not apply them in their operations. This problem has plagued the management at Flayton Electronics. With presence in six countries, Flayton has only relied on the traditional business networks thus totally ignoring the powerful social media tool that has the potential of enhancing business communication. 1.2 Research Question Although many organizations realize the need of developing relationships in business networks, very few of them go ahead to create such relationships. Given that the inner workings of an organization are not immediately visible to the outside eye, it becomes hard to determine whether an organization is on the right paths as far as the creation of relationships in business networks is concerned (Palmatier, 2008). With this perspective in mind, this report tries to answer the question; has Flayton Electronics been keen in creating meaningful relationships in its business networks especially in the area of social networking? 1.3 Study Methodology In order to assess the length and impact of relationships in business networks adopted by Flayton Electronics, I interviewed six (6) individuals from Flayton Electronics with four of them being senior managers to establish their level of understanding of business networks within the organization. The interviews will also seek to establish if the relationships formed within the organization are up to date or outdated. The interviewed manages are the ones closest to the business operations and their opinion is seen to mirror the true image of Flayton Electronics. 2.0 Research Findings 2.1 Conventional Business Domain Relationships ‘Social capital’ model is often used to delineate reasons why and how relationships amongst personages are often of benefit to all the parties or entities involved. Actively being involved and taking part in initiating and building business networks has explicitly been proved to offer organizations valuable resources such as industry knowledge, novel concepts, means of raising capital, modern applicable expertise and knowledge. Put together, these resources can enhance an organizations productivity and effectiveness and aid the organization using it to attain competitive advantage (Dunbar, 2002). The significance of having external contacts and networking was outlined in a recent research study, whereby it was established that over 90% of the information utilized by senior executives in the decision making process has its genesis from their informal networks instead of official reports (Cross and Katzenbach2012). Leboff (2011) and Eliasson (2010) have tried to explain the conceptualization of ‘strong and weak ties’ in an effort to offer additional understanding into the function of relationships in business by differentiating between the benefits brought about by various kinds of links or connections formed. Granovetter, (2013) specifically delineated the power of a link or connection in relation to certain dynamics; for instance, the amount of time expended in it, the level to which mutual services are passed across and the nature of closeness or acquaintance amongst the corresponding parties. This is because often effective and close ties are usually existent amongst parties that spend quality time to know each other well. In most cases, upholding these connections necessitates substantial investment in both time and endeavour, even if the relationship brings about great benefits including the passage of information and intricate or implicit business information. The importance of solid and effective networks has also been depicted in experimental inquiry demonstrating that large amount of value to a business is often got from networks from fairly tiny fraction of other businesses (Granovetter, 2013). Over the years, the amount of time investment and effort put on developing strong relationships between identical organizations has dwindled. This is especially due to the fact that it is rare for any new information to be introduced into the network and the rate of innovation is also constantly under threat. Therefore, ‘weak ties’ or looser networks between people or businesses with irregular contact and ones that know very little about each other often bring about increased benefits. In most cases, the benefits reveal themselves in terms of enhanced prospects to develop more ties or relationships with a more varied amount of associates different from the current social or business sphere, and ability to get hold of valid data and tools. For this reason, weaker ties have traditionally been seen as a way of introducing far-reaching innovation and to be mainly important when a definite administrative issue need to be dealt with (Hubert, Elgar, & Rainer, 2001). Although Flayton Electronics at first had a large number of business contacts, this seems to have become a challenge that the organization could not handle. According to the communications manager Michael Joseph, the number of businesses where a meaningful relationship is maintained has dwindled from fifteen hundred (15) five years ago to only one fifty (50) today. While this might be construed as a lack of seriousness by this department, the opposite is the same. According to anthropologists, the cognitive ability of a human being basically restricts the number of social connections or relationships that a person can have to just about one hundred and a maximum of one fifty. Naturally, these personal-level associations are the most significant; while relationships between organizations are important, it is the relationships between the individuals representing the firms that are the most crucial since they have a bigger impact on business performance as compared to the inter-organizational relationships (Hubert, Elgar, & Rainer, 2001). On this account, Flayton Electronics seems to have faired badly since the management seems to have a policy that restricts its employees from forming deeper relationships with those from other organizations. According to a junior employee who was interviewed for this report, the senior managers seems to have less tolerance for close relationships between their employees and those who are perceived to be from rival businesses. This has led to a scenario where the employees are scared of forming close relationships with their contemporaries from other firms for fear of reprisals. The fifty businesses that the business deals with are only those that they do business together and the information that they share cannot therefore be useful to any of these organizations. Although there has been a strong emphasis on networks, very little emphasis is placed on examining the definite expertise and features that are necessary in the establishment and maintenance of relationships. For Flayton Electronics, the challenge has been that the role of pursing these skills has conventionally been left to the senior executives as well as the sales department. The other challenge has been that Flayton addresses this function in the perspective of specialized expertise in these two fields. Ideally, the reason why there seems not to have been meaningful relationships created within Flayton is that their formation calls for the need of trust. For a long time, it has been established that ideal business networks or relationships, which are linked to enhanced productivity have a tendency to to be founded on mutual trust amongst the concerned entities. In the absence of trust, there cannot be transfer of information, skill and knowledge and there cannot also be cooperation and collaboration between the various parties (Alter, & Hage, 2011). Perhaps the indication that Flayton is still on the right path in the formation of relationships with other networks is evident given that not all business associations are relationship-based. Traditionally, most businesses have minimized their associations to only those businesses that they regularly do business together. Until in recent times, the kind of relations that Flayton had with its clients, contractors and other investors was predominantly transactional. According to experts, the significance of relationship-based associations is at the presented being widened to incorporate these stakeholder contexts. While this in itself requires new skills to build the new relationships, it means that the Flayton scenario can still be salvaged (Alter, & Hage, 2011). 2.2 Relationships in the Contemporary Business Environment There are over a billion social media fans and users worldwide, and a projected 70% of organizations being actively involved in it. In essence, numerous critical and inter-connected advances related with the evolution of social media utilization are principally significant in business connections. The quick spread of social sites denotes that it is very easy to create weak ineffective ties; however, this trend can be harnessed to offer valuable information especially when getting into partnership. Work-connected networks of weak ties might include but not limited to LinkedIn contacts and individuals involved in online forums created to distribute information and deliberate on subjects of concern. These set-ups basically develop instinctively often based upon a certain trending topics and dissipate just as fast. Regardless of this, there are very strong pointers to prove that the conventional benefits of weak links are not being utilized effectively. Analysts have for long pointed out that the large involvement in social sites emanates from people who own offline connections and not from the new contemporaries that can offer inventive concepts or proficiency that was not available to the other part before the relationship developed. Within the same time, given that electronic communication have largely displaced interpersonal consultations and phone calls, it has come to be increasingly more challenging to cultivate and maintain strong bonds or associations with business associates (Achrol, 2010). Regardless of this, the technological advancements and the expansion of social networks have also introduced advanced means of business collaborations that incorporates novel business associations founded on weak ties. Since recently all the info and data can be shared over the Internet, and everything has become the subject of debate on online debate, it has become totally impossible for organizations such as Flayton to control or regulate their data or to hide their undertakings. In fact, owing to this trend one major effect of the Internet is the heightened expectancy that businesses of all nature will become more open in regard to their strategies and processes. In addition to this, the readiness to share data resources and expertise has turned to be paramount to achieving success in any environment where businesses need to associate or work with others (Bourdieu, 2007). On whether the management at Flayton Electronics has been able to harness the full potential of the Internet, the senior managers seem not to be aware about the great pool of talent that lies in this area. Ideally, the management at Flayton Electronics seems to realize that the technological advancements in information and communications; for instance, social media upon which connections are instigated, makes it easy to establish and carry out work in thorough novel techniques. Despite this realization, the management seems to not be aware of the significant implications in relation to relationship-development. This is because the management is only focused on the negative side of the Internet and has in the process forgotten that this is an important tool that can enhance their relationship building. Although Flayton has presence in six countries, the management seems not to realize that it is now exposed to a tool that makes it possible to tap into an international workforce of professionals something that lessens the necessity of maintaining strong links in the long term. Although there is still necessity to uphold a substantial level of dependence and assurance albeit temporarily, the kind of skills and expertise required when business partners do not have to meet face-to-face are undoubtedly different from those required in the conventional model of relationship development (Bresser, 2009). While many individuals and businesses now use the Internet and social as their sole source of information, this craze seems not to have caught up with the management at Flayton. According to the two junior employees interviewed for this report, the use of the Internet at Flayton is strictly restricted to the senior management. This is because the management believes that the Internet is a time wasting tool that would affect the organizations productivity leading to a scenario where the organization still relies on outdated yellow pages and directories to get business contacts. This has come out of the desire by the Flayton management to maintain control over what is circulated about them. However, what the management has failed to realize is that a large number of consumers rely on what is said about an organization by other people over what the organization says about itself. This explains why the numbers of consumer websites that depend entirely on consumer reviews have been rising significantly in the last few years (Coleman, 2004). The far-reaching changes brought about by the Internet have made firms such as Flayton that are not ready for the change to be on the losing end because these developments have called for the need to cultivate novel relationship-based interactions with their clients and other players. This has especially been generated by the need to develop and sustain brand allegiance and to effectively manage or influence what is being said online regarding or relating to the organization. Therefore, As opposed to just dispersing information regarding itself and the product it offers, Flayton needs to actively take part in deliberations or forums on social media and come up with other approaches to keep Internet consumers engaged. The management should also realize that it will be judged in the manner that they react to client feedback and this means that the organization should develop a permanent department to deal with client concerns (AT&T, 2011). 2.3 The Reciprocity of Business One important thing about business relationships is that they are reciprocal in nature. For B2B business such as Flayton, attaining this reciprocity is critical for its survival. Ideally, something that Flayton should note about the B2B and B2C social frameworks is the capability to spot and shape the affairs with strategic sponsors within its target market. At least, the person charged with overseeing the B2B operations seems to be on the right footing as far as establishing the right relationships is concerned. In order to attain the Flayton objectives, the manager has been working hard to examine the sea of online users with a view to establishing the ones that are most likely to have the greatest impact. This practice has come out of the realization that in social networks there exists trustworthy specialists who have already acquired a good repute in their respective fields. Building constructive connections with various stakeholders who will pass along affirmative info regarding the Flayton brand is a better strategy that does not require much resource as compared to building large relationships with a large number of individual within the target group. Instead of sourcing for experts or a business partner directly, the manager has first been using the Internet to develop a relationship with an important enabler who then offers critical information about the attributes that the person being sought for should be having. The good thing about this approach is that such advisors have n higher chance of knowing the individual personally and are therefore better placed to organize for a meeting (Curtis, & Lewis, 2010). Therefore, for an effective relationship to be developed with either enablers or any other primary stakeholder, the theory of progressive reciprocity must be maintained. This implies that something of worth must be presented to the second party at the beginning of the negotiations and not just after the required help has been gotten. This has been challenging for the organization in that it is hard to know just how much an individual is worthy before you have interacted for long. In terms of reciprocity, the organization has done well in refraining from offering cash incentives and instead offering to promote the influencer in their various areas of expertise. To this end, this strategy has been effective in that the involved manager has been able to get the required help from the key influencers without necessary using the company’s money. In addition to this, the company has located influencers from within it and has been offering them incentives such as sponsored education in returning of their working on proposals that the business requires. This has also ensured that such talent is maintained within the organization (Sexsmith, & Angel, 2009). Conclusion The importance of forming relationships in business networks cannot be underscored. While many organizations realize the need to create meaningful relationships with other businesses, very few undertake this objective. In addition to this, many businesses only utilize the traditional ways of forming relationships without taking advantage of the existent social networking, which offers a new and unique way for businesses to form relationships within their networks that would give them easier access to information as well as interact with their clients. Study Recommendations From the interviews conducted with the six individuals within Flayton Electronics, it is apparent that their relationships in business networks need to be enhanced. Some of the ways that they can achieve this objective include; Empower all the employees with the right skills that are necessary for business-relationship building as well as online marketing. Given that most individuals belong to more than one social media sites, the management must realize that the traditional boundaries between individual and professional life are fast dissipating. This means that employees have now become social ambassadors for their organizations and any of their online activities no doubt mirror that of the organization they represent irrespective of whether they represent it officially or online. There is a very high probability that their expertise will be sought by other people in a certain social network keen on sourcing for information about the business. For Flayton Electronics to deal with the threat of negative publicity from their own employees and to help in ensuring that the company is represented positively, all the employees should be offered training on how to use social media sensibly (McKinsey Global Institute, 2012). Given that most business networks are now developed online, Flayton Electronics should endeavour to establish a strong and permanent online presence. Instead of merely sourcing for social media management, as is currently the case, the organization should have in-house trained managers who understand the nature of business conducted by Flayton and the nature of relationships that it requires for survival. The importance for this cannot be underscored given that these individuals will become the official ambassadors of the organization. In this aspect, personal attributes are much more critical than even formal skills when choosing the individuals for these roles (Håkansson, & Snehota, 2005). The art of fashioning and upholding a network that benefits is something that the management should be overly concerned with. This is because the individuals chosen for this role will be key in offering solutions arising in the organization as well as handle the issue of reciprocity that has been a challenge in the selection of key influencers. At the present, Flayton can settle on offering a B2C product for its key influencers while in the B2B area, a form of communication can be developed to explore a common area of interest (Curtis, & Lewis, 2010). Given the range of areas that Flayton operates in, there is no doubt that that far-reaching cultural and structural changes will need to be conducted to support the skills that are required for relationship development. Although drastic, a change of leadership and the management styles is inevitable in order to foster transparency and reciprocity that are necessary for success in this climate. Instead of just limiting the use of the Internet to the senior management, every employee should be empowered and allowed an online presence since the individual relationships that will be born out of this will be beneficial to the organization in the long run (Zavišić, & Zavišić, 2011). References Achrol, R. (2010). 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