1. Strategic relationships and networks: Building the infrastructure to deliver the strategy
Lecture 8

2. A route-map for market-led strategic change
Part I
Customer value
imperatives
Part II
Developing a value-based
marketing strategy
Part III
Processes for managing
strategic transformation
The strategic pathway
Change strategy
Market sensing
and learning
strategy
The Customer
is always
right-handed
Strategic
gaps
Strategic
market choices
and targets
Strategic
thinking and
thinking
strategically
New marketing
meets
old marketing
Organization
and processes
for change
Customer value
strategy and
positioning
Implementation
process and
internal
marketing
Value-based
marketing
strategy
Strategic
relationships
and networks

3. The strategic pathway Strategic thinking and thinking strategically
Market
sensing
and
learning
strategy
Strategic
market
choices
targets
Customer
value
positioning
relationships
networks
Strategic thinking and
thinking strategically
transformation
and strategy
implementation

4. Agenda Customer relationships Competitor and contingent relationships
Collaborator relationships
Co-worker relationships
The network of key relationships

5. Strategic relationships and networks
Customer
relationships
Competitor
and contingent
relationships
Strategic
relationships
and networks
Collaborator
relationships
Co-worker
relationships

6. Customer relationships
Do we know what we want the customer relationship to be?
Do we have that relationship or can we get it?
Can we deliver that relationship?
Do we understand the link between the strength of the customer relationship and the attractiveness of that customer’s business?

7. Customer relationship
The dancehall dilemma
Customer relationship
Strong
Weak
Prime target
customers -
achieve synergy as
we retain the “best”
customers (we hope)
Targets for
conversion -
are they attractive
enough to be
worth chasing?
High
Customer
attractiveness
Sticky
customers -
they want us, we
don’t want them,
so what do we do?
Mutual
antipathy -
they don’t want us,
we don’t want them,
end of discussion
Low

8. Competitor and contingent relationships
Some fundamental issues:
every organization has competitors
every company says “we know who our competitors are” and frequently get it wrong
most think that “competitors are in our industry” – see back to the Competitive Box to dispel that myth

9. Competitor and contingent relationships
Really understanding the competition
conventional analysis develops a competitor response profile
the psychology of competition may be just as significant – e.g., how ugly are the competitors around here?

10. Competitor analysis Competitor’s goals What are they trying
to achieve in this
market?
Competitor’s strategy
What is this company’s
current strategic
position?
Competitor’s response profile
Is this competitor satisfied with its current position?
What are the likely moves they may make?
Where is this competitor most vulnerable?
What is this competitor sensitive about, what is
most likely to provoke a competitive reaction?
Competitor’s strategic
assumptions - How
does management
look at the market?
Competitor’s
capabilities - What are
their strengths and
weaknesses
Adapted from: Michael E. Porter, Competitive Strategy, New York: Free Press, 1980.

11. How ugly are the competitors around here?
Competitive reaction
to our move?
Yes No
Fight to
the death
Show
disdain
High
Competitive
aggression
Weak
counter-
attack
Ignore us
Low

12. Competitor and contingent relationships
Where is the competition coming from in this market?
can we predict the strategic moves of our competitors and maintain our competitive advantage?
do we recognise new potential competitors and new technologies?
does our value proposition give us a specific positioning thatb plays to our strengths and avoids head-on competition?

13. Competitor and contingent relationships
Critical contingents:
shapers of opinion
regulators
recommenders
gatekeepers
suppliers
supply chain partners

14. Collaborator relationships
From outsourcing to alliances and networks
outsourcing
partnership
alliance
vertical integration

15. Types of collaborative relationship
Closeness of
relationship
Nature of the relationship
Outsourcing
Arm’s
length
Low
Purchase of goods and services
from outside the company, possibly
over the long term
Short-term focus, but coordinated
activities between partner companies
Short-term
Long-term
Longer-term focus with integration of
activities between partner companies
Partnership
Permanent
“Permanent” arrangement with
partner companies highly integrated
Joint
venture
Shared ownership in an operation
with a collaborator company
Alliance
Vertical
integration
Full ownership of the activities
or operations
Ownership
High

16. Collaborator relationships
Advantages in collaboration:
cost efficiency
customer service
marketing advantage
strategic advantage
profit stability and growth

17. Collaborator relationships
Network organizations
a new organization form: the hollow or networked organization

18. The Calyx & Corolla hollow, networked organization
Customers
1. Customer orders from
catalogue: phone, fax,
mail,
4. Federal Express
delivers flowers
Federal
Express
Calyx & Corolla
3. Federal Express
collects flowers
2. C&C notifies order
to Federal Express and
the chosen flower grower
by computer
Flower
growers

19. Collaborator relationships
Collaborations that crash
synergy or “ygrenys”
Managing partnerships and collaborations
corporate compatibility
management style and techniques
mutuality
symmetry

20. Collaborator relationships
Partnership-based strategy should consider time and cost in:
establishing the partnership
monitoring the partnership
strengthening the partnership
getting out of the partnership

21. Co-worker relationships
Can and will employees/managers in the company/alliance deliver the promise of the value proposition to the customer?
do not assume everyone will think our strategy is great and buy-in
be realistic about capabilities
Link to internal marketing strategy

22. The network of key relationships
Relationships with customers, competitors, contingents, collaborators and co-workers are connected
Challenge is to test market choices and value propositions against the network’s capabilities

23. British Airway’s relationship network
Customers
Customer satisfaction levels
falling; premium passengers
switching brands; higher
service image weakened
Competitors and contingents
Virgin antagonism continues;
low cost operators attacking
through courts; European
regulator investigates;
no help from government
Collaborators
USAir alliance crashed;
American Air alliance stalled;
travel agents are hostile; BA
Strategy
Co-workers
Climate surveys go down; new
branding is resisted; industrial
action takes place and more
is threatened

24. The network of key relationships
The danger is developing and pursuing attractive strategies that rely on relationship network capabilities which do not exist