STMK final 06-05-2013

Commercially sensitive - confidential

Strategic Marketing Assignment

Student name Ian Boyd-Sutherland SA 06 Student Number 1700064 Strategic Marketing Assignment - January 2013 (Word count – count – 5970, 5970, including exec summary, diagrams and tables)

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In order to print this document from Scribd, you'll first need download it. Navistar Financial. The main objective of the The opportunity identified is to the alliance

alliance is to give the partner distribution channel, a captive finance company and all the perceived benefits, risk share, branded finance, exclusive subvention, access to Cancel Download Print knowledge and expertise, profit growth and market And share gain. Early in the roll out of the alliance there were a number of complaints from the dealers, specifically in the outsourced area, that the alliance was not delivering on the expected value creation. This prompted an investigation into the overall strategy, market orientation and the rationale for the alliance. The investigation revealed that the relationship marketing approach in the outsourced areas is not supported by the drivers required, with respect to “one on one “ interactive “ interactive and value added activities as a result of using non-alliance focussed, broadly spread and skilled, marketing resources. Change is required in the dealer distribution channel with respect to the interaction process; interaction parties/resources, relationship atmosphere and environment. The outsourced marketing function needs to be in sourced if we are to drastically improve relationship strength and work towards a bilateral relationship, eliminating all parties self interest attitude, improve interdependence, interaction and co-operation, in the Navistar alliance. The suggested change addresses the key elements required in an interactional relationship, specifically, strategy, structure, systems, style, staff, skills and shared values. The biggest challenge ahead is identifying and developing the correct resources, crafting people practices and providing the management support to deliver on alliance partner‟s expectations, in line with WesBank‟s marketing orientation . The business benefits and measure of success will be seen in market share and profitability growth, improved customer/partner satisfaction and a long happy partnership that is interactive, mutually independent and cooperative, creating value for all partners and parties involved.

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Table of contents Cancel Download And Print 1.

2.

Part 1 – Analysis of current marketing related opportunity. .......................................... 4 1.1

Overview of the organisation and its business strategy..................................................4

1.2

My relationship to the organisation.................................................................... ........... 7

1.3

Overview/Analysis of relevant context contributing to the problem.................................8

Part 2 – Proposed strategic actions and rationale .........................................................10 2.1 Rationale.......................................................................................................................10

3.

4.

2.2

Course of action..........................................................................................................13

2.3

How the proposed strategic action addresses the problem identified...........................13

Part 3 – Implementation and expected impact of proposed course of action ............14 3.1

Actions to be taken .....................................................................................................14

3.2

Risks to consider ........................................................................................................18

Interdependencies & reflection .......................................................................................18 4.1

Interdependencies & implications on broader management challenges ......................18

4.2

Reflection....................................................................................................................20

References ..............................................................................................................................21 Appendix A.................................................................................................................................23 Appendix B.................................................................................................................................23 Appendix C.................................................................................................................................24 Appendix D.................................................................................................................................25

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1. Part 1 – Analysis of current marketing related opportunity (1455 words) Introduction: 1.1

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Overview of the organisation and its business strategy Cancel

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WesBank is an asset based finance company and part of the First Rand banking group (FRB) in South Africa (S.A). WesBank is currently the market leader in S.A. asset based finance, averaging in the region of R6-7 Billion production a month. Closest competitor averages about R3-4 Billion monthly. Professor Moira Clark (2012) refers to the hierarchy of strategies, corporate, business and functional (Pg 9 workshop presentation). As opposed to a production or sales orientation strategy. WesBank adopts a “marketing orientation” corporate strategy, where we are focused on understanding the requirements and various segments of our customers, both end user, partners, and deliver on their expectations. Fig 1.1 Maps out WesBank‟s marketing orientation.

(Adapted from Doyle, 2002, p39) This orientation is evidenced in WesBank‟s two primary divisions, Motor division and Corporate. Motor is the bigger part of the business whose business strategy is alliances/Joint ventures (JV‟s) with the motor vehicle manufacturers (OEM‟s) and dealer /supplier distribution channels. We use the partnerships and direct delivery channels to market the various products, while using customer feedback to make continuous improvements.

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Corporate‟s business strategy has two channels, channel being described as our “way to market”, see Fig 1.2.In order to print this document from Scribd, you'll first need to download it. Fig 1.2 WesBank Corporate Business Strategy (area where opportunity identified)

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The first channel is direct to market through a sister company, First national Bank (FNB), who is the retail banking sector of the FRB group, and through the non-FNB banked customers i.e. the broader market. The second channel is the supplier channel via JV‟s/alliances and follows a similar business strategy to the motor division. Fig 1.3 Below re-iterates our broader corporate business strategy.

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The second channel “functional strategy”, is the development of various business units In order print(POS) this document you'll that focus on the point of to sale where from we Scribd, partner with the suppliers through a JV/alliance in the areas of yellow metal,it.commercial trucking, aviation and VARS (value first need to download added re-sellers). We lock in the external market, (manufacturer, dealer distribution channel and sales force), by sharing profits and creating a unique finance brand for them. Cancel Download Andsupport Print through their distribution This in turn gets the O.E.M/supplier to drive channel/dealers. The potential market opportunity is reflected in Fig1.4 below. The corporate market cap opportunity is just short of R60 Billion annually. WesBank Corporate division is currently budgeted to a total finance production of about R15 Billion annually (25%market share).

Fig 1.4 What opportunities exist in our markets?

/VARS

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Our competitive advantage is a result of our market orientation; see Fi g 1 .2 in conjunction In order to print this document you'll with Fig 1.3 . Our JV/alliance partners help usfrom to Scribd, gain maximum market share as it is financially and mutually and weit.in turn provide our partners customer orientation firstbeneficial need to download through exceptional service, quality product and perceived customer value. Cancel Download And Print Our competitor orientation helps us provide our partners a differential through our industry expertise, unique product development and technological delivery.

We further provide inter-functional co-ordination through the sharing of information across all our support divisions who fully understand the needs and expectations our partners and their/our end user customer. The JV/alliance operational and board meetings also allow for the sharing of information on customer requirements, competitor activities, delivery channels, operational and strategic challenges and opportunities. Fig 1.5 The components of marketing orientation

(Adapted from Sargeant, 1999, p31)

1.2

My relationship to the organisation I am currently the supplier channel business head for WesBank corporate, detailed above. I spent 18 years in the motor division driving their above mentioned business strategy and I was recently requested to move to corporate division to use this experience in helping the corporate supplier channel, existing JV‟s/alliances grow, find solutions for the ones that are not working and look for new growth opportunities. For the purpose of this assignment I am going to focus on a specific alliance in the supplier channel (point of sale). This opportunity lies in the commercial trucking division and our newest alliance with Navistar (International trucks). I have narrowed it to one alliance, as I believe the solutions identified will address the above mentioned issues/dilemmas for all my JV/alliances in the supplier channel.

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In order to print this document from Scribd, you'll Overview/Analysisfirst ofneed relevant context contributing to the problem to download it.

WesBank has a very strong regional structure with a skilled marketing force supported by Cancel Download management. This structure is responsible for And the Print marketing delivery of the entire corporate strategy identified earlier. Centrally based I have my own division which are specialist marketers/managers in the different areas within the supplier channel and in the regions I outsource this responsibility to negate the in sourced cost of building my own specialist business support structures. This functional strategy, however, brings about a host of marketing issues/dilemmas. At the end of 2012 we signed an alliance agreement with Navistar to form Navistar Financial. The main objective of Navistar and WesBank, which is basically the objectives of all our alliances, was to give their distribution channel/sales team, the perception of a captive finance company and all the perceived benefits that come with it, namely:-

1.3.1

Risk share and the promotion of stability model, enabling the partner to continue selling to strong customers who have reached prudential limits. Risk sharing also allows us to buy slightly deeper into the market while resisting the temptation to write poor business.

1.3.2

A “one stop shop” , gain economies of scale, a single entry point for the customer and enabling customer retention/brand loyalty.

1.3.3

Branded support with market leading expertise and “industry best” service delivery, gain legitimacy/capitalise on both partners reputations.

1.3.4

Competitive advantage, through exclusive Navistar Financial subvention supported by the manufacturer e.g. the cost of Finance to the end user customer is reduced by retail funding support.

1.3.5

Gain access to knowledge, capabilities and future re-marketing opportunities, data base mining and effective customer retention campaigns.

1.3.6

Grow profit opportunity.

1.3.7

Gain market share.

November 2012 we did a marketing road show to the Navistar dealer distribution channel and outsourced marketing team across the country, talking and promoting the benefits mentioned above and launched Navistar Financial. By the middle of December we started receiving complaints from the dealers expressing frustration around a number of issues that needed urgent attention. See example e-mail in Appendix A. I urgently conducted an investigation using primary qualitative research methods (STMK core module, 2012, Pg 69 table 7.2). I requested senior management in the respective outsourced regions to conduct face to face marketing calls with the management and sales team of the various distribution dealers. I personally phoned and emailed dealers 8


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and requested our partner Navistar to do the same, in an effort to minimise potential orderWesBank to print thismanagement. document from Scribd, you'll filtering of feedbackInfrom I received feedback concerns around the alliance and the ability to refer/place firston need to download it. business with us. Although this research method is subjective, I was able to get a feeling for the behaviour and emotions on both sides and understand the usage, attitude, image Cancel Download And Print and brand perception. The following common concerns were highlighted from the partner and distribution channel (external market). See example of an email response, Appendix B. 1.3.8

Perceived service levels around turn-around times for application approvals.

1.3.9

Perception of “no difference” between the previous WesBank and the Navistar Financial process, i.e. no advantage to having a branded product.

1.3.10 Perception that WesBank ‟s Credit department don‟t place relevant value on Navistar‟s risk share model or a miss-understanding by the dealers and outsourced marketing team as to what differential value the risk share arrangement provides. 1.3.11 They wanted a dedicated credit division for Navistar Financial. 1.3.12 There is an expectation that dealer incentive commission (DIC) for business introduced and concluded, should be more generous than what the opposition offered. 1.3.13 There seems to be a general lack of understanding to what the perceived benefits of an alliance are. 1.3.14 A general perception that opposition O.E.M (original equipment manufacturer) captive finance is better i.e. Mercedes Benz Finance. The following feedback was received from the regional outsourced sales team (Internal market) See example of an email response Appendix B. 1.3.15 They believed that the credit decisions and turnaround times were in line with the agreement. 1.3.16 A belief that the dealer has unrealistic expectations with respect to DIC. 1.3.17 A belief that the dealer and manufacturer do not fully understand asset financing. 1.3.18 A belief that relationships were good and service levels excellent despite e-mail and telephonic evidence to the contrary. Although we have and follow both a corporate and business strategy, it is clear that we need to re-focus on the functional strategy, enabling us to maximise WesBank‟s productivity, both outsourced and centrally, (the internal market). This could improve the perceived value offering to our external market, Navistar and their dealer network, as well as their end user customer.

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2. Part 2 – Proposed strategic actions and rationale (1639 words) 2.1

Rationale


Based on the aforementioned challenges, and understanding that our supplier channel Cancel Download And Print I have elected to focus my functional strategy is based on relationship marketing, proposed actions in this area. Eagan, 2008, identifies drivers promoting the rationale for relationship marketing in the specific appropriate areas of our supplier business:2.1.1

High risk to Buyer , which is relevant when buying a 1, 2 million Rand truck and to the supplier who is trying to sell this high cost asset. The customer‟s business success is very reliant on the assets ability to deliver in terms of logistics and for the finance structure to be affordable in line with the assets earning ability and to be flexible against any unforeseen logistical challenges in the future.

2.1.2

Requirement for trust and commitment , when the customer requires finance support for the transaction and our partner supplier relies on us to provide the “all in one” solution and ongoing support as indentified in the first driver.

2.1.3

Satisfaction positively related to retention , which financing the assets helps both us and the partner to achieve, allowing us to talk to the customer at regular intervals and various touch points through the life of the contract.

2.1.4

Perceived need for closeness , logistics customers rely heavily on the supplier product and finance solution to provide the lowest cost for operation and product back up support. The customer will definitely need operational support to keep the assets working and due to seasonal fluctuations in contracts, poor weather, strikes etc. they might need finance facility support to reschedule or restructure.

The most relevant definition of our supplier channel functional strategy relationship marketing comes from Gordon, 1998:9, “is the ongoing process of identifying and creating new value with individual customers and then sharing the benefits from this over a lifetime of association. It involves: understanding, focusing and management for ongoing collaboration between suppliers and selected customers for mutual value creation and sharing through interdependence and organisational alignment. ” (Relationship marketing elective path way, pg 8) Our relationship strategy is definitely network based and according to Moller & Halinen, 2000 this would indicate a high relational complexity which requires focus on supplierbuyer dyads, mutual interdependence through resource ties. Transactions are episodes in long term relationships and the emphasis is on resource, social and inter-functional exchange relationships. (Relationship marketing elective path way, pg 8-9) Sheth (2000) further identified the basic aspects of relationship marketing (RM) 2.1.5

“One-to-one” relationship between the marketer and the customer.

2.1.6

Interactive process rather than an exchange.

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Value-added activity, value is created through mutual interdependence and order to print this document from Scribd, you'll collaborationInbetween suppliers and customers. first need to download it.

Essentially RM notes the change from discrete to continuous exchanges that occur between parties with a past history as well as plans for the future. (Relationship Cancel marketing elective path way, pg 8-9) Download And Print Understanding the theory mentioned above, the questions raised earlier, and that our JV alliance with Navistar was essentially built on the Agency theory at the outset supported by an all encompassing written legal contract. It is important to note that the outsourced marketers/management goals are at conflict with the goals of the partner and their distribution channel. Essentially each party is trying to look at their own goals first (Eisenhardt, 1989, relationship marketing elective path way, pg 11). My recommendation is to re-focus and take a Meta-approach combining economic theory, Agency theory, and social exchange theory with an element of the interaction approach (Behavioural theory), where the key variables are trust and fairness and selfinterest is best served by co-operation that brings value to all participating parties. We need to get all parties to co-operate in order to solve problems at a local level; the challenge being that individuals could have difficulty in assessing where to place their trust and commitment in the case of conflict. (Homans, 1958, relationship marketing elective path way, pg 13). The interaction element suggests considering all the activities undertaken by our organisation to build, maintain and develop relations with our partners and customers. We need to consider the exchanges between our organisations and manage the complex human interactions. (Donaldson & O‟Toole, 2007, relationship marketing elective path way, pg 13). To address this I have selected the key elements of the interaction model (adapted from Hakansson, 1982, relationship marketing elective path way, pg 16). 2.1.8

The interaction process: - Our partners and their customers have a very high expectation in the sharing of information and communication. With respect to our partners they want the ability to share in profit opportunity by way of DIC and their customers have high expectations for competitive lending rates. The outsourced marketers/managers have proven to be lacking in the areas of communication and information with the dealers as seen in the feedback. Non-JV WesBank corporate marketers have traditionally not paid DIC because their model was to market direct to the end user customer. This also explains the breakdown in communication, as they communicate directly with the customer without including the partner/dealer. A further result is that they don‟t take DIC into consideration when pricing transactions and end up leaving the partner without the ability to earn DIC. The dealer/customer see the outsourced marketer as a WesBank representative and not as a Navistar Financial partner brand which impacts negatively on loyalty, retention and partner brand advocacy

2.1.9

Interaction Parties: - The outsourced WesBank people resources look after a number of businesses and different partnerships ranging from yellow metal, commercial trucking and agriculture. They are targeted on total production and their commission earning is based on the success of this. This indicates that they will focus where the biggest production opportunity is and this includes, once

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again, going direct to the end user customer. They are not focused on working In order to print dealers this document from Scribd, you'll with the specific Navistar and developing ways for the finance alliance to help grow sales andtocollectively first need download it. market the dealer fleet customer opportunities. This then forces the partner to only pass on walk in customers who historically make up the higher risk end of customer and/or once off transactions. This also Cancel Downloadof And brings into question the competencies thePrint outsourced marketers; they are trying to be “jack of all trades” when the logistics business is a very specific industry with a very specific skill required. The credit department that supports these marketers face the same challenges. This in turn erodes the trust, leading to conflict with the dealer/partner. 2.1.10 Relationship atmosphere:- understanding the above shortfalls identified, we run the risk of a power struggle as to who is delivering on expectations of a captive finance company, partner accusing us of just being a normal WesBank operation, having no brand alliance or significant advantage that a captive finance company should have. The WesBank marketers accuse the dealer/partner of only referring high risk business, that is high in noise value and that no other finance company wishes to bank. Loyalty and trust go out the window, along with closeness and co-operation 2.1.11 The relationship environment:- This environment requires specialised and dedicated resources that differentiate from the standard WesBank and opposition finance company offerings. The marketers required, have to clearly understand their roll and responsibility in the channel and alliance structure. They have to be in tune with the partner environment and customer requirements and connected to the dealer and customer network. The relationship strength model focuses on action and the belief component required. The analysis indicates that for the JV to work effectively, both action and belief components need to be high, resulting in a bilateral relationship at ground level. Fig 2.1

(Donaldson & O‟Toole, 2000, Relationship marketing elective path way, pg 17)

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Course of action

In order to print this document from Scribd, you'll My course of action to toaddress firstisneed downloadthe it. relationship strength and achieve a bilateral

relationship, to eliminate self interest, improve interdependence, interaction and cooperation, in the Navistar alliance and revisit the outsourced model. In order to do this Cancel Download And Print effectively I need to address the following planning principles, Interdependence

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Longer term horizons

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Analysing interaction

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Values and images

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People and process

Networks

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(Donaldson & Toole, 2007, relationship marketing elective path way, pg 15, 16). It is evident that as the business head I need to balance the sources of power through common interest and co-operation, high level of communication, improving access and distribution of information, leverage and share market knowledge between both parties, leverage contacts through improved relationships, and most importantly develop competent marketers and management in the outsourced areas, improving the trust element. I believe the most effective way to achieve all of this, is to use my centrally based division as example of best practice and this is achieved by direct ownership of the management responsibilities and marketing staff. Developing specialised skills required in the logistics business financing requirements. I propose that I identify and employ specialist marketers and sales mangers in the outsourced regions. I also propose that I in-source the credit function to my centralised credit department which I am busy splitting into specialist channels to facilitate the various expertises across the various asset classes and their application. 2.3

How the proposed strategic action addresses the problem identified The proposed course of action will allow me to re-produce the centralised model where the dedicated and specialised resources (management and marketers) will be focused purely on the Navistar JV and our shared values. They will be taken through the JV agreement and the principals of what is required to develop the relationships on the ground. They will understand the partners expectations and objectives identified in 1.3.1 to 1.3.7.The dedicated resources will initially have to put the partner‟s needs first until trust is developed. The resources will have to focus on being interactive, establish and develop mutual interdependence, and collaborate. This will lead to a bilateral relationship and will address all the challenges identified in 1.3.8 to1.3.18.

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3. Implementation and expected impact of proposed course of action (1751 In order to print this document from Scribd, you'll words) first need to download it.

3.1

Actions to be taken Cancel Download And Print In order to address the actions to be taken to implement the change proposed and realise the intended business benefits, financial considerations and the impact, I am going to adapt the 7S framework. Fig 3.1

(McKinsey 7S framework, Tom Peters & Robert Waterman, 1980‟s, Relationship marketing elective path way, pg 22)

3.1.1

Strategy: - The first point of departure would be to share the contents of this research document and its analysis/rationale and the resultant strategy change required with the JV partner and management team to create buy in and belief that the change will create the desired outcome. This presentation will need to be supported by comparisons with the successes of the centralised model vs. the outsourced model with respect to market share, customer service and relationships. I have empirical data that can support this. Once this is achieved I will need to present the proposed changes to the dealer council and achieve the same objective and give the distribution channel comfort that we are making changes to address all their concerns identified in the investigation. It would also be a good opportunity to get conformation from them that they support the initiative and will give candid and regular feedback on improvements and short falls, and highlight that their collaboration and support is all important to the success of this initiative.

3.1.2

Structure: - Once the correct resources are identified and put in place in the regions they will need to be supported by the central credit department to ensure 14


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alignment to the specialised logistics credit skill. These resources will be made In order to print document from Scribd, up of marketing skill and this sales management whoyou'll will report operationally to my centralised head of to commercial first need download it.trucking. Administration and processing will be managed by the outsourced region as they follow a centrally governed model and we have had no issues with service delivery in this area and it is practical for the marketing team to Cancel have directDownload access toAnd thePrint administration support team. The recent digitisation of self loading scorecard and i-contract will also reduce the marketing team‟s reliance on the admin team as the dealers will soon have the ability to self load applications and will be able to send approved contracts to customers for digital signing on-line, improving turnaround times and service delivery levels. 3.1.3

Systems: - My division already has the systems in place to provide Measurement information systems (M.I.S) around applications submitted, approval rates, take-up rates, profitability by deal, dealer, region and division. Deals loaded in to the system will have a specific prefix per region to enable the M.I.S. We have also introduced a new online pricing model empowering the marketers and sales management to review the profitability of each application and take into consideration the DIC we can pay away over and above our minimum return of 25% return on capital (ROC), enabling them to remain competitive in the market place and pay our partners the maximum amount available. This will also encourage the dealer to help us negotiate the maximum finance charge rate that is palatable to the end user customer and prevent them putting pressure on us to discount all the time in an effort to sweeten the retail deal. Essentially we make them willing partners in the profit opportunity. I am busy developing specific reporting to monitor and manage the marketing calling program and have attached in Appendix C, the prototype calling schedule will monitor frequency of visits, action items, deals currently being worked, feedback and communication to our management and the partners/dealers. These can be used in meetings and performance reviews. I have systems working on loading into our online system that can enable the resources to update, monitor and create consolidated stats on applications received, approved, taken up and turn-around times from the marketers as well as understand credit support and administration turnaround times. I will also introduce monthly dealer reviews that I currently run in my centralised division where we meet with the dealer management and sales team, give feedback on Board items, strategy and share the detail reporting already mentioned. This opportunity will also be used to positively re-enforce best practice and practices that should desist. WesBank currently run a Customer satisfaction index (CSI) and a dealer satisfaction index (DSI), to help us understand our shortcomings and help management make the required changes. Investing in people is all important as well as setting realistic targets and assessing performance to ensure the desired results. I will apply best practice from the centralised division where managers monitor monthly performance

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against targets on a score card basis, combined with a performance order to print this document from Scribd, you'll remunerationIn incentive. first need to download it.

3.1.4

Style: - The sales managers and marketers will have to behave in a manner that entrenches themselves in the partners business. This can be achieved by Cancel Download And Print attending the dealers management and sales meetings, which in turn give them early sighting to potential future deals and leads. The resources will also have to get access to the partners fleet list and propose visiting customers on a regular basis with a view to putting finance facilities in place for those fleet customers and encouraging them to use the branded Navistar finance products, which will also give us an opportunity to discuss our various sub-vented scheme deals and range of finance products that would suite their specific needs. Close collaboration would also enable the marketing team to tailor make special offers for specific customers. Proving to our partners that we bring unique skills and finance advantage to the table

3.1.5

Staff: - I am confident that we have the existing resources that are correctly trained and even specialists in logistics expertise, sitting in the outsourced regions but they are sitting in different areas or are not focussed because their responsibilities are spread across a range of product, suppliers and areas. With respect to the cost of placing these resources, my business is already charged on an allocated model at the same rate these resources cost my centralised business. Therefore from an organisational perspective these costs will simply transfer from the outsourced region to my division and in turn the regions cost would decline, having the same net cost implication. Simply put, those resources will no longer look after customers in the direct channel and various suppliers, but focus specifically on the partnership dealers. There could be an initial drop in overall productivity but the growth that will come from the specialised dedicated resources, would soon nullify this impact. Judd‟s employee influence on customer‟s matrix, (1987), specifically talks to the premise that it is people who develop and achieve competitive advantage. I believe that we have three of the four types of staff identified and covered with our current structures in place, i.e. the modifiers, influencers and the isolateds. The specific skill we need to focus on is the contractors, who need to fully understand the alliance strategy and respond to our partners and customers accordingly. (Relationship marketing elective path way, pg 17).

3.1.6

Skills: - As identified earlier, the capabilities and skills already exist in my business and whatever skills are short in the various areas, can be quickly addressed through transference of skill from management and subject matter experts. We also have access to our training department which have the ability to train and up skill very quickly. I have already collaborated with HR and identified the training program “Relationship Capital” that the new identified resources will be put through to help develop relationship skill.

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Shared values

In order to print this document from Scribd, you'll first need to download it. values have driven the growth and success of WesBank‟s organisational shared

WesBank. 

Cancel Download We believe the customer comes first And Print

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We believe in our people as individuals

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We believe in quality in all we do

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We believe in profitable growth

For my division I have added a shared value and that is:

We believe in being the partner of first choice, in profitability, value add, service delivery and relationships.

It is critical that the resources that are put in place in this recommendation live and breathe all these shared values. With WesBank‟s and my added shared value it is interesting to note that we have addressed Christopher et al (1991) recommended key factors, “service” and “Customer driven”. All that is left to do is to “walk the talk” and this must be reinforced by “doing” rather than “talking” (Larkin & Larkin, 1996). Brennan (1997) identified the following inter-organisational aspects as important for relationship marketing 

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Teamwork, feeling that we, the partners and end customers are all involved in a positive sum game and that common aims and processes will increase business success. As already identified, information sharing is critical to support joint efficiency and effectiveness. Trust will develop naturally through experience and reduce the need to monitor and control. The relationship is important and neither will take advantage of the other to obtain short-term advantage. This was discussed in the interaction analysis.

Individual success comes through shared success and my career will develop when I can show that the relationship has contributed to company success. This belief is well supported through our shared values.(Relationship marketing elective path way, pg 17) The true success of all of the 7S‟s considered will ultimately be measured by improved market share growth (Navistar Financial currently at 15% vs. the best practice, the centralised division of 38%), profitability (balance sheet and income statement analysis and Return on Capital), customer/partner satisfaction (DSI & CSI) and a long happy partnership that is interactive, mutually independent and co-operative (driven by realistic target setting and performance management

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supported by performance linked remuneration). All partners must derive value order to printinthis document from Scribd, you'll and that the In partnership, a simple mathematical term, is 1+1=3. first need to download it.

3.2

Risks to consider Download And(2000) Print that the financial efficiencies Risks are similar to those Cancel identified by Ballantyne and expected earnings between the players do not materialise. An unhealthy imbalance of power is allowed to develop. Complacency, that we do not monitor, measure and make changes where needed to the strategy with a sense of urgency. That to close a relationship could result in anti-competitive behaviour coupled with the potential loss of independent skills in each company. With the sharing of customer information between the partners and dealer network, it is important to make sure the South African consumer protection Act and the protection of information bill is not transgressed, but more importantly, we need to ensure that we retain ownership of all the information.

4. Interdependencies & reflection (716 words) 4.1

Interdependencies & implications on broader management challenges One of the key issues identified in above analysis was the strategy of forming an alliance with Navistar. During the course of my investigations I started to question if an alliance was the best strategy for marketing the opportunity in the dealer distribution network. As a result I revisited the strategy and international business core module with a view to understanding the reasons and motivations for strategic alliances. I was reminded that the main motives for the forming of an alliance were an alignment of the strategic objectives of the partners, the advantages over alternative organisational arrangements and the learning and knowledge-sharing opportunities. I was reminded that the main objective was the value creation in a way that could not be achieved by each partner alone. The alliance would look to achieve the following:

Gain economies of scale

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Reduce/risk share and promote stability

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Gain legitimacy/capitalise on partners reputation

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Gain access to knowledge and capabilities

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Enter markets faster relative to other entry modes

As the result of the revisit to this strategic objective I broke away from the assignment and worked on developing a JV/Alliance blue print where I investigated these structures and put together New/existing JV/alliance tick box template. The objective of this template was to document and formalise the considerations and process when making a decision to partner. Traditionally and based on past partnership successes and our P.O.S strategy, we have just taken this approach whenever the opportunity presents itself without proper consideration to the risks. Appendix D is the document created and I believe addresses most considerations to be taken and is now being applied by corporate division for all

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new opportunities. We are busy running all current opportunities through the document. In order to this document from apparent Scribd, you'll On applying the template to print Navistar, it became that the alliance ticked most the boxes except infirst theneed area of staff/resources, which has been clearly identified in the to download it. analysis of this assignment. Cancel Download And Print Other areas that need consideration/application in developing the relationship strategy and identified in my research, came from the managing processes, systems and projects core module in the use of the align-deploy-operate model (ADO) (adapted from Anupindi et al, 2006) Six primary components need to be applied:

Intent- aligning systems and processes strategy

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Design- designing systems and processes

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Implement- implementing systems and process change through projects

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Deliver - managing ongoing systems and processes

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Evaluate- evaluating ongoing activity

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Improve- improving systems and process performance

With respect to the resource needs identified in the investigation, it is clear that the framework for managing people and performance needs to be applied, considering and addressing external business realities, serving external and internal stakeholders, building people resources, crafting people practices, creating individual performance, integrating performance and supporting the line management to deliver. Fig 4.1 Frame for managing people and performance: the HR value proposition

(Adapted from Ulrich & Brockbank, 2005)

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Reflection


The biggest learning for me in this assignment was all the previous learning in this MBA that needed to be considered applied to And support Cancel and Download Print the marketing strategy. The strategy cannot be applied in isolation. I was also surprised at the level of detail that the core module and elective pathway had to specific theory relating to WesBank‟s market orientation and P.O.S strategy. I understood the principles in the past but having access to the theory to substantiate my thinking, helped me put our strategy into perspective and give me the tools to take a structured and methodical approach. The international Business core material was also very instrumental in enabling me to formalise a JV/Alliance blue print and “tick box template”, which is now being used across the whole of WesBank. This assignment has really added value to my business and is instrumental in a total restructure in the corporate division supplier channel. If I have any criticism, it is that the assignment brief with respect to word count guidelines, appeared a little restrictive in option A, specifically in the area of analysis. It was almost impossible to cover my full analysis in 20% of the word count and forced me to continue using analysis in part 3 to make sure I could support the proposed course of action.

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Anupindi, R, Chopra, S, Deshmukh, S D, Van Mieghem, J A & Zemel, E (2006) Managing first ed. needUpper to download it. River, NJ: Pearson Prentice Hall Business Process Flows, 2nd Saddle Ballantyne, D (2000) Interaction, dialogue and knowledge generation: three key concepts in Cancel Download And Print relationship marketing. In: Proceedings of the 2nd WWW Conference on Relationship Marketing , 15 Nov 1999 –15 Feb 2000 Boyd-Sutherland, I, 2013, JV/Alliance Blue Print, Pg 11-14 Brennan, R (1997) Buyer/supplier partnering in British industry: the automotive and telecommunications sectors. Journal of Marketing Management , 13 (8), 758 –76 Canhoto, A, Clark,M, James,D, Palmer,R, Rose,S, Yenicioglu,B. STMK core module, Henley Business School, May (2012), Table 7.2 primary research methods, Pg 69, Clark, M, 2012, Pg 9 Henley South Africa workshop presentation, strategic Marketing, 23rd-24th October. Doyle, P (2002) Marketing Management and Strategy , Pg 39, 3rd ed. FT Prentice Hall Donaldson, B & O‟Toole, T (2000) Classifying relationship structures: relationship strength in industrial markets. Journal of Business & Industrial Marketing , 15 (7), 491 –506 Donaldson, B & O‟Toole, T (2007) Strategic Market Relationships: From Strategy to Implementation . Chichester: John Wiley & Sons, pg 13 Donaldson, B & O‟Toole, T (2007) Strategic Market Relationships: From Strategy to Implementation . Chichester: John Wiley & Sons, pg 15.16 Egan, J (2008) Relationship Marketing: Exploring Relational Strategies in Marketing . Harlow: Pearson Education Eisenhardt, K M (1989) Agency theory: an assessment and review. Academy of Management Review , 14 (1), 57 –74 Gordon, I H (1998) Relationship Marketing: New Strategies, Techniques and Technologies to Win the Customers You Want and Keep Them Forever . Etobicoke, Ontario: John Wiley & Sons Hakansson, H (ed) (1982) International Marketing and Purchasing of Industrial Goods: an Interaction Approach. New York: John Wiley & Sons Homans, G C (1958) Social behavior as exchange. American Journal of Sociology , 63 (6), 597 – 606 Judd, V C (1987) Differentiate with the 5th P: people. Industrial Marketing Management , 16 (4), 241 –7 McKinsey 7S framework, Tom Peters & Robert Waterman, 1980‟s, Relationship marketing elective path way , pg 22

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Möller, K & Halinen, A (2000) Relationship marketing theory: its roots and direction. Journal of order to Marketing Management , 16In(1/3), 29print –54this document from Scribd, you'll first need to download it.

Research methodology, STMK core module, 2012, Pg 69 table 7.2 Cancel Download Print Sargeant, A (1999) Marketing Management for NonprofitAnd Organizations . Pg 31,OUP

Sheth, J N (2000) Relationship marketing: paradigm shift or shaft? In: J N Sheth & A Parvatiyar Ulrich, D & Brockbank, W (2005) The HR Value Proposition. Harvard Business School Press

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Sent: Thursday, December 27, 2012 2:11 PM first need to download it. To: Subject: Navistar Financial Good morning,

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We are very happy and excited about Navistar Financial, but nothing is in place. The applications follow the same route as any normal application and take forever. Navistar Financials will never become a player in the market if there are no changes in the thinking and the understanding of the risk sharing in WesBank. We got quicker answers from ABSA Bank with no alliance. We recommend the following;  WesBank have to clarify the position of Navistar Financial.  WesBank credit departments must understand the Navistar Financial products and the risk sharing to made quicker and proper decisions.  Navistar Financials must have specific credit managers at WesBank.  We have to finalize the Dealer Incentive commission. We feel that nobody of WesBank front staff and credit department know enough of the Navistar Financial products to help our customers. We need to get clarification on the above. Kindest regards. Managing Director GRW Commercials (Pty) Ltd t/a GRW Services

Appendix B From: Dippenaar, Tertius To: Boyd-Sutherland, Ian Subject: RE: Navistar Financial Ian , I met with Jan just before I went on leave , he has unrealistic expectations . Really really old school thinking , thinks the risk share should make just about every deal approved. Questions the Credit Managers decisions , why no dedicated Credit person (which must know all about the risk share and approve everything) , wants DIC on all deals , doesn‟t buy into risk categories – („if deal is approved , how can I tell him its high risk and he doesn‟t get DIC! What is the risk , you have R30 000 deposit!) etc etc etc ! He did get an approved answer from ABSA on a deal where the customer has insolvent Balance Sheet - THAT DIDNT HELP. The challenge will be a big one – it‟s astonishing how little understanding of banking the gentleman has. It‟s like dealing with McCarthy‟s. Back tomorrow, will phone you. Cheers.

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Appendix D New/existing JV/Alliance template/Tick box The main strategic objective of an alliance/JV is value creation in a way that each partner could not achieve alone. Each partner must gain some benefit that is otherwise unattainable without the alliance/JV membership. Value creation refers to the process of combining the resources and capabilities of the alliance/JV members to generate financial or other benefits for the partners. The alliance/JV members may have different strategic objectives, i.e. the perceived value may not be the same, and Alliance/JV partners should pursue one or several strategic objectives listed below:When reviewing current JV‟s/Alliance or contemplating a new opportunity, you need to be able to tick off the following considerations. Does the proposed JV/Alliance review have the ability to achieve the following:-

X

Strategy Considerations 

gain economies of scale ------------------------------------------------------------------------------


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In order to print this document from Scribd, you'll New/existing JV/Alliance template/Tick box first need to download it.

The main strategic objective of an alliance/JV is value creation in a way that each partner could Cancelgain some Download not achieve alone. Each partner must benefitAnd thatPrint is otherwise unattainable without the alliance/JV membership. Value creation refers to the process of combining the resources and capabilities of the alliance/JV members to generate financial or other benefits for the partners. The alliance/JV members may have different strategic objectives, i.e. the perceived value may not be the same, and Alliance/JV partners should pursue one or several strategic objectives listed below:When reviewing current JV‟s/Alliance or contemplating a new opportunity, you need to be able to tick off the following considerations. Does the proposed JV/Alliance review have the ability to achieve the following:-

X

Strategy Considerations      



gain economies of scale -----------------------------------------------------------------------------reduce/share risk and promote stability ----------------------------------------------------------gain legitimacy/capitalise on partner‟s reputation -----------------------------------------------gain access to knowledge, assets or capabilities -------------------------------------------------Gain an competitive advantage in the market----------------------------------------------------(Who brings what to the relationship/partnership, i.e. what is the potential partner able to bring to the party, what can they influence and drive to ensure maximum support?) Grow profit opportunity -----------------------------------------------------------------------------(Can the JV make more money than direct or existing business channels?)

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Gain market share ------------------------------------------------------------------------------------Does it make sense ------------------------------------------------------------------------------------

(i.e. does the potential JV have the ability to make money and achieve minimum expected investor R.O.E.C after profit share and cost of capital. Does the partnering enable sufficient finance opportunity to sustain profit share long term? Is the JV a win win for all partners, i.e. if there is R2 on the table, we each take R1?) Is the JV being considered, consistent with our overall strategy --------------------------Does the JV enhance/restrict future options -----------------------------------------------------Does the JV cut any revenue streams -------------------------------------------------------------  

Brand considerations 

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Loyalty test, do we understand our partner‟s history and do they have the potential to stand the test of time -------------------------------------------------------------------------------------- Are we able to have an exit strategy as a backup plan -----------------------------------------Does the JV create a barrier of entry for the opposition-----------------------------------------Have we taken the impact on the greater organization (FRB) into consideration ---------Have we conducted a potential partner reputation audit ---------------------------------------Does the partnership enhance our Brand ---------------------------------------------------------25


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Does potential partners brand add value, and have compatible ethics, do we understand order essence to print thisindocument from-----------------------------------------------Scribd, you'll their reputation andInbrand the market first stability need to download it. run ----------------------------------------------------Does their brand have in the long Can we leverage off both brands, i.e. benefit for us to be associated or is the potential partner just leveraging off our strong Brand in the And market -------------------------------------Cancel Download Print Do we fully understand synergies between the brands ------------------------------------------

Marketing opportunity considerations 

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Does the partner have the ability to influence supply chain support. This is critical! If not then an alliance/JV is not necessarily the proffered option -------------------------------Is the supply chain independent or owned by the partner -------------------------------------Can we retain customer access ---------------------------------------------------------------------Do we understand service ethic of the partner --------------------------------------------------Have we given consideration to conflicting product offerings ---------------------------------Has the courtship been conducted properly -----------------------------------------------------Are you able to manage partner expectations from the beginning --------------------------Does the partner think the JV will enable more sales through the partnership because of aggressive credit appetite or do they see the opportunity of putting all the existing finance opportunity into one basket -----------------------------------------------------------------Does the partner have appetite to share in credit risk and/or throw money at subvention support -------------------------------------------------------------------------------------------------Can we have affairs legitimately---------------------------------------------------------------------

Management Who is the alliance/JV Champion of each side and are they compatible, do they have the ability to put egos and personal agenda‟s aside for the good of the partnership -----------Can we retain management control, not necessarily shareholder control -----------------Do you have the total buy in from all the management in the partner‟s portfolio --------Does the management have control/influence over distribution channel -------------------Is the management remuneration impacted by the success/support for the JV ---------- Does our management team have specific skill in the area of JV management/relationship building ------------------------------------------------------------------If you are using an outsourced model, does that management structure understand the strategy and intention of the JV and once again do they have the necessary expertise and skill -----------------------------------------------------------------------------------------------------

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Financials Make sure no income streams or costs, both direct or allocated, are hidden and that you are able to fully explain in terms of the agreement, always take a view of transparency--------------------------------------------------------------------------------------------------------------Profit share must be based on increased business opportunity, i.e. you are funding partners profit share through growth and not from existing or current opportunity (legacy) ------------------------------------------------------------------------------------------------------------Profit share must always be pre-tax ---------------------------------------------------------------

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Don‟t forget the cost of capital ---------------------------------------------------------------------In order to print this document from Scribd, you'll Look to include all VAP/NIR opportunity ----------------------------------------------------------first need to download it.

Staff  

 

They must live and breathe the JV, branding, business cards and partner language---Cancel Download And Print Full integration into JV, except when using outsourced model, however the responsible outsourced staff must appear integrated and totally focused, they must have the ability to wear many hats ---------------------------------------------------------------------------------------Staff must “belong” to you --------------------------------------------------------------------------Chinese walls are critical and we must ensure adherence at all times ----------------------

Exit Strategy Make it an easy process ------------------------------------------------------------------------------Make it difficult for the partner to start again -----------------------------------------------------6 months should be the longest exit strategy ------------------------------------------------------  

Financial Arrangements with non-WesBank entities WesBank Corporate Policy Document Financial Arrangement Procedure This policy applies to any type of agreement that is concluded with any outside party (meaning a non-WesBank entity) that has any financial impact, being negative or positive, for WesBank Corporate, irrespective of the format of the arrangement, be it commission payment or receipt, profit share or receipt, referral fees paid or received, discounting of an agreement or a selection of agreements, purchase of any type of asset book, joint venture, joint marketing or any other joint activity, or any other type of financial arrangement involving WesBank Corporate and a non WesBank entity. The process as outlined below should be followed prior to concluding any agreement/arrangement, and no verbal or written agreement/arrangement may be entered into unless the entire process has been signed off as indicated below. No proposal will be considered without the support of the regional business head. Process to be followed: 1. A comprehensive analysis needs to be done on the proposed transaction/arrangement, that includes the following: a. Executive summary------------------------------------------------------------------------------b. Description of the nature of the arrangement ---------------------------------------------c. Background information on the prospective partner --------------------------------------d. Commercial rationale for WesBank to enter into the arrangement, including financial forecasts/analysis ----------------------------------------------------------------------i. Include initial estimates of investment in people, process, technology ----e. Rationale for the prospective partner to enter into the arrangement ------------------f. Strategic & cultural fit for WesBank ----------------------------------------------------------g. Competitive advantage that this arrangement will provide WesBank to offer to its clients --------------------------------------------------------------------------------------------h. Possible risk factors in the arrangement to WesBank and to the prospective partner and how these will be mitigated ------------------------------------------------------------27


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2.

3.

4.

5. 6.

7.

i. Proposed timelines -------------------------------------------------------------------------------In order to print this document from Scribd, you'll j. Critical success factors/dependencies -------------------------------------------------------need---------------------------------------------------------------------------------to download it. k. Compliancefirst issues l. Description of the obligations envisaged in the arrangement on each party --------This proposal needs to beCancel presentedDownload to Corporate MANCO for initial approval. Once And Print approved, present to Sales and Marketing EXCO for approval of the proposed arrangement, prior to any further discussions with the prospective partner. -----------------Once approval has been received from Sales and Marketing EXCO, the following needs to be done: a. The process flow of the transactions envisaged under the arrangement needs to be mapped in detail (and stored on WesMap), indicating the involvement of all parties required within WesBank as well as the prospective partner.-----------------b. From this process mapping, a list of approvers will be drawn up. Approval will need to be obtained from each area indicated as being involved in the envisaged transactions, prior to the signing of any agreements.--------------------------------------c. Legal division needs to be provided with the process map, in order to draft the legal agreements. ----------------------------------------------------------------------------------d. Irrespective of whether indicated in the process map or not, the following divisions will have to provide sign-off prior to the signature of any agreement with the outside party: i. Corporate Finance -----------------------------------------------------------------------ii. Commercial Credit --------------------------------------------------------------------iii. Portfolio Reporting and Management ---------------------------------------------iv. Corporate Operations -----------------------------------------------------------------v. Risk & Compliance ---------------------------------------------------------------------vi. If the arrangement involves a foreign entity, the necessary SARB and EXCO approvals need to be obtained prior to any conclusion of the arrangement. RMB EXCO needs to be involved in this process. -----------Based on the sign-off of each division, a time-frame for implementation needs to be drawn up, which will dictate when the first transactions will be able to be commenced under the new arrangement. ------------------------------------------------------------------------------Once the timetable has been compiled, and all divisions have provided sign-off, the prospective arrangement needs to be presented to Corporate MANCO, for final sign-off.Final conclusion of the agreements/arrangements will then happen, and based on the achievement of the set timetable, the first transacting may commence in terms of the arrangement. ---------------------------------------------------------------------------------------------Please note that the amount of detail required in each step will depend on the nature of the arrangement.

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STMK final 06-05-2013

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