Acknowledgements

1. Towards a customer oriented networkOlga A. Tretyak, Ekaterina V. Buzulukova, Alexander G. Rozhkov, Nikita I. Popov, Marina Weck 8 April 2010

2. Acknowledgements This study is part of the wider project called STROI-network, implemented jointly by researchers from Finland and Russia

3. Introduction: the research project and its scope This research was one of the perspectives of the STROI-network project BSC dimensions (P3 - P6) Perspective (P1 - P6) Objectives of network Results Partners

4. Introduction: the research project and its scope This research was focused on interfirm customer orientation, which is a subfield in a continuum of available approaches to managing market relationships Market orientation Market domination Customer orientation Competitor orientation

5. Introduction: the research project and its scope The project included several interrelated questions… What is a market-oriented interfirm network? 1 Stage 1 Setting the framework Stage 2 Relationship facet Managing customer relationships (B2B) 2 Managing supplier relationships (B2B) 3 How to engineer acustomer-oriented network of partners? 4 Stage 3 Network development How to cope with the risks involved? 5 Stage 4 Study of risks

6. Introduction: the research project and its scope … distributed among researchers Olga Tretyak Alexander Rozhkov Nikita Popov Ekaterina Buzulukova Marina Weck

7. Outline of the research project A preliminary framework of market-oriented interfirm network was proposed, based on literature review and company interviews Market knowledge sharing Cross-firm planning of CRM, SCM and NPD ROUTINES AND PROCESSES Motivation and control for market orientation Network information systems Network collaboration structures SYSTEMS AND STRUCTURES Control structures and shared values

8. Outline of the research project A simple method to evaluate network’s degree of customer orientation higher value creation risk management market share growth uncertainty avoidance cost management cost cutting lower Reactive approach Proactive approach

9. Outline of the research project Potential customer New customer External buyer (RU) Loyal customer Participant buyer (RU) Participant buyer (FI) Participant supplier (RU) Existing customer External supplier (RU) Participant supplier (RU) Loyal customer Focal company (FI) Participant supplier (FI) Participant buyer (FI) New customer Existing customer External supplier (FI) External supplier (FI) Loyal customer Potential customer New customer The field research consisted of several interviews with managers and aimed to concentrate on firm triads (focal company, one buyer and one supplier) Suppliers Tier 2 Suppliers Tier 1 Distributors Tier 1 Final customers

10. Findings from the field study The top ten: main findings (1) • Investigated companies exhibit relatively low level of customer orientation, and don’t measure customer satisfaction; • Investigated companies exhibit relatively low level of CRM tools and policies usage; • When securing customer company’s commitment becomes possible, companies don’t pay due attention to it; • Customer companies pass through relationship stages individually, and success in reaching commitment stage mainly depends on particular manager’s knowledge and experience; • Companies have developed systems to evaluate performance of suppliers and the products supplied, but not of supplier relationships; • Some firms are buying from suppliers which disregard final customers’ needs and have poor purchasing capabilities, and this prevents these firms’ ability to translate its own customer knowledge into tailored value propositions;

11. Findings from the field study The top ten: main findings (2) • Successful implementation of three types of market entry strategies can be observed; • As perceived by firms, trust, honesty, willingness to conduct open dialog, readiness to adapt and great wish to work account for relationship stability (over and above economic returns); • Main difficulties of companies are macroenvironmental factors (such as bribes, obsolete standards, changing legislation); • While many firms maintain strong relations with their suppliers (often also Finnish firms), few firms develop strong customer relationships.

12. Findings from the field study Different entry strategies to Russian market employed by Finnish companies were found Finnish Company Parent Finnish Company Parent Finnish Company Russian Company Russian Company Subsidiary Finnish (Russian) Company Russian Company

13. Findings from the field study Finnish companies experienced many difficulties in Russia. Several groups can be outlined Managing personnel High uncertainty Construction norms, regulations Russian Market Difficulties Accounting State institutions relations Business partners relations

14. Findings from the field study While companies maintain strong relationships with suppliers, strong customer relationships are not pursued Customer Supplier Customer Supplier Customer Customer Company Supplier Customer Customer Supplier Customer Customer Customer Supplier Extending ‘global’ relationships with suppliers to the Russian market is a must Market information sharing with trusted suppliers is extensive Evaluation of supplier performance is in place Maintaining relationships with former customers is, generally, not a priority Customer satisfaction is not monitored Level of customer orientation if low CRM tools and policies are almost absent

15. Findings from the field study On the customers side, Russian sales staff is the main adaptation instrument at every stage of relationship development Loyal customers Stage 1 Initial contact Stage 2 Initial transaction Stage 3 Repeated transactions Very high entry barriers Difficult to embed into existing relations Dealing with complex construction legislation and certification Customer representatives demanding bribes Initially very strict requirements for on-time delivery and quality assurance Coordination challenges when the deal has been secured Payment delays Contract fulfillment Russian salespeople as a main vehicle for problem solving Solutions: Customer intelligence Getting straight to the CEOs Bribery reporting to CEOs of customer companies Solutions: Signaling to suppliers Securing suppliers’ commitment Solutions: Getting a sense of customers’ occasion Reaching compromise

16. Findings from the field study Several factors appeared to act as drivers of relationship stability Interest in relationships Business relations turnover Readiness to adapt STABILITY Social bonds Relationship atmosphere Knowledge bonds Technical bonds Economic bonds Customer firmturnover

17. Towards a customer oriented networkOlga A. Tretyak, Ekaterina V. Buzulukova, Alexander G. Rozhkov, Nikita I. Popov, Marina Weck 8 April 2010 Thank you for your attention!