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A standardized approach to relationship management between an exporter and an overseas channel intermediary
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GROUP 6C’S REPORT ON TUTORIAL SESSION HELD ON
17TH OF MARCH, 2009
TUTORIAL TOPIC
Using a context/contexts of your choice, take stance in favour or against a standardized
approach to relationship management between an exporter and an overseas channel
intermediary
MODULE TITLE: INTERNATIONAL MARKETING
MODULE CODE: 56337
WORD COUNT: 11001
MODULE LEADER: JOHN NICHOLSON
GROUP: 6C
STUDENT ID: 200887310
200617055
200884888
200884876
200885167
1 – Excluding Front page, Contents, References and Appendix
CONTENT
1.0 Introduction
2.0 Main tasks
3.0 Standardization and Adaptation
4.0 Trust, benefit and psychic distance
5.0 Summary
6.0 Questions
2
1.0 INTRODUCTION
The aim of this report is to give a critical evaluation of the class tutorial session of 17th of
March, 2009. The aspects of the tutorial analysed include the presentation (group A), the
questions (group B) and the nature of the responses of group A to the questions presented to
them. An effort would be made to try and incorporate part of the presentation into this report,
however, additional new material and discussion would be brought in where necessary.
2.0 MAIN TASKS
The tasks that need to be answered from the tutorial topic can be broken down into 2 main
parts;
i. Choose a context(s)
ii. Take a stance for or against standardizing relationship management (RM) between
an exporter and an overseas channel intermediary (OCI)
In answering these two parts, the group presented five main constructs which they felt were
essential to answer the key questions which include standardization, adaptation, relationship
management (RM), exporter and overseas channel intermediary (OCI).
3.0 STANDARDIZATION AND ADAPTATION
“Standardization refers to a common approach to business throughout the world, while
adaptation requires a different approach in each market” (Ang and Massingham, 2007). In
terms of RM, standardization means that an exporter relates with its channel intermediary
(ies) in the same way in all markets (international or domestic) while adaptation on the other
hand means that its relationship approach differs across markets.
The group failed to clearly state the linkage between standardization and relationship
management. They focused more on standardization in terms of marketing strategy, the
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customer and the product. Their example using McDonalds was irrelevant to the topic in
question.
The group cited two main problems that could be faced if a standardized approach to RM was
adopted – friction and hindrance to international performance. Another point they cited
which is controversial is positioning.
The controversy with positioning is that for a firm to take advantage of an adapted RM
approach, it must possess the ability to leverage capability (Fung et al., 2007), transform or
combine the knowledge derived from the OCI to create competencies, capabilities (Ang and
Massingham, 2007) and into competitive advantage (Srivastava et al. 2001). If a firm that
adapts its relationship practices with its OCIs doesn’t possess such ability, then it may not
have a positive effect on its positioning.
It should also be bore in mind that adapting the relationship doesn’t guarantee that the OCI
will be willing to release any necessary information that could be of help to the firm. This
may result from the fact that it may not perceive a greater benefit from the relationship (Fung
et al., 2007). Therefore, an exporter must be able to identify a willing partner or a capable
partner (Walters and Rainbird, 2007) before taking further steps as regards its RM approach.
4.0 TRUST, BENEFIT AND PSYCHIC DISTANCE
Trust and benefit are two variables that are key determinants and motivation for a good
relationship. Whether to trust, who to trust (Doney, P. M., Cannon, J. P. & Mullen, M. R.
1998) or the cognitive or building process of trust are however dependent on the culture of
each party involved (Usinier, 2009). This gives rise to the construct called psychic distance
i.e. the extent to which the norms and values of two companies differ because of their
separate national identities (Conway and Swift, 2000).
The group, taking a stance that a good relationship takes time, patience and commitment to
develop, used the model developed by Conway and Swift (2000) to show how psychic
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distance changes depending on the time duration of the relationship i.e. psychic distance
decreases as the relationship develops.
The group took the side that the possibility of psychic distance makes it impractical to
standardize RM approach with OCIs. They concluded that such approach should be used
only in cases of cultural similarity between both parties involved. The group also used
Hofstede’s cultural dimensions to explain that trust also varies across cultures.
However, instead of defining relationship management, the group defined relationship
marketing.
5.0 SUMMARY
In summary, the group failed to choose a context which should have set the direction for their
discussion. This could be attributed to the group’s lack of time management and the
inclusion of certain irrelevant materials which made it impossible for the group to finish and
conclude their discussion. What could be deduced however from the presentation is that the
degree of standardization or adaptation in the exporter - OCI relationship has an overall effect
on performance.
6.0 QUESTIONS (see appendix for the four questions)
The group answered the question on commitment stating that its effect in an exporter – OCI
relationship is greater cooperation, group cohesiveness and increased efficiency (Anderson
and Weitz, 1992). Agreed that these three positive effects do occur, the facts not mentioned is
that commitment like information flow may not be a two-way dyadic interchange. This is
possible not only because the decision whether to be committed or how much to be
commitment is based on a party’s perception of the commitment of the other (Anderson and
Weitz, 1992) but because element of vulnerability exists and as a result, trustworthiness
becomes essential if the other party will willingly stay committed (Ruyter et al., 2001). This
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implies that one party may refuse to be committed because the other party is perceived not to
be trustworthy.
The group’s answer to the second question was adequate. However, as the tutor reiterated in
class, other factors may need to be taken into account aside psychic distance such as duration
of relationship, objectives in each market or region, level of market development, etc
(Howard and Squire, 2007). For example, basic communication infrastructure (landline,
mobile or internet) varies across countries (Howard and Squire, 2007) making it difficult to
standardize which form to use to share and exchange core information in a relationship with
an OCI.
The group couldn’t answer the third question on local legitimacy. Low level of trust in a
foreign company has been attributed to a lack of interpersonal sensitivity (empathy) (Chen et
al. 2002). This is said to have an effect on the perception of fairness by the locals concerning
the actions of the foreign company and as established in the previous question this could have
a negative effect on commitment. Therefore, local legitimacy may not be the most needed
factor but rather empathy on the part of the exporter that may account for a positive
relationship with an OCI.
The last question was well addressed but like said in earlier, using the case of Albaik in Saudi
and Kuwait, language similarity (high context, low psychic distance) was not sufficient to
choose a standardized approach.
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REFERENCES
1. Fung, K. O., Chen, S. N., & Yip, S. C., (2007), “Relationships and performance of
trade intermediaries: an exploratory study”, European Journal of Marketing, Vol. 41
No. 1/2: 159-180
2. Srivastava, R.K., Fahey, L. & Christensen, H.K. (2001), “The resource-based view
and marketing: the role of market-based assets in gaining competitive advantage”,
Journal of Management, Vol. 27: 777-802.
3. Walters, D. & Rainbird, M., (2007), “Cooperative innovation: a value chain
approach”, Journal of Enterprise Information Management, Vol. 20 No. 5: 595-607
4. Anderson, E., & Wietz, B., (1992), “The Use of Pledges to Build and Sustain
Commitment in Distribution Channels”, Journal of Marketing Research, Vol. 29, No.
1: 18-34
5. Ruyter, Ko de, Moorman, L., & Lemmink, J., (2001), “Antecedents of Commitment
and Trust in Customer–Supplier Relationships in High Technology Markets”,
Industrial Marketing Management 30: 271–286
6. Howard, M. & Squire, B., (2007), “Modularization and the impact on supply
relationships”, International Journal of Operations & Production Management, Vol.
27 No. 11: 1192-1212
7. Ang, Z., & Massingham, P., (2007), “National culture and the standardization versus
adaptation of knowledge management”, Journal of Knowledge Management, vol. 11,
no. 2: 5 - 21
8. Conway, T. & Swift, J. S. (2000), “International relationship marketing. the
importance of psychic distance”, European Journal of Marketing, Vol. 34, No.11/12:
pp. 1391-1413.
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APPENDIX
GROUP B’s QUESTIONS
1) Commitment to the relationship is defined as a firm’s intention to continue its
relationship with another (Geyskens et al., 1996; Morgan and Hunt, 1994). How these
commitments affect the relationship between the exporter and the importer and
channel intermediaries?
2) To what extent power distance influences the standardization or adaptation process?
3) Why achieving and maintaining local legitimacy is important to firms in all markets?
4) In what ways does the context of language-based communication have an effect on
Exporter and international intermediaries’ relationship management?
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