Value Co-Creation in Industrial Buyer-Seller Partnerships ... - Doria

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The Buyer sees that the interest for the Seller should be that they are safe in the cruiseindustry and can gain benefits of volume. The Buyer recognizes that the loss of the ridingcrew is a sore point for the Seller, but that there is still potential that can be exploited inworking together. An example of a new business opportunity for the Seller could be thekeeping up of the Buyer’ s spare parts inventory and service off board. The alternative is thatthe Buyer sets up its own warehouse and keeps all their parts stored off board, somethingthat is still under discussion. Overall the Buyer is interested in looking at the total life-cyclecost for operating their fleet and cooperating with the Seller in order to optimize operationsin the long-run, without compromising safety and reliability.“ And I believe as a matter of fact, that there is another issue, which is what I amaiming at… we probably waste a considerable amount of energy - and if we workedtogether with the Seller in a purposeful manner, we would be looking at the whole lifecyclecost - then it would not be only about maintenance, but fuel costs would beincluded. Our fuel costs are xx million dollars per year, and if we could take this downby a couple of percent by working better together that would be added value and thatcould be seen as supporting our agreement. This is the way we look at it.” (Interview:Buyer 9)The way the Seller management discussed the partnership was with some reservations; itwas not crystal clear and obvious how the partnership with the Buyer would benefit theSeller. Mostly this had to do with the fact that the Seller had not systematically identifiedand analyzed the different benefits and sacrifices involved. An observation during theresearch process was that the Seller management got increasingly involved and startedseeing the opportunities that there are in the partnership when it focused on the right things.The problem with the word partnership seems to be that people associate it with somekind of non-utilitarian, charity and friendship–type of activity, and seem to feel compelledto make the argument that “ business is always about money” , and fail to realize that thepartnership is exactly about that - making money and profit, only with a slightly differentlogic.“ Yes, this (partnership versus maximizing in each transaction) is a little double sided...because on one hand… it is clear that much of it has to do with pure business, MONEY.He (Mr BR9) naturally strives to get costs down and it is his job. And at the end of theday that is what drives the partnership into different directions.” (Interview: Seller 9)Obviously a partnership should not be seen as anything but pure business. A partnership isone relationship management strategy – a strategy among others - with the ultimate aim ofdoing profitable business. The logic of a partnership is that working together, cooperating,165
eing interdependent and creating and exploiting interdependencies with a business partneris a means to do profitable business in the long run. If this is not the case, the partnershipcannot be seen as the optimal strategy for that particular relationship.1667.6 Concluding commentsCurrently the Buyer is operating xx number of ships that are powered by the Seller dieselengines, and there is more to come in the future. The Buyer has chosen the Seller as enginesupplier because the Seller is said to have the most reliable product on the market. TheBuyer also has other engine makes in their fleet but the Seller is said to be the mostimportant. Safety and reliability are number one concerns for the Buyer and therefore theSeller has been the preferred choice of supplier. The Buyer has operated a ship for some 20to 25 years, which means that the Buyer has been “ living” with the engines every day for along time. By definition this situation creates a certain degree of dependence between thetwo organizations. The Buyer has been “ stuck” with the engines for 20-25 years, and livewith a number of the Seller engines every day. This makes them an important customer andsource of revenue for the Seller, both regarding new sales opportunities and after salesbusiness.Looking at the power/dependence relation between the two companies it can be saidthat both companies are to some extent dependent on each other. This quite obviously givesa somewhat safe position for the Seller although the Buyer does have other engines than theSeller’ s in their fleet. Regarding volume, the Buyer is not the biggest or most importantcustomer for the Seller. However, the company is a great reference for the Seller and acts asa partner in developing new technology and testing new concepts. The volume of spareparts sales should not be underestimated either; the Buyer is a good customer for the Sellerlocal service office. They do purchase a considerable amount of spare parts even thoughthey do not buy service work from the Seller, which they have chosen to do in-house.Cooperation between the two companies can be described as frequent and fruitful. There areseveral development projects going on between the companies. The Buyer provides a reallife test lab for the Seller’ s products and concepts, and the Buyer continually helps the Sellerdevelop and improve its offering. The partnership agreement is based on the idea ofincreased cooperation between the companies.At the time of the initial discussions about the partnership there existed a certaindegree of dependence between the Buyer and the Seller due to the fact that the Buyer hadthe Seller engines installed on board their ships. There was no reasonable way they couldget out of the technological dependence on the Seller. Therefore the Buyer made the
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Birgitta ForsströmValue Co-Creatio
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VALUE CO-CREATION IN INDUSTRIAL BUY
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CIP Cataloguing in PublicationForss
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Suokannas and Annica Isacsson my de
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3.3 The use of the value concept in
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7.2.1 Price as a benefit and a sacr
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Figure 8.1: Interdependence, involv
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81. INTRODUCTIONEconomic theory rel
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Portfolio management and key accoun
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value - ways to understand and thin
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creation in a world of relationship
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Möller and Halinen-Kaila (1999) cr
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Value of a Relationship: When discu
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1.3 Outline of the studyThe study s
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in such relationships, and on how t
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2.2 Research approach“ Human gras
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“ In case study both the research
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interview ended up being different
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simplifying and combining observati
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the purpose of why it is studied an
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started paying attention to issues
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The analysis of the material was an
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are: setting the boundaries of the
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Critical events during the process
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interviewing, observing, reading, r
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unit. Going even further back in hi
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3.4.1 Overview of the use of the va
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ç-è1éWèê9ë ì9í!î¹ï5ðWí
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argumentation alters the traditiona
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industries. Innovation is the sourc
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ôô3.7 SummaryThe assessment of va
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4. A RELATIONAL APPROACH TO VALUE C
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est way to organize, any way of org
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4.2 The IMP view on relationships a
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The focus and unit of analysis of t
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ecent book discuss how creating val
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not simply mutual dependence betwee
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3n3465-7 89;:=©:¡?@95AB
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interdependence is associated with
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“ The performance of supplier arr
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Figure 4.5: Different value creatin
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“ organizational arrangements tha
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There is no simple or universal def
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The question of win-win in partners
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The following chapter, number five,
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The world cruise industry is domina
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Figure 5.2: The actors and the setu
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ù õ ñ ù õ ó*ÿ¡ ÷£¢ ñ¤
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:: ]:: ]In normal cases the Seller
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the top 10 suppliers for the cruise
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6. THE DEVELOPMENT OF THE RELATIONS
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In 1997 when Mr BR9 got the positio
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The relationship between the compan
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” He (BR9) often talks about the
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With some years of experience with
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offering, the Buyer still sees the
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When the Seller realized that they
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we have a new development in the pr
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Page 126 and 127: • Optimize operations i.e. fuel o
Page 128 and 129: They also commented that the person
Page 130 and 131: 6.7.5 Comments on internal issuesAt
Page 132 and 133: changes, and that the Seller would
Page 134 and 135: survey 14 that the Seller had condu
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Page 138 and 139: Seller. At present there are three
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Page 150 and 151: and that is insane. We must be able
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Page 154 and 155: We learn their way of handling thin
Page 156 and 157: Price receivedThe price received ca
Page 158 and 159: partnership with the Seller, the as
Page 160 and 161: In the light of this, one could say
Page 162 and 163: dependence. If managers were not ab
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Page 168 and 169: forth between the companies. This h
Page 170 and 171: What I found even more interesting
Page 174 and 175: decision to pursue a collaborative
Page 176 and 177: methodology. I will also direct som
Page 178 and 179: years to come. Consequently the par
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Page 182 and 183: Question 1: How is the value concep
Page 184 and 185: exists, the value co-creation poten
Page 186 and 187: partnering and cooperating are so o
Page 188 and 189: process of analyzing the material s
Page 190 and 191: Barney, JB. (1991). Firms resources
Page 192 and 193: Forsström, B., (1998). Trouble & S
Page 194 and 195: Katz, M & Shapiro, C (1985). Networ
Page 196 and 197: Shapiro, B.P., Rangan V.K., Moriart
Page 198 and 199: Interviews:Interview: Buyer 1Interv
Page 201: Relationships between buyers and se
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Value Co-Creation in Industrial Buyer-Seller Partnerships ... - Doria

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