Essays on supplier responsiveness and buyer firm value - Nyenrode ...

2.8 Managerial Implications
The following points include practical examples to illustrate the managerial implications of
our research.
2.8.1 Findings Apply to Both Heterogeneous and Homogeneous Competitive
Markets
In today’s marketplace, increasing complexity and competition make it imperative for
businesses to differentiate their offerings in terms of competitive advantages (Day, 1994).
One important source of such strategic supply competitive edge is market-oriented
suppliers. For instance, consider Porsche Consulting’s services. It operates in the
heterogeneous consulting services market (J. D. Power, 2010). Porsche, the automobile
manufacturer, has consistently ranked at the top of J. D. Powers and Associate’s annual
initial quality study (J. D. Power, 2010). Porsche has perfected its understanding of the
automotive and supply chain management processes. It has internalized the philosophy of
market orientation up to an extreme degree to identify latent needs. As a result, customers
of its consultancy services enjoy increased earnings and avoid crisis or risk (Kotler &
Pfoertsch, 2006, p. 87; Scholz, 2009). Examples of customers who have enjoyed such
benefits include Lufthansa AG, Meyer Werft AG, and Strabag AG. Lufthansa reduced the
time that was required to inspect aircraft by 30%, Strabag significantly improved its
construction processes, and Meyer Werft introduced a new learning academy to ensure that
they fully internalized the suggestions from Porsche. Such experiences are reflected by
Lufthansa’s air services chief who said, “Porsche is an interesting partner for us” (Cremer,
2010, para. 3).
The degree of customer confidence in Porsche’s abilities is reflected by the
statement of Porsche’s consulting services chief officer, Eberhard Weilben: “Many of our
clients come and say please turn us into the Porsches of our industries” (Cremer, 2010,
para. 14).
Mr. Weilben’s quote reflects the importance that such strategic customers
place on the supplier’s brand value. Hence, our example illustrates that responsive
suppliers do create value in such heterogeneous competitive marketplaces by reducing
risk and improving performance.
We have sampled data from diversified companies such as Google, Apple,
Microsoft, YUM brands, Chippolette, Caterpillar, and Red Roof Inns. Our sample
includes 86 publically listed firms. The remaining 78 are privately owned companies.
These companies operate in a variety of competitive heterogeneous to homogeneous
marketplaces. Hence, we advise managers in both forms of marketplace to implement
a supplier responsiveness strategy to reduce IdRR. On the other hand, we realize that
many firms are concerned by their economies of scale. Thus, in our opinion, a
responsiveness strategy should only be applied in strategic relationships. The payoffs
will only be great enough for the idiosyncratic response costs that are incurred when
the volume of transactions is substantial. This is normally the case in strategic
relationships.
2.8.2 Innovation Does Not Increase Relational Risk and Increases Supplier
Brand Value
We consider that any kind of response to an idiosyncratic need is a market innovation.
Since it is based on specific knowledge for a specific firm, it is in a sense, therefore, new to
the world. However, responses to idiosyncratic needs do not necessarily involve an extreme
degree of innovation; as a result, all responses need not be resource intensive. But risk
70