The dynamics in the business world have resulted to change on how businesses do their job. Traditionally, the players in the business world were viewed as opportunities that need to be taken or threats that need to be crashed. This version of argument is defeated by the current need of gaining competitive advantage. As a result, businesses are highly dependent on the relationship cultivated with those around them and the environment. In effect, a management challenge arises where the decision-makers are required to manage these relationships in order to derive the best actions for the business (Ford, 2009).
To understand the appropriate way through which relationships can be managed, it would be prudent to answer the question regarding the meaning of a relationship. In the business arena, the relationship analogy is derived from the manner in which two companies behave towards each other. Relationship refers to the pattern of interactions and the mutual conditioning of behaviors over time, between a company and a customer, a supplier or another organization. Relationships are highly dependent on time, as time defines the parameters within which a relationship exists (Ford, 2009). The past and the future affect current behavior in a relationship and experiences, expectations and promises underlie the interaction within a set time frame. Therefore, time offers a good dimension which dictates how relationships could be managed. Managers are prompted by time to change their emphasis away from a single discrete transaction while analyzing relationships. Through time, relationships are analyzed by tracking how things unfold in the relationship over time and changing these when appropriate.
IMP and the Interaction Approach
Traditionally, marketing was believed to have been built on an assumption that, there are a set of variables that are controlled by the marketers. The variables mix include: the product; the price that is charged for it; the way it is promoted and the distribution methods used. The IMP (Industrial Marketing and Purchasing) group approach is highly used to establishing an understanding of the business markets (Ford, 2009). The approach dictates the myth does not categorically capture what happens in the market. For instance, under the action myth customers seek a product from manufacturers while under IMP approach customers seek solution to their problem from suppliers.
Consequently, under IMP approach the suppliers and customers are beneficial to each other. Different suppliers have differentiated offers and each offer contains a combination of elements of product, service, advice and logistics. Considering these offers, relationships arise between the suppliers and the customers and these relationships require appropriate management. Therefore, it would be prudent to understand the various element of relationship management. The elements of relationship management entail the fact that there are many people involved in the processes of developing and fulfilling the offering that is traded between the marketing parties. The trade between the parties is a relationship that represents an interaction between customers and suppliers (Ford, 2009). The interaction is based on these parties past experience and their expectations of any possible future interaction. Each interaction and each purchase or sale are understood in the context of that relationship. Thus, there is single type of relationship is “right” for either buyer or supplier in all circumstances. This means that there is no single measure of the “quality” of a company’s relationships.
Another traditional approach is based on the business strategy; where companies are shown as fully independent entities. The IMP approach focuses on the interaction between customers and suppliers in relationships. Companies have to strategize appropriately to reap the highest benefits of the relationships. Through the achievement of relationship advantages, companies improve on their competitive position. Thus, the competitive advantage of a company is based on its total set of relationships, which differs from the traditional view where the competitive advantage is based in terms of products, services and markets (Ford, 2009). Therefore, relationships are essential in the development of the strategies of a company; as relationships are a resource from which strategies are built.
In management of relationship it is important to note that the market parties are interdependent of each other. Both the customers and suppliers search and assess for potential relationship colleagues, as the two parties bring their resources to the relationship and invest in the relationship. For instance, a company supplying a product may also offer extensive advice and adaptation. However, the company may decide to source these services from suppliers. This shows how a company can utilize its relationships to be more effective in servicing its clients’ needs.
Furthermore, another traditional approach of relationship arises. This approach is based on a fact that a strategy adopted is all conclusive and self-sustaining. The argument is that a company can operate within its own abilities and resources. The IMP approach disputes this argument. The opposing argument indicates that no company has sufficient resource to satisfy all the clients’ needs. A company depends on its relationship with suppliers, distributors, customers and even competitors (Ford, 2009). Under IMP, strategies are developed in a manner that they allow a company to use its resources as well as resources of those with which it interacts and with which it is interdependent. For instance, a large part of what a company sells is made up of what it buys; therefore a company can never succeed without suppliers.
The Manager and the Network
Managers are the foundation of the decision making system of a company. They are the ultimate decision makers. Therefore, managers operate in a network where they are coordinate the links connecting the various variables of the network. In this regard managers are tasked with the developing appropriate strategies that would enable the company to exploit their relationship with others. Without relationships, business would be impossible and a company would be isolated in the network. Therefore, without competent managers, companies would be unable to exploit its own skills and resources to solve problems for customers and to sell its offerings. . It is through these relationships that companies cope with their increasingly widespread technological dependence on others and the need to develop and tailor offerings to more specific requirements (Ford, 2009).
By definition, a network refers to a structure comprising of number of units that are related to each other by specific threads. These threads are the relationships between the various units in a network. The threads are developed through the investment of physical and human resource by these units under the guidance of their managers. Depending on the position a company in a network, the interconnections can be viewed in two ways. First a company creates its own relationships while on the other hand a company arises from its relationships. Networks are essential in developing of new products or standards. In production of a new product companies may agree to introduce the product jointly or separately. Under joint introduction, a multiple relationship arises. Companies are able to restrict the number new introductions, where by companies can sell to and buy from their competitors as well as more conventional customers and suppliers (Ford, 2009). As a result, the acceptance of a new standard is very high; however companies have to fight for the market share.
The management of must be very vigilant while monitoring the operations of a network. This is because there are a lot of dynamics in the business environment. Additionally, limitations exist on the knowledge and information available regarding the ever changing business environment. The environment dynamics results to difficulties in managing the interactions with other companies. . Each has a network position, consisting of its relationships with others and its own resources and those that exist within and through its relationships. These resources – technical, economic and social – are the core of each company’s strength and the basis for its growth and development in a rapidly growing and evolving market. Depending on how well a company manages her relationships, it gains competitive advantage, which arises from the strengths derived from having relationships with resourceful partners (Ford, 2009).
Ford, D. (2009). Managing business relationships. Chichester [u.a.]: Wiley.