Company X Program

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Company X Program

-Together we create something great-

Master thesis Business Development

Business Administration - University of Groningen

Author Name: Willemijn van Dijk Student number: 1341596

Supervisors University of Groningen First supervisor: Dr. ir. M.C. Achterkamp Second supervisor: Dr. J.L. Miedema

Supervisor Company X N.V. E. M. Pooters

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Preface

This report was written in order to finish my study business administration -specialization in Business Development- at the University of Groningen, the Netherlands. This research was realized in cooperation with Company X.

I would like to express my gratitude to many people who supported me during my research. In the first place, the staff of Company X who assisted in implementing this research. Particularly the managers of Company X headquarters, Company X U.K. and Company X France who assisted me during this research. Without them this research wouldn’t have been successful. Especially I would like to thank Monique Pooters, my supervisor at Company X, for all her essential input, feedback and guidance through this research. She teaches me much more in addition to my internship, which is very worthwhile for me.

I would also like to express my gratitude to Marjolein Achterkamp, my supervisor at university. With her professional help, clear and critical feedback, I was able to finish this research. In addition to Marjolein, I would also like to express my gratitude to Joost Miedema, my second supervisor at university, for his critical remarks which enables me to finish this research.

Rounding off, I would like to thank all others who gave me instructions and feedback in order to finish my research.

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Management summary

This research is part of the Company X Partner Program and initiated by the business group XYZ of Company X. The focus of this research is Europe, especially the United Kingdom on XYZ business.

The objective is to present recommendations to the business group XYZ. As most of the Company X Partners offer supplies as well as machines, part of the recommendations are also valid for business group ABC. These recommendations will be about how to improve the quality and effectiveness of the cooperation between Company X and its partners. A partner is a business-2-business organisation with the main focus on selling Company X products to end-users.

With these recommendations, Company X can strengthen the relationship with its partners and should be able to distinguish itself better from its competitors in the future.

On the one hand this research verifies the perception of Company X about the cooperation between Company X and partners. On the other hand it verifies the perception of partners about the cooperation between them and Company X. What is the position of Company X, what are its offerings? Does Company X offer its partners what partners need, or does Company X offer what Company X is interested in? What are strengths and weaknesses of Company X? Moreover, the position of Company X is compared with the most important competitors.

In order to comply with the objective of this research, a main research question has been formulated:

“How can Company X strengthen the relationship with partners, and thus distinguish itself better from competitors in the future?”

Scientific publications illustrate that the effectiveness of loyal customers results in the increase of the productivity and profitability of an organisation.

These scientific publications plus many interviews with Company X and partners clarified the perceptions of both parties. These perceptions are measured by six influential factors. These factors are product portfolio, logistics, knowledge, relation, price and quality.

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relationship with partners. In the end Company X needs to deliver its partner what the partners need to do business with the Company X offering.

Besides verifying both the perceptions of Company X and partners an environmental analysis points out strengths and weaknesses of Company X related to strengths and weaknesses of its most important competitors. The most important competitors of Company X are divided into two groups; printer vendors and paper merchants. Competitors 1 and 2 belong to the printer vendor group, Competitors 3 and 4 belong to the paper merchant group. Opportunities for Company X are found by comparing Company X’s strengths with competitors’ weaknesses.

There are three opportunities for Company X U.K. to improve its relation with printer vendors. Firstly, Company X must make the partner aware of the total package they offer. Secondly, Company X needs to exploit its leading position in building relationships with partners and offer support that competitors in this group cannot or do not offer. And thirdly, Company X can profit from the fact that the Company X Program brings business groups XYZ and ABC closer together, which represents added value to the partners.

There are also three opportunities for Company X U.K. in relation with paper merchants. Firstly, Company X should make partners aware of the wide product range Company X offers in comparison with this group of competitors. Secondly, Company X can profit from its strong, well known brand name in the industry, which competitors in this group do not have. And thirdly, Company X should make partners aware that Company X is a global organisation and disposes of global account management and knowledge, which is interesting for the partners.

This research ends with recommendations to Company X. Recommendations are divided in two parts; recommendations to Company X in general and recommendations to Company X in the U.K.

Recommendations to Company X in general

• Make the brand name of Company X better known worldwide

• Make partners and end-users aware of the total package Company X offers • Continuation of this research in other countries

Recommendations to Company X U.K.

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The separation between recommendations to Company X in general and to Company X U.K. is because this research has only been completed in the U.K. yet. It is not clear whether some recommendations are valid only for Company X U.K or also for other operating companies of Company X. Similar research in other countries should be initiated. Research in France has already been started.

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Tables and figures

Figure 1: Research model 15

Figure 2: Conceptual model 23

Figure 3: What is important to Company X U.K. 28

Figure 4: Perception Company X U.K. what partners consider important 28

Figure 5: Perception partners what Company X U.K. considers important 28

Figure 6: What is important to partners 28

Table 1: Strengths and weaknesses Company X U.K. 36

Table 2: Strengths and weaknesses printer vendors 37

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Abbreviations

XYZ: Business group XYZ

Company X HQ: Company X headquarters

OCP: Company X Program

Company X UK: Operating company of Company X in the United Kingdom Opco: Local sales and service organisation of Company X

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Chapter 1 Introduction

This chapter gives a brief introduction to company X and the purpose of this research.

1.1 The Company X

Because of confidential information in this report the introduction of Company X is deleted in this public document.

1.2 Research assignment

This research is part of the Company X Program and initiated by the business group XYZ. As the program is a synergy program between XYZ and ABC, ABC will also be involved.

Company X wants to strengthen the relationship with partners. This means Company X wants to improve the quality and effectiveness of the cooperation between Company X and partners. Company X also wants to find out how to distinguish itself better from competitors in the future by means of better cooperation with its loyal customers, partners in this case.

Within Europe and the United States, Company X works closely with many partners. In Europe there are around 1500 partners, 150 of which are preferred partners.

The focus of this research is Europe, especially the United Kingdom.

1.3 Research objective

The objective of this research is to give recommendations to the business group XYZ of Company X. As most of the partners offer as well supplies as machines, part of the recommendations will also be valid for business group ABC. These recommendations will be about how to improve the quality and effectiveness of the cooperation between Company X and partners. With these recommendations, Company X can strengthen the relationship with partners and will be able to distinguish itself better from its competitors in the future.

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1.4 Research model

The research model on the next page succeeds the research objective. As the model shows, this research is divided into three parts.

Part 1 includes the study of different theories about ‘cooperation’ and ‘customer loyalty’. There is a large amount of scientific literature that shows a connection between the quality and effectiveness of cooperation and customer loyalty. There is more explanation about the theories in Chapter 2 Theoretical framework.

Apart from the study of different theories, part 1 contains the perception of Company X about the cooperation between Company X and its partners, as well as the partners’ perception about the cooperation with Company X. These two perceptions will be compared. A gap between both perceptions can influence the quality and effectiveness of the cooperation negatively.

Part 2 consists of an environmental analysis of Company X and its most important competitors. These analyses determine the position of Company X in relation to its competitors at this moment. Because the ultimate objective of the Company X Program is to distinguish better from its competitors in the future, it is important to get an insight into the position of Company X in comparison with its competitors.

Part 3, the last part of this research, contains recommendations to Company X. As written before, these recommendations will be about improving the quality and effectiveness of the cooperation between Company X and its partners so as to strengthen the relationship between both.

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Theory about cooperation and customer loyalty Perception Company X about cooperation with partners Perception partners about cooperation with Company X Compare both perceptions

Part 1

Recommendations to Company X to strengthen the relationship with its

partners

Part 3

Part 2

Environmental analyses of most important competitors

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Chapter 2 Theoretical framework

This chapter introduces important theories and concepts useful for this research. As mentioned in the chapter before, this research is divided in three parts. Part 1; consist of theory about cooperation and customer loyalty, and both perceptions about cooperation between Company X and partners. Part 2; consist of strengths and weaknesses of Company X and from its most important competitors in the U.K. And part 3; consist of recommendations to Company X about improving the quality and effectiveness of cooperation between Company X and partners. In this chapter different theories will be clarified for each part.

2.1 Theoretical background part 1

Cooperation

There are many publications about ‘Cooperation’ and ‘Collaboration’ and there are many definitions for cooperation. For example the definition of Ul Haq and Morison: “ a durable relationship between two independent firms, involving the sharing or pooling of resources to create a mechanism (corporate or otherwise) for undertaking a business activity or activities of strategic importance to one or more of the partners for their mutual economic advantage” (in Genefke and Mc Donald, 2001: 47) .

The Wit and Meyer (2004:370) give another definition: “Cooperation can be defined as the act of working together with others, where two or more organisations’ goals are mutually beneficial. Cooperation is the collaborative behaviour exhibited by organisations or individuals where both sides need each other to succeed”.

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The definition of De Wit and Meyer (2004) is clear. But why is cooperation so important for organisations? There are many theoretical findings why companies should cooperate with each other.

Genefke and McDonald (2001) argue that organisations have faced increased competition, modifications in technology and rules pertaining to an institution throughout the years. So partnerships and other types of cooperative relations between organisations have become increasingly common.

De Wit and Meyer (2004) also mention that every company must necessarily interact with other companies. But how organisations act with each other, relies on what people wish to achieve. De Wit and Meyer (2004) give three objectives for cooperation between organisations. First, relation oriented towards levering resources, which means learn or lend from others. Second, relations oriented towards integrating activities, which means link organisations horizontally or vertically. The third objective of De Wit and Meyer (2004) is relation oriented towards aligning positions, which means leaning or lobbying from each other.

A firm has multiple reasons to cooperate. Tidd et. al. (2005) give several reasons, for example reducing costs and risks of market entry, and shared learning.

Dangel (2006) in his article explains the benefits of cooperation with manufacturers (like Company X) and distribution channels, in the case of Company X, partners. Dangel (2006) give several reasons why closer relationship with manufacturers and distributors is important for the manufacturer. Firstly, the width of the product line, manufacturers can reach customers better with the help of distributors. Secondly, distributors can provide extra value to the end-user, because advanced products of the manufacturer often need to be customised or engineered to survive in the high competing environment.

On the other hand, Dangel (2006) noticed several benefits for the distributor. “Manufacturers share confidential information about margins, investments and future plans with their distributors. Distributors get access to internal inventory, order status and collaboration software. Most important, the manufacturer gives the distributor a share of his brand positioning” (Dangel, 2006:2).

Customer loyalty

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initiates different economic impacts for the business. The most important effect for this research is that satisfied customers reinforce the productivity of an organisation, and also the quality and the effectiveness of the cooperation. The objective of customer loyalty is to bring together customers, employees and investors who will remain together in the long run, so that they can be effective in creating and consuming value (Reicheld, Markey and Hopton, 2003).

Biz24, an English journal for business and finance, published an article with four reasons why it is important to have loyal customers. Firstly, loyal customers will choose your organisation above your competitors. Secondly, they argue that 80 percent of your business comes from 20 percent of your customers. These 20 percent are your loyal customers who purchase regularly. This fact is also noticed by other authors, for example by Cumberland (2007). Thirdly, loyal customers will tell their friends about your business. Word of mouth is the cheapest form of marketing for your organisation. And lastly, they state that it costs five to seven times more to gain a new customer than to keep an old one (www.biz24.com, 2005) .

The benefits of customer loyalty are clear, now the question is how to turn your customers into loyal customers? Companies offer loyalty programs to their customers. Sharp and Sharp (2007: 474) state: ‘Loyalty programs are structured marketing efforts which reward and therefore encourage loyal behaviour: behaviour which is, hopefully, of benefit to the firm’. Sharp and Sharp (1997) also explain that loyalty programs include activities that focus on locking companies’ existing customers in stead of focussing on finding new customers for the company.

Young and Stephanek (2003) present six types of loyalty programs that can turn existing customers into loyal customers.

1. Appreciation: Giving customers more of a company’s product/service.

2. Rewards: Giving customers rewards unrelated to a company’s product/service.

3. Partnership: Marketing to another company’s database and allowing loyal customers to choose their rewards from either company.

4. Rebate: Giving customers’ money back when they buy more.

5. Affinity: Building a lifetime value relationship with a customer based on mutual interest and not on the use of rewards.

6. Coalition: Teaming up with different companies to share customer data to jointly target a specific customer demographic (Young and Stephanek, 2003).

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Important objectives of implementing such programmes are furthering cross-selling, aiding trade relations, assisting brand PR and establishing alliances (Uncles, Dowling and Hammond, 2003).

Influential factors on perception of cooperation

There are many factors that influence the perception about the cooperation between two parties. According to in-depth-interviews with six managers of Company X HQ, the following factors are key factors which could influence the perception of Company X and partners. These factors are: 1. Product portfolio 2. Logistics 3. Knowledge 4. Relation 5. Price 6. Quality

According to the managers of Company X HQ; Company X must meet the needs of the other party, its partners in this case, in the cooperation. While taken these six factors in consideration, it is not about offering partners what is important to Company X, but it is about giving its partners what partners need to be successful. The more successful Company X’s partners are, the more successful is Company X.

Scientific literature also explains many influential factors on cooperation. Apart from the factors defined by experts inside Company X, other factors are also mentioned in scientific literature.

The factors mentioned by Company X are also mentioned as important by different authors and businessmen. “It’s not all about price, established relationships with vendors and contractors are also very important. Cooperation stands strong just from a flexibility standpoint and logistics will become an important part for the retailer” (Apparel Magazine, 2003).

Manufacturing Business Technologies Magazine (2006) writes that Microsoft focuses on thirteen competencies in their relationship with partners. The competencies are all about international logistics. Microsoft cuts its costs and improves service levels by transforming global inventory control and transportation spends management for example.

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In this research, the focus is on the six factors defined by Company X experts. These factors are also found in scientific literature and are not only important for Company X but also for other companies. Because the explanation of these factors in many scientific publications, these factors are used in this research to measure the perception of Company X and partners about the cooperation between both parties.

SWOT-analysis

The content and purpose of a SWOT-analysis is clear to almost everyone. For a good understanding of this tool De Wit and Meyer (2004:245) give the following explanation:

“There must be a fit between an organisation and its environment. A well known tool to express this is the SWOT-analysis. A SWOT-analysis suggests that a firm’s internal strengths (S) and weaknesses (W) should match a firm’s external opportunities (O) and threats (T). The key to success is alignment between both sides”.

“To relate the position of your company to your competitors it is useful to compare your strengths with opportunities and weaknesses of your competitor”.

(www.zakelijk.infonu.nl/marketing).

As illustrated before, Company X does a lot of its business with the help of long-term partners over many years. Company X knows that in today’s circumstances it is necessary to cooperate. These days Company X wants to strengthen the relationship with its partners. To strengthen the relationship Company X wants to improve the quality and effectiveness of the cooperation between the company and partners.

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Quality

Reeves and Bednar (1994) give in their article ‘Defining quality: Alternatives and implications’ give different definitions of quality from different authors. For example the definition of Tuchman (1980): “Quality is achieving or reaching for the highest standard as against being satisfied with the sloppy or fraudulent…It does not allow compromise with the second-rate”. In the same article a definition of Feigenbaum (1951): “Quality is the best for certain customer conditions. These conditions are (a) the actual use and (b) the selling price of the product”. Reeves and Bednar (1994) give another explanation of quality; they define quality as “conformation to conditions and meeting and/or exceeding customer’s expectation”.

In this research, this definition will be used. There is no ‘best’ definition, all definitions have strengths and weaknesses, but for this research, this definition is the most clear and complete. The definition of Reeves and Bednar (1994) is about customers’ expectation, just as in the relation between Company X and partners. The definition of Feigenbaum (1951) is not complete for this research; ‘actual use’ and ‘selling price’ are not the only conditions in the relation between Company X and partners. As mentioned before other factors are also essential.

Cronin et. al. (2000) did research into the effect of the quality of cooperation on behavioural intentions. With quality, Cronin et. al (2000) mean the performance of the delivered quality. With behavioural intentions customer loyalty is meant, recommendations from customers and willingness to pay price premiums (Cronin et. al., 2000).

One of the results of this research was the direct and indirect effect of quality on behavioural intentions. This means for Company X that when quality of cooperation increases, partners will be more loyal in the future.

Effectiveness

Effectiveness is also a broad concept. Daft (2001) describes organisational effectiveness as the degree to which an organisation realizes its goals. Daft (2001) said effectiveness evaluates the extent to which multiple goals are attained.

According to Wikipedia an online encyclopaedia: “Effectiveness is doing the right things”. According to Wiktionary an online dictionary: “Effectiveness is the property of being effective, the degree to which something is effective”.

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life cycles and the ability to patch. Ann et al. (2001) say that with these six characteristics an organisation can provide important management guides to make partnerships more effective.

2.4 Conceptual model

For a clear view of the research, a conceptual model is presented on the next page. This model illustrates part 1, part 2 and part 3 of the research.

The model shows both perceptions, from Company X’s point of view as well as from the point of view of its partners. On the one hand the model refers to the perceptions from the point of view of both parties i.e. what is important in the cooperation for both parties themselves at this moment? On the other hand the model refers to the perceptions from the other parties’ point of view i.e. what is important for the other according to Company X or to the partners. Those perceptions are measured by the six different factors, established before by expert knowledge inside Company X. These factors are product portfolio, logistics, knowledge, relation, price and quality. These factors are also mentioned in specialist literature, for example in Apparel Magazine (2003), managers and business men point out the same factors.

Probably there are differences between both perceptions. After studying theories and concepts in the literature differences in both perceptions are presumed to have a negative effect on customer loyalty. Reicheld, Markey and Hopton (2003) mentioned before that satisfied customers reinforce productivity, quality and effectiveness of the cooperation.

It is presumed that differences between actual cooperation and desired cooperation from the partner’s perception also have a negative effect on customer loyalty. Customer loyalty is important in this research because customer loyalty has a positive effect on the quality and effectiveness of the cooperation between Company X and partners, according to many studies already done by experts.

Competitors could also influence both perceptions of Company X and partners, either positively or negatively. Competitors can influence Company X; if competitors perform well Company X will probably try to benchmark its competitor’s performance. If competitors perform badly Company X will probably react to the bad performance of its competitors and try to perform better than its competitors.

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Different competitors have been analysed. In consultation with expert knowledge inside Company X, competitors are divided into two groups. Competitors 1 and 2, both printer vendors like Company X, are the first group. The second group consist of Competitors 3 and 4, both paper merchants in the U.K.

Figure 2: Conceptual model

Perception Company X Perception about itself versus perception about partners Perception partners Perception about itself versus perception about Company X Influential factors: • Product portfolio • Logistics • Knowledge • Relation • Price • Quality

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Chapter 3 Problem statement

In this chapter the problem statement succeeding the conceptual model, will be outlined. The presumption -after having consulted the literature- that customer loyalty has a positive effect on the quality and effectiveness of cooperation, will not be examined further in this research. The part that is examined in this research is the part inside the surrounded blue line which is shown in the conceptual model (page 23).

3.1 Research question

In order to comply with the objective of this research, a main research question has been formulated:

How can Company X strengthen the relationship with its preferred partners, and thus better distinguish itself from its competitors in the future?

With the following sub-questions the researcher will to formulate an answer to the main research question.

1. What is the perception of Company X about the cooperation between Company X and its preferred partners at this moment?

2. What is the perception of the preferred partners about the cooperation between them and Company X at this moment?

3. What are strengths and weaknesses of Company X, from the perception of Company X and partners?

4. What is the position of Company X in relation to its competitors?

5. Which of the influencing factors show differences in perceptions of Company X and its partners?

The research will be rounded off with conclusions and recommendations to Company X, recommending what to do in future to reduce the differences of perceptions and in that way strengthen the relationship with partners.

Notifications of definitions relevant for problem definition

Strengthen relationship: Improve the quality and effectiveness of the cooperation between Company X and partners.

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Chapter 4 Methodology

As clarified before, first the theoretical framework is launched. This framework is based on a study of literature. Scientific literature was consulted and different topics relevant for this research are discussed. Experts inside Company X HQ were also consulted and also documents internally available at Company X HQ. After the theoretical framework, the conceptual model and problem statement will follow. This chapter covers the way this research is implemented and shows in which way data were collected to find answers to sub questions and finally to the main question.

4.1 Qualitative research

This research is a qualitative research. “Qualitative research focuses on people’s experience, processes and structures of their normal social setting. That provides a holistic view, through the participants’ own words and perceptions, of how they understand, account for and act within these” according to Miles and Huberman (1994).

There is a variety of methods that can be used to collect data in a qualitative research. In this research data were collected by having interviews with both parties; Company X and partners. According to Flick (2006): “one of the benefits of having interviews is that these are useful for assessing an individual’s attitudes and values, which are hard to observe”. In this research individual attitudes and values are important to get an insight in both the perceptions of Company X and its partners, so having interviews proved to be a useful method.

4.2 Interviews

To get insight in the perception of Company X and partners it is interesting to have in-depth interviews with representatives of both parties. For a representative research different managers of Company X U.K. (N=4) and partners of Company X U.K. (N=7) were interviewed. The four managers of Company X U.K. that were interviewed represent senior managers/ key persons of Company X U.K. These managers were expected to give the clearest insight into the situation in the U.K. according to experts of Company X HQ. That is the reason why these four managers were chosen to have interviews with.

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The four appendices will show the interview questions which are used in order to gain knowledge of Company X and to get insight into the both perceptions of Company X U.K. and partners.

For a reliable result, all interviews were recorded. Afterwards the interviews were interpreted by coding. This was done roughly first, category by category. After the rough coding, the second coding was more in detail, sentences by sentences.

The interpretation of data is one of most important aspects in a qualitative research. According to Flick (2006) there are different methods of coding which can be used to analyze the interviews. These methods are theoretical coding, thematic coding, qualitative content analysis and global analysis. With the help of qualitative content analysis the interviews were interpreted in this research. The purpose of a qualitative content analysis is to reduce the information and essential features in this method and using categories (Flick 2006).

Mayring (2000, 2004) explains the procedure of the qualitative content analyses in Flick’s book (2006). Mayring (2000, 2004) defines four steps which can be taken. First select interviews necessary for answering the main research question and sub questions. Secondly, analyze the way of collecting data. Thirdly, how are the data documented? In the fourth step the way of the analysis is defined. With the help of these steps this research was conducted.

4.3 Reliability and validity

Because this research is qualitative, results are based on the researcher’s interpretation. However the reliability and validity are taken into consideration in this research. Reliability contains, does the researcher find same results or value by a repeated measurement? Validity contains, is measured what the researcher wants to measure (Flick, 2006)?

There are different criteria formulated to measure validity and reliability in a quantitative research.

“For interview data, reliability can be increased by interview training for the interviewers and by checking the interview guides or generative questions in test interviews or after first interview” (Flick, 2006). Referred to Flick (2006); these criteria are taken into consideration in this research. The way the reliability of this research is enlarged is with pre-testing the interviews with other persons than the respondents in this research. Besides pre-testing the interviews, also interview guidelines were consulted.

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in the same way. These criteria are according to Flick (2006) also criteria for a reliable research.

Flick (2006) uses the nine points Wolcott (1990) presents for a valid research. According to Wolcott’s nine points, these should lead to valid results in a qualitative research. Referring to the nine points this research is valid. Points which are mentioned by Wolcott (1990) and which are taken into account in this research are; the researcher has to make accurate notes, the researcher must not talk but listen, the researcher should ask colleagues for critical feedback on findings collected by having interviews.

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Chapter 5 Results

This chapter covers both the perceptions of Company X and its preferred partners about the cooperation with each other. The perceptions are measured by the six factors explained before; product portfolio, logistics, knowledge, relation, price and quality. Company X and partners ranked these factors from their own perspective and also from the other parties’ perspective. This means, Company X ranked the factors from its own point of view, what is important for Company X in the cooperation with partners and what is less important. Company X also ranked the factors from a partner’s point of view, what is the perception of Company X what partners consider important? Partners ranked the factors also from these two perspectives, vice versa. The given ranking range was one to six points. One point means least important, six points means most important.

The two rankings from both parties are clarified in the charts below. All figures are placed together for a complete view. This chapter shows a comparison between all perspectives. Paragraph 5.1 explains two horizontal analyses; the perception of Company X and the perception of the partner. Paragraph 5.2 describes vertical analyses; what is important for Company X according to its own point of view and according to the partners’ point of view, vice versa for partners. In paragraph 5.3 a diagonal analysis is carried out; the actual situation of Company X is compared with the actual situation of the partner.

Company X U.K. abou t Company X U.K. 0 1 2 3 4 5 6 Quality Price Relation Knowledge Logistics Product portfolio Value

Figure 3: What is important to Company X

Company X U.K. about partners

0 1 2 3 4 5 6 Quality Price Relation Knowledge Logistics Product portfolio Value

Figure 4: Perception Company X what partners consider important

Partners about Company X U.K.

Figure 5: Perception partners what Company X considers important

Partners about partners in the U.K.

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Above all, all six factors are important factors in the cooperation between Company X and partners. For example, when Company X ranks the factor ‘logistics’ as less important, that does not mean logistics are not important for Company X, but other factors are more important for them. Both parties stated all factors are important. On the whole, both parties are satisfied about the cooperation otherwise, the partnership would not exist. Although, it would be interesting to get an insight into both perceptions and discover if there are areas to be improved in the future.

5.1 Horizontal analyses

In this paragraph firstly figure 3 is compared to figure 4; which explains, what are important factors in the perception of Company X, and what is the perception of Company X about what partners consider important. Secondly, figure 5 is compared to figure 6; which explains the perception of the partner.

5.1.1 Perception Company X

From interviews with four managers of Company X in the U.K. results were collected about which factors Company X U.K. focuses on the most and which the least in the cooperation with partners.

Figure 3 makes clear that factors ‘product portfolio’ and ‘relation’ are most important for Company X in the cooperation with partners. That sounds logical because all managers argued Company X offers the broadest product portfolio and the strongest relationship in comparison with competitors. These two factors are the focus factors of Company X in the cooperation with partners.

The factors ‘knowledge’ and ‘logistics’ are less important in the cooperation with partners for Company X. In a partnership with distributors, Company X shares much of its knowledge with partners. Partners do not have as much knowledge as Company X got, which means Company X

Company X U.K. about Company X U.K. 0 1 2 3 4 5 6 Quality Price Relation Knowledge Logistics Product portfolio Value

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do not receive much knowledge back from its partners. In a partnership Company X brings its knowledge to the partner, that is why cooperation with Company X is interesting for partners. Logistics is according Company X U.K. not most important factor in the relationship with its partners. That is an outstanding feature because Company X is aware they have to improve the logistics, especially for business group ABC. Some stock is held in city X, the Netherlands, which costs extra days to deliver. For business group XYZ logistics is much better, most of the products are available next day. But for XYZ there are also some improvements, for example at display graphics products.

Managers of Company X U.K. also ranked the six factors from a partners’ point of view; how does the partner rank these factors according to Company X? Which factors are most important for partners in a partnership with Company X and which factors are less important for partners, considered by Company X. Figure 4 shows the results of this ranking.

This figure makes clear Company X presumes that ‘price’ and ‘product portfolio’ are most important factors for partners in the cooperation with Company X. Company X is not the cheapest manufacturer compared with competitors. Company X’s explanation: “We offer the partner the total package which competitors do not offer”.

Product portfolio is also important for partners according to Company X because partners know Company X offers the broadest product range with high quality. Partners want to offer their customers the same, a wide product range with high quality.

The factors ‘knowledge’ and ‘relation’ are less important for partners presumed by Company X U.K. Managers argue that partners in a cooperation attach more value to the other factors and less to these two factors, although these factors are important in a relationship.

Managers of Company X U.K. argue that many partners think they are self-sufficient and know everything they need to know. Sometimes it is difficult for Company X to make the partner aware of the benefits of Company X’s knowledge and the training they can offer.

The strong relationship Company X has with its partners is ‘nice’ to have but not most important for partners, Company X presumes. When Company X does not offer excellent products for a competitive price, a strong relationship cannot exist because relationship comes from trust and does not happen overnight.

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managers mention: “In reality not all partners give the same ranking, so we have to look at them individually”.

5.1.2 Perception Partner

Partners in the U.K. ranked the same factors as Company X did. The figures below show the rankings of the partners in the cooperation with Company X.

Figure 6 makes clear that the factors ‘price’ and ‘logistics’ are most important for the partners in the cooperation with Company X. Price must be competitive for the partner. Partners need to offer their customers good products for a competitive price. Also logistics are very important for the partner. If the partner cannot access the product they will not sell it to their customer. When partners do not have access to the products, it does not matter what price partners ask their customers.

The factor ‘knowledge’ is less important for partners in the cooperation with Company X. Partners rank ‘product portfolio’, ‘relation’ and ‘quality’ as moderately important. These factors are ranked very closely together. In the cooperation, partners want to have a wide range of good quality products for a competitive price. Partners are aware of the fact that knowledge is also an important factor in the cooperation; Company X shares a much of its knowledge about its products with its partners. That is one of the reasons why partners work closely with Company X.

Partners also ranked the same factors but from an Company X U.K. perspective. Figure 5 shows the partner perception Company X considers important.

This figure makes clear that partners presume ‘quality’ and ‘product portfolio’ are the most important factors for Company X in the cooperation. Partners argue Company X always

Figure 5: Perception partners what Company X considers important

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promotes that they offer products with high quality. “If they don’t offer high quality, nobody wants to pay the high price they ask”. For product portfolio applies the same, Company X promotes they offer a wide product range, much wider than its competitors do. “Company X can’t have a good relationship with partners if they don’t offer a wide product portfolio with high quality”.

The factors ‘price’ and ‘logistics’ are less important for Company X in the cooperation, considered by the partner. Partners complain that Company X is trying to sell on its product range and quality, rather than price. Partners explain: “Company X always argues ‘we are not the cheapest but we offer the total package’. Sometimes that is frustrating”.

Partners rank ‘logistics’ also as less important for Company X. According to partners, Company X considers that everybody assumes that logistics are fine but in fact logistics are more important for partners than Company X recognises. Not only delivery time is important, also the status in which products are delivered. Sometimes Company X delivers products which are damaged. Company X should be more careful with packaging the pallets they deliver, according partners.

Concluding, partners agree all factors are important in a relation. Which factor is most important, depends on the partner. For example if a partner has storage facilities, logistics will be less important. If a partner does not have those facilities logistics will be a very important factor.

Despite the differences in the charts, partners see possibilities for the future to handle those differences. Partners argue that both partners and Company X have in fact the same objective; doing business as much as possible.

5.2 Vertical analysis

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Concerning Company X

As is shown in figure 3, most important factors for Company X are ‘product portfolio’ and ‘relation’. Partners think ‘quality’ and ‘product portfolio’ are the most important factors for Company X, as shown in figure 5. This result shows agreement between Company X and partners about the factor product portfolio. That is not surprisingly because Company X anticipates on its wide product range regarding the partner many times. Partners choose Company X because of its wide product range. Nevertheless, it is surprisingly that partners rank the factor ‘relation’ as moderately important for Company X. Company X’s strength in comparison with competitors is the strong relationship Company X builds with partners. Partners rank ‘quality’ as most important for Company X. That is strange because partners rank ‘quality’ as moderately important in their own ranking -figure 6-.

Factors ‘knowledge’ and ‘logistics’ are less important factors for Company X in the cooperation with partners, partners rank ‘price’ and ‘logistics’ as less important for Company X. There is similarity in both perceptions about logistics. That sounds logical because logistics is an area partners sometimes complain about. This analysis shows that Company X need to focus more on logistics because partners rank logistics as one of most important factors for themselves in the cooperation (figure 6).

Partners rank ‘price’ as less important for Company X, this fact sounds also reasonable because partners also complain about the way Company X prices the products. Partners presume that price is not important for Company X because Company X is a large company and does not have any fear of surviving in the highly competitive environment. Partners’ thoughts are not right. Price ís important for Company X, Company X ranks price as third important factor, above moderate. Company X tries to focus on price, but for Company X it is also hard to handle this fact. Price reduction is not as easy as it seems, although partners think it is easy.

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Concerning the partner

Some analyses concerning the partner are described above. Factors not discussed above are analyzed on the next page.

Regarding figure 6 and as discussed before, partners rank ‘price’ and ‘logistics’ as most important. Company X -shown in figure 4- ranked ‘price’ and ‘product portfolio’ as most important for the partner. This proves Company X is aware of the importance of price for partners. Strange in Company X’s consideration is the fact that Company X ranks factor ‘product portfolio’ as very important for partners in a partnership, but partners rank ‘product portfolio’ as moderately important. This means the wide product range Company X offers, is not the main reason for partners to choose Company X to cooperate with.

A less important factor for partners in the cooperation is ‘knowledge’. Company X ranked the same factor as less important for the partner, but they also rank ‘relation’ as less important for the partner. This fact contradicts the fact that Company X focuses on a strong relationship with partners and for partners strong relationships seem moderately important, as figure 6 shows. Explanation for this unexpected result is that partners first focus on other factors, like price, logistics, quality and product portfolio and afterwards on relation. When the other factors are not present or cannot be realized, a strong relationship between Company X and partners can never be established.

5.3 Diagonal analysis

For the diagonal analysis, it would be interesting to compare figure 3 to figure 6. The actual perception of Company X compared with the actual perception of partners.

Figure 4: Perception Company X what partners consider important

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The results are remarkable. The only similarity between these figures is that both Company X and partners rank ‘knowledge’ as less important. Most important for Company X is ‘product portfolio’, partners rank this factor as less important. Company X ranked ‘logistics’ as less important, partners as most important.

On the one hand, dissimilarity between both perceptions is not unexpected. The Company X differs in comparison with partner companies. Arguments why Company X cooperates with partners differs from partners arguments. Partners companies are much smaller than Company X which means partners have fewer resources, management of both companies differ, and both focus on different factors. Besides these reasons, Company X does not only sell its products with help of partners but also sells its products directly to the final customer. With the help of partners Company X wants to enlarge its market share in the low volume market. Company X also operates in the high volume market -where its market share is huge- without help of partners. But as the market trend is decentralization and the partner has a regional focus and expertise it is evident that Company X needs to cooperate with partners to enlarge its market share in the low volume market.

On the other hand, it is illogical both perceptions differ so much. Company X and partners are companies that are similar to each other; in the industry they both operate, they have to supply same kind of customers. Actually, Company X and partners have corresponding objectives, do their own business the best they can, supply their customers the best they can in the most profitable way and try to survive in the highly competitive market in which they both operate.

Next to that, it is mentioned before that in the cooperation with partners Company X must meet the needs of its partners for an optimal relationship. This analysis shows that Company X focuses at factors which are important to it selves instead of a focus at factors which are important to its partners.

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Chapter 6 Environmental analysis

In addition to the results pointed out in the previous chapter about both the perceptions of Company X and partners, it would be interesting to get an insight into the position of Company X in comparison with its competitors. First, paragraph 6.1 clarifies internal strengths and weaknesses of Company X U.K. succeeding the chapter before (Chapter 5 Results). In paragraph 6.2, different groups of competitors are analyzed, what are their internal strengths and weaknesses? Finally, comparing Company X’s strengths and weaknesses with its competitors’ strengths and weaknesses presents opportunities to Company X U.K., illustrated in paragraph 6.3.

6.1 Strengths and weaknesses Company X U.K.

“Each business needs to evaluate its internal strengths and weaknesses. It is one thing to find attractive opportunities and another to be able to take advantage of them” (Kottler, 2006:53).

To discover opportunities for Company X in the future, it is important to exploit strengths and to react to weaknesses. Most strengths and weaknesses have already been discussed in the chapter before, but to get a clear view, Company X’s strengths and weaknesses are indicated in this paragraph. Moreover to provide a clear and reliable comparison between Company X and its competitors, Company X’s strengths and weaknesses are described in this paragraph.

According to the four experts of Company X U.K. and consulting internal documents of Company X in general, the internal strengths and weaknesses of their Opco are shown in the table below.

Strengths

• Wide product range/portfolio • High quality of products

• Strong relationship with current partners • Good knowledge of the market and

products

• Strong brand name in industry

Weaknesses • Logistics

• Hard to compete with competitive prices • Brand name worldwide

• Marketing support to partners • Flexibility of the organisation • Order lead times

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According to table 1 and the results in Chapter 5, the weaknesses of Company X can become a serious obstacle to Company X. Company X must take these weaknesses in consideration and react to them. To get an insight into how Company X can react to these weaknesses, competitors’ strengths and weaknesses are described in the next paragraph.

6.2 Strengths and weaknesses competitors

As discussed before, Company X competes with different parties. The most important competitors can be divided into two groups; printer vendors and paper merchants. Printer vendors are companies like Company X, with a main focus on manufacturing and selling their own products. Most important competitors in this group are competitor 1 and competitor 2. The main business of paper merchants is the paper industry; these companies do not manufacture their own products. Most important competitors for Company X in the U.K. in this group are Competitors 3 and 4.

6.2.1 Printer vendors 1 and 2

Table 2 below lists internal strengths and weaknesses of Company X’s most important competitors 1 and 2 in the group of printer vendors. Many documents, interviews with experts of Company X HQ, Company X U.K. and partners were consulted to get an insight into this group of competitors.

Strengths

• Strong brand name worldwide • Flexible pricing in line with market

trends

• Big rebates against sales, high discounts on many products • Sell only through indirect channel

Weaknesses

• Not enough individual support for partners (in training or sales

assistance)

• No backup support

• Business units do not work closely together

Table 2: Strengths and weaknesses printer vendors

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Competitors 1 and 2 also profit from their strong brand name; their brand names are better known worldwide than the brand name of Company X.

By selling products only through the indirect channel, competitors 1 and 2 do not have any problems in the relation with partners which is also a strength of the competitors that Company X has to take in consideration.

6.2.2 Paper merchants 3 and 4

Table 3 below lists internal strengths and weaknesses of the most important paper merchant competitors. To get an insight into this group of competitors a U.K. competitor analyse internal available Company X HQ as well as experts of Company X HQ, Company X U.K. and partners were consulted. The results will follow in the table below.

Strengths

• High competitive pricing • Flexible organisation

• Meet specific customer needs regarding private label branding • Accept low margins

Weaknesses

• Brand name

• Range and continuity of products • Small organisation

• Little market share

Table 3: Strengths and weaknesses paper merchants

Competitors 3 and 4 are small but emerging companies. These companies have low overhead costs and are very flexible because they are much smaller than Company X. Their strategy of aggressive pricing creates a downward pressure on prices and restricts Company X’s ability to achieve increased margins. Company X can expect these companies to become an increasing threat to win business away from Company X’s customer base (U.K. Competitor analysis, 2005).

6.3 Opportunities Company X U.K.

After analysing Company X’s and competitors’ internal strengths and weaknesses, the position of Company X is clear. This paragraph presents opportunities for Company X in the future. These opportunities are based upon exploiting internal strengths and adapting to weaknesses of competitors.

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Opportunities for Company X U.K. in relation with printer vendors

• Company X must make partners aware of the total package Company X offers, which includes offering all products partners need and providing service and support. Matching Company X’s internal strengths, Company X offers a wide range of high quality products and provide excellent service and support. For the partner it is interesting doing business with a company which offers this total package. No other printer vendor imitates Company X with this strength, so Company X needs to exploit from these strengths.

This opportunity in relation to figure 6 (page 25) is very important for the partner. Partners rank all six factors relatively close together which means partners focus on all factors. In the total package Company X offers its partners, the focus is also on all factors.

• Company X needs to exploit its leading position in building strong relationships with partners. Company X can offer support competitors 1 and 2 cannot or do not offer. Company X offers more training, (backup) support and guidance to the partner how to help them to grow their business. Company X assists its customers in developing their company; Company X works closely together with the partner. Competitors like 1 and 2 do not offer partners much support and guidance in how to grow their business. Company X must still build on its strong relationship which Company X can offer to its partners. When Company X falls short in this area, it will be difficult to keep existing partners.

Partners rank the factor ‘relation’ as moderately important for them in the cooperation with Company X (figure 6, page 28). Thus one of the reasons partners choose Company X to cooperate with is the strong relationship and support Company X offers. For Company X, it will be necessary to focus on the strong relationship and make partners more aware of the benefits of the strong relationship sometimes because Company X ranks the factor ‘relation’ as very important for them in the cooperation (figure 3, page 28).

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cooperation between business units/groups. Partners mention, it is important to work with one company, not a company that is split into separated parts. Thus Company X can profit from the fact Company X is a smaller company which is able to bring its business groups -in this example XYZ and ABC- closer together.

Figure 6 (page 28) does not make clear that this opportunity is important for the partner; but partners mention in the interviews that less hassle with different business groups and managers is important for them. Partners prefer working with ‘one’ organisation. That is what Company X can achieve when business units work more closely together.

Opportunities for Company X U.K. in relation with paper merchants

• Company X should make partners aware of their wide range of products in comparison with this group of competitors. Company X is known as a reliable company, not only because of the wide range of products Company X offers but also the continuity of their products. The smaller companies, Competitors 3 and 4, are acknowledged for regularly changing the base material of their products. A continuously changing product range is not attractive to the partner; partners want to offer their customers a range of products which will not change radically throughout the years.

This opportunity is quite important; figure 6 (page 28) shows that the factor ‘product portfolio’ is moderately important for the partner. So partners focus indeed at product portfolio. This opportunity is an opportunity which Company X must further exploit and focus on.

• Company X can profit from its strong, well known brand name in the industry. In comparison with competitors like 3 and 4, the brand name of Company X is much better known. Some partners prefer using a market leading branded product. These paper merchants offer their products for a lower price, but a branded product is sometimes more worthwhile for partners. It is worthwhile because a branded product is often related to the quality and continuity of a product; that is where partners are interested in.

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• Company X is a global organisation; Company X has global account management and knowledge, which is interesting for partners. According to table 3, a weakness of paper merchants is the size of their companies and the small market share they have. These companies do not operate worldwide, like Company X does. Partners can rely on the large, stable company of Company X.

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Chapter 7 Conclusions and recommendations

The objective of this research was to find out how Company X could strengthen the relationship with its partners. This means Company X wants to improve the quality and effectiveness of the cooperation between Company X and its partners in the future. With improving the quality and effectiveness of the cooperation, Company X should be able to distinguish itself better from its competitors in the future.

In order to comply with the objective of this research, the formulated main research question is as follow:

How can Company X strengthen the relationship with its preferred partners, and thus distinguish itself better from its competitors in the future?

Scientific publications illustrate that the effectiveness of loyal customers result in the increase of the productivity and profitability of an organisation.

This chapter covers the most important conclusions for this research in paragraph 7.1. After the conclusions, paragraph 7.2 provides recommendations to Company X for the future based upon results and analysis done in this research. These recommendations also provide an answer to the main research question. This chapter, and therewith this entire research, ends with a short personal note about the relevance of this research in paragraph 7.3.

7.1 Conclusions

Both the perceptions of Company X and its partners were verified to find an answer to the main research question.

Clarified in Chapter 5 (Results) both perceptions were measured by six factors which influence the cooperation between Company X and its partners. Both parties ranked the factors from their own perspective; which factors were important for each of the parties? Both Company X and partners also ranked the six factors also from the other parties’ perspective. What is important for the partner according to Company X? And what is important for Company X according to the partner?

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can be improved so that Company X can distinguish itself better from its competitors in the future.

Before conclusions are drawn from the horizontal, vertical and diagonal analyses, it is clear that in this relationship between Company X and its partners, it is all about meeting the needs of partners. In this cooperation it is not about giving the partners what is important to Company X, but giving the partners what they need.

7.1.1 Horizontal analysis

The horizontal analysis between figure 3 and 4 (page 29) shows the perception of Company X; what is important to Company X compared with the perception of Company X what partners consider important.

The horizontal analysis between figure 5 and 6 (page 31) shows the perception of the partners; what is important to the partner compared with the perception of the partner of what Company X considers important.

Most important conclusion for this horizontal analysis:

There is a gap between factors which are important to partners and the perception of Company X considered by partners. There is a difference in what is important to the partner and what the partner receives from Company X, according to the partner. For partners the factors price and logistics are most important. But Company X focuses more on quality and product portfolio considered by partners.

As can be concluded fromthe conceptual model (page 23), this influences the customer loyalty negatively.

Most important conclusion for this horizontal analysis:

There is a gap between the focus of Company X itself and the focus of its partners considered by Company X. This gap means that Company X U.K. knows that they focus on other factors than its partners do. This analysis shows that at this moment Company X focuses at this moment on factors that are important to Company X instead of focussing on factors that are important to its partners. Company X focuses most on factor product portfolio and relation while Company X considers partners focus the most on factor price. To minimize this gap Company X should focus on factors which are important to its partners.

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7.1.2 Vertical analysis

The vertical analysis between figure 3 and 5 (page 32) shows what is important to Company X as compared with the perception of what the partners of Company X think is important.

The vertical analysis between figure 4 and 6 (page 34) shows factors that are important to partners compared with the perception of Company X of what partners consider important.

Most important conclusion for this vertical analysis:

There is a gap between the factors which are important to Company X and the factors from partners’ perception of what Company X considers important. Partners have the impression that Company X focuses on certain factors while in reality Company X focuses on other factors. Company X is not clear in presenting its focus to partners. Company X itself focuses the most on the factor ‘product portfolio’ and the least on the factor ‘knowledge’. According to its partners, Company X focuses the most on factor ‘quality’ and the least on factor ‘price’.

As can be concluded from the conceptual model (page 23), these differences in perceptions influences the customer loyalty negatively.

Most important conclusion for this vertical analysis:

There is a very small gap between the factors which are important to the partner and the factors from Company X’s perception of what its partners consider important. That indicates that Company X has a relatively good understanding of the focus of the partners. The perception of Company X of what partners considers important is in line with partners’ actual perception. But to minimize the gap Company X should focus more on factor logistics instead of the strong focus on factors product portfolio and price.

Company X Program