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One of the challenges we found as consultants Developing mutual dependence means both
working across a range of industries was how parties must play the game.
best to integrate insights from a number of The checklist provides a framework and
academic theories into a format relevant to guide and should be used with caution as
our clients. For example, transaction cost there are no weightings and a low score on
economics provides powerful lessons on the one dimension, such as goal compatibility,
fundamental importance of transaction may seriously limit a closer relationship.
specific investments for the development of Conversely, a low score on a dimension such
closer relationships. Agency theory com- as understanding each others business can
plements transaction cost economics by be relatively easily rectified.
highlighting the importance of uncertainty Figure 1 shows that the nine relationship
and information in the context of a principal- dimensions can be aggregated into three
groups:
agent framework. Business-to-business rela-
(1) The foundation. Value creation, alignment,
tionship marketing emphasises dimensions
history and alternatives these four
such as compatible goals, value creation,
dimensions assist managers in coming to
alternatives and commitment. Finally, the
grips with the important question of
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(3) Relationship management. The third set of relationship with the agents and not simply to
dimensions relate to managing the become dependent on them.
relationship, building on the history Discussions with the agents suggested that
between the two firms, and developing the best way to achieve this was through the
the appropriate internal reward agents willingness not only to reveal the
systems. identity of the export customers, but to
This side of the diagram emphasises encourage direct communication and feed-
the fundamental importance of core back. Product and service improvement
capabilities of your firm, as well as the would also be enhanced.
other firms in the supply chain. The Over the season one agent encouraged
emphasis on core capabilities also high- such interaction but the other agent could not
lights the need to establish the boundaries come to terms with the new realities. He
of the alliance, and in which areas the could only think in terms of short-term
firm is free to act independently. trading transactions and power, and
The question for each firm considering isolated the growers from their customers.
the welfare of its partner is also closely
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from Pennsylvania State University in two (2) providing richer insights and additional
areas: items in the relationship management
(1) developing weightings for the various area, especially for clients who are well
dimensions of the checklist; and down the SCM path.
better service
Total
Score
2. Alignment (1-10)
2.1 Goals Our goals are well aligned and compatible, and are likely to
remain so
2.2 Capabilities Our capabilities are complementary, and relevant to our
target market
Total
Score
3. History (1-10)
3.1 Understanding The history is such that we understand each others business
3.2 Levels Roughly how many people at different levels in the organisation,
interact with each other on a regular basis?
Total
Score
4. Alternatives (1-10)
4.1 Alternatives The number and quality of alternatives
Total
Score
7. Investment rewards (1-10)
7.1 Sharing We are comfortable that the relationship benefits are being, and
will continue to be, shared equitably
7.2 Costing systems We have the appropriate costing systems to help us locate our
share of the profits
7.3 Opportunism The other party is unlikely to act opportunistically even if they
had the chance to do so
Total
Score
8. Core capabilities (1-10)
8.1 Satisfaction The level of satisfaction with the performance of our partner
8.2 Performance Each partys performance is best or near best in its class
8.3 Future Each party is prepared to invest in their core capabilities, to
performance remain best in their class
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9
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