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For instance, if a business is keenly aware of the manner in which different conditions are effecting business relationships, that businesses to work to make the appropriate changes.
Stages of Development
All relationships are governed by stages. Business relationships are no exception to this rule. There are various characteristics that businesses must be aware of as it pertains to each stage.
According to Brooks (2008) that are four primary stages of business relationship development. These four stages of development are as follows:
Emerging - getting familiar with one another with test transactions. These test transactions are both financial and non-financial (Brooks, 2008). During this stage first impressions are made and businesses can determine the reliability, quality of products/services and whether or not the cost of the product/service is equivalent to the cost of the product. This stage is critical because it establishes the type of relationship that the businesses will have moving forward. The objective of this stage is to establish whether or not the business relationship will work -- whether or not the businesses feel comfortable with one another.
Growth - expanding the size or volume of transactions (Brooks, 2008). Once businesses have familiarized themselves with one another and decided that the relationship is worth developing, the growth stage occurs. During this stage a the business can begin to increase the amount of transactions occurring. This stage solidifies the relationship between the two businesses. If this stage is handled correctly, both businesses benefit from the interaction. The objective of this stage is to solidify the relationship so that both companies experience mutual benefit.
Maturity - consistent transactions as it pertains to both size and volume of (Brooks, 2008). During the maturity stage the companies feel secure with one another and have confidence in the quality of the products/services that are being purchased. This is often the height of the relationship between two businesses. The objective of this stage is simply to continue with the relationship between the businesses and maintain consistency.
Declining - transactions decrease in size and/or volume (Brooks, 2008). As time moves forward there is often a decline in the relationship. This decline is often dependent upon the type of industry associated wit the business. For instance, the supplies needed for technology-based products can change rapidly. In addition, the rate at which people purchase certain technology products such as personal computers often decreases. These conditions can lead to a decline in business to business relationships. The objective of this stage in some cases is to sever ties with the business. However, decline also occurs in some cases based on decreases in demand for certain products or supplies.
There are several objectives associated with the development of business relationships. One of the primary objectives is to secure the competitive advantage. Business to business relationships can improve the competitive advantage of a company because such a relationship can provide a company with leverage. This leverage can be use to negotiate lower prices for supplies needed in the manufacturing of products. If a company can get supplies (parts, components) at a lower price than competitors, they will also have the ability to charge the consumer less for the product. This can lead to substantial increases in profitability and the gaining of a competitive advantage.
Another objective of the development of business relationships is quality assurance. When business to business relationships are established and sustained all parties involved are aware of the type of products that are going to be produced and the type pf quality that is expected. Once a relationship has been established the companies can work together to ensure that the quality of the products are high and consistent. This also assist in ensuring that the company remains competitive.
The suppliers also benefit greatly from the development of relationships. This is particularly true if the buying company is well respected. The objective of the supplier in the scenario is to receive as many purchases as possible to increase profitability. The increase in business often occurs because the supplier has created a good product and other businesses want to have access to these products. In short, having good relationships with buyers increases the brand recognition of the supplier. This translates to an increase in profitability.
The final objective has to do with the globalization and expansion of multinational corporations. The building of relationships is important to multinational corporations because it allows the corporations to function outside of their home countries. Multinational companies benefit greatly from the presence of support from suppliers and vendors. These companies depend on such support so that they can function in a manner that is efficient.
"It is a well-known fact that people across nations and cultures think, behave and believe differently. Nations and cultures differ in terms of how they define specific phenomena, act and react. Phenomena include behaviour, regulations, language and institutions. In the global business environment, controlling for industry- and firm-specific characteristics, researchers have long reported on the dominant role of national culture in determining managing practices/strategies in the context of cross-border investments. Thus, managing change in another culture involves understanding how objects or events are defined in other cultures (Zineldin, 2007).
These cultural and behavioural differences solidify the need for companies to have allies in host countries. These relationships allow the companies to expand and become profitable in new markets.
The purpose of this discussion was to focus on the various ways in which business relationships can be developed. The discussion will began with a brief history of relationship development within the business environment. The research found the interaction approach, buyer-seller approach and networking are all substantive methods that can be utilized to assist in the development of business relationships. The research also focus on the variable model, stages of development and objectives associated with business relationship development. The research found that there are several different variables that are considered as it pertains to the variable model. In addition there are four stages associated with the development of business relationships. In addition, there are meaningful objectives (competitive advantage, globalization and quality assurance) associated with the development of business relationships. Business relationships allow companies to operate more efficiently.
Barry, J.M., Dion P., Johnson W. (2008) A cross-cultural examination of relationship strength in B2B services. Journal of Services Marketing. 22/2 114 -- 135
Brooks, N. (2008, December 3). Building Strong Relationships - Four Stages of Development, Four Phases of Connection. Retrieved June 12, 2009, from http://ezinearticles.com/?Building-Strong-Relationships-Four-Stages-of-Development,-Four-Phases-of-Connection&id=1694468
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