Executive Summary This paper discusses, using the multinational corporation Dell, Inc, existing and suggested Relationship Management Strategies applied to both Upstream and Downstream members of a supply chain. It also examines and gives an analysis of, using several diagrams, tables and models, Dell’s product range – and the customers who buy them. This paper also examines several Key Issues associated with maintaining positive relationships with supply chain members, and how they may be worked out, besides providing an in-depth analysis of the relationships between Dell and its suppliers, customers and competitors.
Dell’s customers are many and come from many segments, but for this paper the focus will be on its biggest and most important market: Large Businesses and Organizations. Index 1. 0 Introduction 5 1. 1 Background Information on Dell 7 1. 2 Introduction to Dell’s Suppliers and Acquired Products (Upstream) 8 1. 3 Introduction to Dell’s Key Products (Downstream) 9 1. 4 Dell’s Customers 12 1. 5 Dell’s Competitors 13 1. 5. 1 Explanations for the Numbered Arrows 14 2. 0 Classification of Dell Products According to Buying Situation16 2. 0. 1 Explanation of Tables 17 2. Buy Grid Framework 18 2. 1. 1 Upstream 19 2. 1. 2 Downstream 20 2. 1. 3 Explanation of Tables on Previous Page 21 3. 0 Suggested Relationship Management Strategies 22 3. 1 Upstream Supplier Relationship Management: Suggested Strategies 22 3. 1. 1 Encouraging Collaborative Relationships 22 3. 1. 2 Engage in Strategic Alliances 23 3. 1. 3 Engage in Strategic Alliances – Commitment from Top Managers 24 3. 1. 4 Engage in Strategic Alliances – Issues to be Paid Attention to 25 3. 2 Downstream Customer Relationship Management: Existing and Suggested 26 3. . 1 Encouraging Collaborative Relationships 27 3. 2. 2 Encourage Value-Added-Exchanges 27 3. 2. 3 Application of Above Strategies 28 4. 0 Evaluating Relationship Strategy Outcomes 29 5. 0 Summary and Comments 30 5. 1 Summary of Discussed Strategies 31 6. 0 Conclusion 32 Referencing/Bibliography (APA Format) 33 1. 0 Introduction Business markets worldwide account for most of the money circulating the economy – Recorded business to business volume in Asia alone was recorded at USD$330 Billion in the year 2004 (Businessweek. com, 2006).
The volume of transactions within the business market will always surpass that of the consumer market. This is because in a typical supply chain (from raw materials to the manufacturer to the distributor to the consumer) there will be several Business to Business transactions involving subcomponents or raw materials, and only one Business to Consumer transaction (Wikipedia. org, 2009a). Although Business – to – business marketing has been around for as long as there has been commerce, the bulk of research on the discipline of business marketing has only come about in the last 25 years or so (Wikipedia. rg, 2009a). Nevertheless, it is important for a business marketer to be able to manage relationships with both his Upstream Suppliers and Downstream Customers – interpersonal relationships will no doubt matter in the business world, and the business marketer represents the point of contact between the firm itself and the supplier / customer. Maintaining good relations with supplier and customer have their obvious benefits. This being said, the issue a company faces would be: how should the organization manage relationships with key suppliers and business customers?
This is the focal point of this paper and several key issues will be discussed in the following chapters. The company selected as the subject for this assignment is Dell Incorporated, a company known worldwide for its hyper – efficient supply chain (due largely to a good communication network along the supply chain) and emphasis on good relations with its suppliers and customers (as will be explained later in this paper). Due to its exemplary business practices, Dell Incorporated has been the subject of many case studies and reports ranging from Customer Service to Human Resources to Logistics.
For the same reason, the author thinks that Dell is a prime candidate of discussion for this paper’s given topic. This paper will examine and discuss, among other things, Dell’s vast product line catering to various business segments, the structure of Dell’s supply chain – parts and peripherals suppliers, distributors and business customers, competitors, and (most importantly,) its methods and policies of dealing with and maintaining good relations with its suppliers and business customers. 1. 1 Background Information on Dell Dell, Inc is a multinational corporation formed in the 1980s by founder and college dropout Michael Dell.
What sets Dell apart from other firms operating within the same category is that Dell was the first company to offer Built-to-Order computers, which were different from the norm of buying ready-made computers at that time. The company currently sells personal computers, servers, data storage devices, network switches, software, and computer peripherals (Wikipedia. org, 2009b). Dell utilizes a JIT approach – that is, instead of stocking up on parts in expectation of future orders, it uses a “pull” system – building computers only after customers place orders and by requesting materials from suppliers as needed.
In 2006, Fortune magazine ranked Dell as the 25th-largest company in the Fortune 500 list, 8th on its annual “Top 20” list of the most-admired companies in the United States. [3] In 2007 Dell ranked 34th and 8th respectively on the equivalent lists for the year. A 2006 publication identified Dell as one of 38 high-performance companies in the S&P 500 which had consistently out-performed the market over the previous 15 years. [4] Dell generally maintains positive functional relationships with members of its supply chain – both upward and downward (McClenahan, 2001), which makes it a prime candidate for the topic of discussion in this paper.
As of 2009, Dell operates manufacturing plants in Penang, and in Xiamen, China. These facilities currently serve the Asian market and assemble 95% of Dell notebooks (Wikipedia. org, 2009b). 1. 2 Introduction to Dell’s Suppliers and Acquired Products (Upstream) The products acquired from Dell’s suppliers fall into four main categories: • Main Processors • Hard Disk Drives • Graphics Processors • Display Monitors (LCD, CRT (Phasing out)) These are mainly Facilitating Goods and are assembled by order and sold to businesses and other organizations.
Virtually all of Dell’s suppliers are Original Equipment Manufacturers – the parts they provide are assembled and sold under the Dell Brand Name. These suppliers include: • Microsoft Corporation – Operating Systems (XP, Vista) • Intel – Processor and Networking Modules • AMD Inc. – Processor Modules (Only for Alienware Products) • NVIDIA – Mid to Low-end Graphics Processor Modules • ATI Technologies Inc. (Subsidiary of AMD Inc. ) – High-end Graphics Processor Modules • Maxtor – Hard Drives • NEC Corporation – LCD Monitors
The above products are imported into Malaysia through Dell Asia Pacific Sdn Bhd (Bayan Lepas Industrial Zone) in Penang (Wikipedia. org, 2009b) and distributed to retail/businesses as Business Solutions. To properly classify the supplier’s products by Buying Situation (Straight Rebuy, Modified Rebuy, New Task), the suppliers must first be classified into categories based on the characteristics of the product. These suppliers can be classified into three main categories (classification according to Buying Situation will be done later in this paper): Hardware Supplier: Intel, AMD, NVIDIA, ATI Technologies, Maxtor Product Characteristics: New Technology is often and periodically introduced into the market, hence prompting frequent re-evaluation of what to buy, when to buy and how much to buy. • Display Module Supplier (LCD Screens): NEC Corporation Product Characteristics: These are very basic products (do not currently change much over time) and do not need much problem solving or decision making when repurchasing. Software (Operating Systems) Supplier: Microsoft Corporation Product Characteristics: Intervals between new versions are typically long (a few years in between – Windows XP, Windows Vista) 1. 3 Introduction to Dell’s Key Products (Downstream) After receiving the manufactured materials and parts, Dell further processes / assembles them to form the end product – workstations to be sold as Business Solutions to Businesses, Governments and other Organizations. Since Dell has a very wide range of products catering to different markets, only the most recent and popular product lines will be discussed for simplicity’s sake.
Dell’s product range can be divided into three Classes that cater to two main customer segments: • Business/Corporate Class: Descriptions: Product lines in this category are advertised to the market as having qualities that would appeal most to the business market: long life-cycles, reliability and serviceability that will provide the customer with optimum business performance. Products in these lines are typically Servers for storing and disseminating information, Workstations for employees and Portable Computers for Working Professionals.
These products boast “Increased productivity and virtually no downtime for business operations” (Dell, 2009). Characteristics: Purchases for these products are typically done in bulk and have high order values. Since product specifications can be tailored to suit the customer companies’ needs (Processor Speed, Hard Drive Size, Types of Peripherals included), the customers for these Product Lines are typically Medium-to-Large sized offices looking to upgrade their office equipment and convert the office into a paperless one.
Product Lines: Product lines in this category include: OptiPlex, Latitude, and Precision. • Home Office/Consumer Class: Descriptions: Product Lines in this category are mainly targeted at the consumer market. These are sold as stand-alone computers (as opposed to the network workstations and servers of the Business Class Product Lines). Advertising for these Products emphasize on value for money, good home performance and expandability (should the buyer want to upgrade the system – increase hard disk space, expand memory, and so on) (Dell, 2009).
Characteristics: these Product Lines are targeted mainly at small Home Offices and individuals who wish to buy a computer for home office use, internet surfing and gaming purposes. Buyers typically include families looking for a home computer for casual use or a computer for the home office. Product Lines: Those within this category include the Inspiron and XPS Product Lines • Peripherals: Descriptions: Besides selling ready-made custom workstations and computers, Dell has also diversified its product line to include computer-related products such as USB Drives, LCD Monitors, Printers and Peripherals such as Keyboards and Mice.
Characteristics: These products are usually considered “aftermarket”, which means they are sold separately from the systems themselves. The target market for these products is broad and may be bought by anyone who needs / wants to upgrade their systems. 1. 4 Dell’s Customers: Although Dell serves customers in a myriad segments, their biggest customers and major accounts are Corporate Customers and its Intermediaries (Stratics. com, n. d. ). The customers can be divided into two segments:
Corporate Customers (Contractual/Seasonal*): These companies and organizations usually look to companies like Dell to provide them with IT solutions for their businesses, and account for the majority of Dell’s revenue (since they usually buy in bulk) o Large Business / Corporation Offices (Such as HELP University College) o Government Offices o Cybercafes *For the previous page, “Contractual” denoting an agreement to upgrade the organizations systems as and when they become outdated for a lower-than-market price. “Seasonal” denoting customers who manually upgrade their systems as their equipment becomes outdated.
Intermediaries: These dealers act as middlemen between Dell and the consumer market, and often slot glossy flyers in the local newspapers advertising Dell’s new products. These companies include: o THUNDER MATCH TECHNOLOGY SDN BHD o Icon Computers Sdn Bhd o Servex (M) Sdn Bhd (computer components replacement) o Bluecomp (M) Sdn Bhd 1. 5 Dell’s Competitors These competitors have products within the same product category as Dell’s (mid to high-end desktops, mid to high-end portable computers and gaming systems) and compete with Dell for a slice of the market share pie.
Companies within this category include: o Compaq o Hewlett-Packard (HP) o Lenovo – Subsidiary of International Business Machines (IBM) o Acer o Apple Computer The network of business relationships with the above Upstream and Downstream suppliers and customers are summarized in the below diagram: [pic] 1. 5. 1 Explanations for the Numbered Arrows are As Follows: 1. Parts and modules that make up the workstations are supplied to Dell for assembly into finished units. 2.
The finished units are then supplied by order from Dell to the Businesses and Offices. 3. Many of the suppliers for computer parts – Microsoft, Intel, AMD also supply their products to competing firms such as Compaq and Lenovo. 4. Dell’s competitors contest for market share in both the Large and Small Business market segments. 5. Businesses that require servicing for their Dell Computers either purchase replacement parts through Dell (Steps 1&2) or buy direct from the manufacturers of the parts (who have their own distributors). 2. Classification of Dell Products According to Buying Situation Since many of dell products (both upstream and downstream) could be involved in all three buying situations (Straight Rebuy, Modified Rebuy, New Task), two tables will be used to classify these products: | | |New Task |Straight Rebuy |Modified Rebuy | |UPSTREAM |Microsoft |Applicable | Applicable | | | |Intel, AMD, NVIDIA, ATI Technologies, Maxtor |Applicable | | Applicable | | |NEC Corporation |Applicable |Applicable | | | |New Task |Straight Rebuy |Modified Rebuy | |DOWNSTREAM |OptiPlex, Latitude, and Precision (Large Business Class) |Applicable |Applicable |Applicable | | |Inspiron and XPS (Home Office and Personal Class) |Applicable |Applicable |Applicable | | |Peripherals (Printers, USB Drives, Keyboards, Mice) |Applicable | | | *Tables related to buying frequency and frequency of introduction of new technology (refer to Introduction of Upstream and Downstream Products). An explanation for the tables is provided in the next page. 2. 0. 1 Explanation of Tables Upstream: Microsoft
Products from Microsoft do not get outdated quickly because of the long interval between new releases. Additionally, only a single copy of the software is required for installation into multiple computers. In this case, Dell will renew licensing terms from Microsoft when the old licenses expire (Straight Rebuy) and consult its buying centre should a new product be released from Microsoft (New Task). Intel, AMD, NVIDIA, ATI Technologies, Maxtor Since products from these companies are mostly hardware-based and become outdated quickly, and also because market prices for these items fluctuate quickly, purchases for these products will tend to be Modified Rebuys and New Tasks. NEC Corporation
NEC’s product offerings (LCD monitors) do not have many elements that need complex problem solving, and have essentially the same technology, so are thus mostly purchased under Straight Rebuys and Modified Rebuys. Downstream: OptiPlex, Latitude, and Precision (Large Business Class) These products can be purchased under all three buying conditions. A New Task is when the company goes through all 8 purchase steps under the BUYGRID Framework (Problem Recognition -> Performance Review) when purchasing the new systems. A Straight Rebuy is done when the customer company is happy with the product offerings and wants to commit more resources to Dell’s business solutions.
A Modified Rebuy is when the customer business is happy with Dell’s offerings, but wished to make modifications to the orders. Inspiron and XPS (Home Office and Personal Class) Purchases for these Product Lines, like the above category, can occur under all three buying situations – New Task, Straight Rebuy, and Modified Rebuy. Peripherals (Printers, USB Drives, Keyboards, Mice) For the case of Dell’s peripherals, only the New Task buying situation is applicable. This is explained by the rarity of the need to purchase new peripherals unless the original one has malfunctioned. Even then, only one replacement unit will be purchased to replace the faulty unit. 2. 1 Buy Grid Framework:
To point out the important stages of the organizational buying process for Dell’s Upstream Suppliers and Downstream Customers, the Buy Grid Framework, or Buy Grid Matrix, can be used. The tables on the following pages show, highly important, medium importance, and low importance (red, yellow and green, respectively) situations for the various finished and unfinished products moving across Dell’s Supply Chain, and at different stages of the business buying process: 2. 1. 1 Upstream: |UPSTREAM (Dell’s Perspective) |New Task |Modified Rebuy |Straight Rebuy | |Problem Recognition | | | | |Determination of Characteristics and
Quantity of needed item | | | | |Description of Characteristics and Quantity of needed item | | | | |Search for and qualification of potential suppliers | | | | |Acquisition and analysis of proposals | | | | |Evaluation of proposals and selection of supplier(s) | | | | |Selection of an order routine | | | | |Performance Review | | | | |High Importance | |Medium Importance | |Low Importance | 2. 1. 2 Downstream: DOWNSTREAM (Customer’s Perspective) |New Task |Modified Rebuy |Straight Rebuy | |Problem Recognition | | | | |Determination of Characteristics and Quantity of needed item | | | | |Description of Characteristics and Quantity of needed item | | | | |Search for and qualification of potential suppliers | | | | |Acquisition and analysis of proposals | | | | |Evaluation of proposals and selection of supplier(s) | | | | |Selection of an order routine | | | | |Performance Review | | | | |High Importance | Medium Importance | |Low Importance | 2. 1. 3 Explanation of Tables on Previous Page As can be seen in the above tables, emphasis is put on Performance Reviews for both goods going in and out of Dell’s manufacturing plants. Both matrices are similar to the traditional BuyGrid Matrix – the first few steps (Problem Recognition -> Acquisition and Analysis of Proposals) are given weight in the New Task buying situations. As Dell Becomes more familiar with the suppliers, and the Customers, with Dell, emphasis is shifted to the terms of the sale (Description and Characteristics of Product needed, Acquisition and Analysis of proposals, and so on.
As purchases become more routine and trust is built between both buyer and seller, there will be less doubt and scrutinizing of the purchased goods. Dell’s emphasis on the Quality of its products makes business sense – history shows that buyer loyalty and customer satisfaction are primarily determined by the sales activities and performance of the companies during “Performance Review” phase of the purchase (Provenmodels. com, 2006). The above being said, Dell must have solid Relationship Management Strategies in order to deal with the multiple members of its supply chain. These Strategies will be discussed in the next section of this paper. 3. 0 Suggested Relationship Management Strategies: 3. Upstream Supplier Relationship Management: Suggested Strategies For the Upstream Supplier, Intel Corporation has been selected as the organization to discuss – Intel Processor Chips are indispensable to every Dell computer manufactured, and it will be important for Dell to design the optimum Relationship Management Strategy to deal with this company. 3. 1. 1 Encouraging Collaborative Relationships Establishing (and maintaining) a collaborative relationship is an ongoing process – Collaboration implies a willingness on the part of organizations to change the way services are delivered by jointly developing and agreeing to a set of common goals and directions; sharing responsibility for obtaining those goals; and working together to achieve those goals, using the expertise of each collaborator (Kent. edu, 2008).
In the case of Dell and Intel, the environment is such that there is a stable supply market for Processor Chips and there is rapid technology change. Despite this, Dell should encourage a more collaborative relationship (as opposed to a transactional one) in order to maintain a good relationship with Intel over time. Doing so will also benefit Dell in other ways – information Between Intel and Dell will be exchanged more freely, enabling Dell and Intel to react to market changes swiftly (market price fluctuations, demand shift, and so on). Firms that engage in collaborative relationships will have closer interactions among the multiple functions in the two companies: manufacturing and logistics, as well as and even sales and marketing.
Such a method will be in line with Dell’s overall business strategy – since Dell uses a “pull” inventory system (instead of a “push” system) to reduce costs associated with excess unused inventory, the timely exchange of information that exists in a collaborative relationship will greatly benefit Dell. 3. 1. 2 Engage in Strategic Alliances One method of achieving the above is for Dell and Intel to engage in strategic alliances. This means making effort in linking information systems and structures between the two companies so as to allow more frequent interactions, timely exchange of information, and accurate feedback on both partners’ actions.
In such a strategic alliance, Dell and Intel “Share to Gain”, as synergy from the alliance brings greater value to both parties. In a sense, the value of Dell and its Partner will be greater than “the sum of its parts”. Dell and Intel may contribute to the strategic alliance resources such as distribution channels, manufacturing capability, project funding, capital equipment, knowledge, expertise, or intellectual property, in addition to a host of other resources – and enable Dell to leverage on its Intel’s core competencies – and vice versa. The Partners within the alliance may design operational linkages and information-sharing mechanisms to keep the Intel’s product and service offerings aligned to Dell’s needs, and vice versa.
Doing so will promote openness and flexibility and enhance learning (for both parties), besides enabling the alliance to handle expected events more readily. In this sense, all parties involved will be working together to improve supply chain, and develop mutual benefit. 3. 1. 3 Engage in Strategic Alliances – Commitment from Top Managers As in any business situation, interpersonal relationships between the involved parties will no doubt have an impact on the outcome of the situation. As so, when engaging in Strategic Alliances, both Dell and Intel must put effort into cultivating interpersonal relationships and improving communication patterns, thus strengthening the alliance.
In this respect, there must be visible commitment from the top managers themselves – the actions of the top managers in handling such relationships signal to the employees of the firm the importance of the strategic alliance (Hutt & Speh, 2001). A lack of commitment from a Dell Sales Director might show to the staff that there is no strong need to provide clear and accurate logistics or sales information to Intel, and this will hamper progress of the Strategic Alliance. 3. 1. 4 Engage in Strategic Alliances – Issues to be Paid Attention to Although generally beneficial to all parties involved, there are issues which, if not paid attention to, will hamper progress and undermine the alliance.
These issues include striking a balance between trusting a partner and protecting the firm’s strategic interests. In this case, both Dell and Intel will be drawing the line on what can and cannot be divulged in the strategic alliance, as an error may jeopardize the competitiveness of both partners. In the long run, rather than relying on competitive bidding from a large number of suppliers to receive the best price and quality possible, Dell has shifted to a “Strategic Alliance” Strategy that provides longer lasting benefit – longer term and closer relationships with a select number of suppliers – and working together in order to improve operations throughout the supply chain as a team. 3. Downstream Customer Relationship Management: Existing and Suggested Strategies As is common business knowledge, loyal customers will be far more profitable in the long run and will be less price sensitive, since their needs have already been closely attended to for such a long time. This is an advantage that is hard for competitors to copy or displace. For the “downstream” customer, a local distributor for Dell’s Products will be arbitrarily chosen: ICON Computers Sdn Bhd. This company has been chosen by the author because it strongly embodies the characteristics of a “business customer”: |More Knowledgeable Buyer – |Applicable: Purchases often done by specializing department in ICON. |Hence more complex decision making | | |Demand is derived from end-user demand |Applicable: PC or Workstation demand influenced by | | |volume of business the “customer” is | | |experiencing – “high customer demand = high demand from ICON” | |Larger Purchase Volume |Applicable: ICON Computers typically purchases its workstations in bulk – instead of by | |(Compared to Individual Buying) |individual units | |Stronger Personal – Selling Component |Applicable: Due to the high order values and more complex decision making process | |Other elements: |Applicable. | |- Longer time needed to arrive at purchase | | |decision | | 3. 2. 1 Encouraging Collaborative Relationships
As is with Dell’s Upstream Supplier Intel, the key to maintaining a good relationship with ICON computers is to encourage a collaborative relationship with it. This means investing resources in the buying relationship with ICON and trying to directly assist ICON in its planning. Engaging in a collaborative relationship is the sensible thing to do in the case of Dell – since the importance of the purchases will typically be higher, as will the complexities of the decisions to be made. In addition, there will be more extensive operational linkages – Dell users who have bought from ICON will turn to it when dealing with warranties and after-sales hardware and software support. 3. 2. 2 Encourage Value-Added-Exchanges
Since many of Dell’s workstation models are essentially standardized, and purchased in typically large quantities on a contractual basis, the marketing strategy should focus on providing competitive prices, reliable delivery and apt supporting services. However, Dell should also make an effort to go the extra mile – encourage Value-Adding Exchanges with its downstream customers – develop an understanding of the customers’ needs and changing requirements, and tailoring its offerings to those needs. In different words, this is being a “Partner”, instead of a “Supplier” to the customer. This can be demonstrated by Dell’s PartnerDirect Program, in which Dell goes past its traditional responsibilities and further adds value to its “Partner’s” urchases (among others): • Financing • Pre and Post-Sales Support • Initiative-Based Marketing Funds (for distributors) • Demo Units (for distributors) (Dell, 2009) When striving to improve relationships, Dell should also demonstrate commitment to the customer (ICON), since relationships with customers can be damaged by product quality problems, late deliveries or sub-par service support. It must also be able to understanding the motivation behind the buying – instead of “pushing” the product to be distributed, both parties can arrange purchases around what is demanded by ICON’s market, and have Dell supply the products accordingly. 3. 2. Application of Above Strategies Besides being able to design the appropriate Relationship Management Strategy, it is also of importance for the managers at Dell to apply them correctly – and to the right people. Hutt & Speh, 2001 contends that knowing who to focus these strategies on is just as important as what the firm is applying. Since purchase decisions will be most heavily influenced by members within the ICON’s buying centre itself, the business marketer at Dell should be able to: Isolate personal stakeholders; identify the experts involved, and also Trace the correct connections to the top. 4. 0 Evaluating Relationship Strategy Outcomes
As with any control system, there should be in place a system that allows for the monitoring, over time, of the relationships between Dell and its Upstream suppliers and Downstream customers. In this case, DaimlerChrysler’s supplier rating chart can be used as an illustration of the point – DaimlerChrysler grades its suppliers by using a chart measuring the suppliers’ performance on different aspects: Supplier Defect Rates, Ability of Expand Production Capacity, Price Competitiveness, Payment Terms, and so on (Sinchi-Levi & Kaminsky, 2004). Most businesses will have unique characteristics and special needs that must be understood by the marketer and integrated into the relationship strategy.
With solid and measurable criterion, the business marketer will better be able to identify shortcomings in his Relationship Management Strategy and objectively improve on any errors or misapplications that have been committed. This being said, the business marketer will also have to have a sense of empathy towards both his suppliers and customer in order to sense any dissatisfaction that may not be explicitly expressed by supplier or customer, and may not be evident from sales figures or other tangible cues (stress between procurement and members of the supplier’s company; pressure from competitor’s increased efforts to lure the customer, and so on) 5. 0 Summary and Comments
In summary, the key to building good relationships with both Upstream and Downstream members of the supply chain is working closely as partners instead of just a member of the supply chain, and contributing unique value to the partners’ business – by developing intimate knowledge about the customer’s operations. This means placing high priority on the customer’s needs, and closely aligning product decisions: product mix, delivery, handling and additional services with the customers’ operations, and using the company’s distinctive competencies to deliver to the customer what competitors find hard to: superior value. A summary of the strategies discussed in this paper is provided in the following page. 5. 1 Summary of Discussed Strategies | |Upstream Parts Suppliers (Intel) |Downstream Business Customers | | | (ICON Computers Sdn Bhd) | |Environment Type |* Stable Supply Market |* Stable Supply Market | | |* Many Alternatives |* Few (Major) Alternatives | | |* Low Purchase Complexity |* (Typically) High Purchase Complexity | | |* Rapid Technology Change |* Rapid Technology Change | | |* Extensive Operational Linkages | | |Encouraged Relationship Type |Collaborative Relationship – despite stable |Collaborative Relationship – Dell must not let its corporate | | |supply dynamism |customers slip too far | | |and rapidly changing technology, this |across the spectrum into a transactional relationship, and must | | |relationship will better serve Dell than a |therefore invest resources and try to directly assist customer | | |purely Transactional Relationship |planning. |Relationship Strategy |* Design operational linkages and |* Develop account-specific product offerings | | |information-sharing mechanisms to keep | | | |suppliers’ product and service offerings |* Strive to offer most attractive combination of Product, Price and | | |aligned to company’s needs |Support | | | | | | |* Work together to improve supply chain to |* Try to work with a wide array of managers in the purchasing firm on| | |develop mutual benefit |strategy and planning | | | | | | |* Regular visit by technical personnel and executives | |Issues of Importance |* Be careful not to compromise Corporate Assets|* Dell should be able to have a profile of each customer | | |when engaging in Strategic Alliances |relationship: | | | |- Identify Key decision makers | | | |- Profile customers’ Potential | | | |- Profile customers’ Needs | | | |- Identify Key decision makers | 6. 0 Conclusion The business marketer must be able to assess the situation and properly determine, given the buying situation, which type of relationship will be most desired by and mutually beneficial to both buyer and seller. Having done this, he must be able to design the right strategy to maintain this desired relationship.
In essence, the business marketer must be able to: • Accurately capture relationship data • Select the right accounts where resources should be concentrated (these will typically include major accounts: large-volume buyers, loyal customers, and so on • If necessary, develop account-specific product offerings (in the case of Dell, this means paying attention the specific needs of the customers in order to tailor product offerings to the customers’ needs) • Effectively implement designed strategies • Accurately assess and evaluate the relationship strategy outcomes. In the end, the goal of any business relationship should be me maximize joint alue – to develop a long-term, mutually beneficial relationship with both upstream and downstream members of the supply chain. In order to encourage and maintain good relationships with supply chain members, companies must be ready to go the extra mile – go beyond their traditional buying and selling responsibilities and cultivate positive relationships with the respective parties. End of Paper Referencing/Bibliography (APA Format) • Businessweek. com, 2006, Businessweek. com – B2B is the Password, http://www. businessweek. com/20060/00_21/b3682236. htm Accessed 6th Jan 2009 • Dell, 2009, Dell Partner Portal – APJ EN Home Page, http://partner. pj. dell. com/Main/Pages/DPPAPJ/EN/ Accessed 7th Jan 2009 • Dell. com. my, 2009, Dell Homepage, http://www. Dell. com. my Accessed 7th Jan 2009 • Hutt, M. D. & Speh, T. W. , 2001, Business Marketing Management: A Strategic View of Industrial and Organizational Markets (7th edition), Harcourt College Publishers Simchi-Levi, E. & Kaminsky, P, 2004, Managing the Supply Chain (1st edition), McGraw Hill Professional • Kent. edu, 2008, Step Four – Establishing a Collaborative Relationship, http://literacy. kent. edu/CommonGood/Guide/stepfour. html Accessed 7th Jan 2009 • Knowthis. com, 2008, Business Buying Behavior, http://www. knowthis. om/tutorials/principles-of-marketing/business-buying-behavior. htm Accessed 6th Jan 2009 • Provenmodels. com, 2006, Provenmodels – BUYGRID Framework, http://www. provenmodels. com/549/buygrid-framework/robinson-wind-faris Accessed 8th Jan 2009 • Stratics. com, n. d. , Stratics Network – Dell and Its Partners – A View on Relationship Management Strategies, http://www. stratics. com/content/articles/compterms. php Accessed 8th Jan 2009 • Wikipedia. org, 2009a, Wikipedia – The Free Encyclopedia (Business Marketing), http://en. wikipedia. org/wiki/Business_marketing Accessed 6th Jan 2009 • Wikipedia. org, 2009b, Wikipedia – The Free Encyclopedia (Dell Inc. ), http://en. ikipedia. org/wiki/Dell Accessed 7th Jan 2009 • Wikipedia. org, 2009c, Wikipedia – The Free Encyclopedia (Strategic Alliance) http://en. wikipedia. org/wiki/Strategic_alliance Accessed 7th Jan 2009 Accessed from ProQuest (http://proquest. umi. com/login): • Banerjee, A. & Kim, S. L. , 1995, An Integrated JIT Inventory model, International Journal of Operations & Production Management 15, no. 9 (January 1): PG237, Accessed 6th Jan 2009 • Business Wire, 2008, EDI Made Easy, May 8, PG1,2, Accessed 7th Jan 2009 • McClenahan, J. S. , 2001, JIT Inventory Systems Hold Appeal, Industry Week, May 7, PG11, Accessed 8th Jan 2009
