MAKALAH STRATEGIC MARKETING

“STRATEGIC RELATIONSHIP”

BY :

ALLINI ROSSA AISHA 175030207141015

FAKULTAS ILMU ADMINISTRASI

UNIVERSITAS BRAWIJAYA

1
 PREFACE

Praise the presence of God Almighty for all Grace, so that the author can complete the
preparation of this paper in its form and content which may be very simple.

This paper contains about "Strategic Relationship". Hopefully this paper can be used as
one of the references, instructions and guidelines and is also useful for increasing
knowledge for readers.

This paper the author admits there are still many shortcomings because the experience
of the author has very little. Therefore, the authors expect the readers to provide
constructive inputs to the perfection of this paper.

2
 TABLE OF CONTENTS

Contents
PREFACE ................................................................................................................................. 2
TABLE OF CONTENTS .......................................................................................................... 3
CHAPTER I ............................................................................................................................. 4
INTRODUCTION..................................................................................................................... 4
A. BACKGROUND.......................................................................................................... 4
B. PROBLEM STATEMENT......................................................................................... 4
CHAPTER II ............................................................................................................................. 5
DISCUSSION ........................................................................................................................... 5
A. RATIONALE FOR INTER-ORGANIZATIONAL................................................. 5
B. FORMS OF ORGANIZATIONAL RELATIONS ................................................... 8
C. EFFORTS TO MANAGE RELATIONSHIP BETWEEN ORGANIZATIONSError!
Bookmark not defined.
D. GLOBAL RELATIONS BETWEEN ......................... Error! Bookmark not defined.
CHAPTER III............................................................................. Error! Bookmark not defined.
CONCLUSION .......................................................................... Error! Bookmark not defined.
BIBLIOGRAPHY ...................................................................... Error! Bookmark not defined.

3
 CHAPTER I

INTRODUCTION

A. BACKGROUND

The concept of competitive advantage is very important for companies in facing

uncertain environments and increasingly fierce competition. After the company can
create competitive advantage, companies must be able to maintain the competitive
advantage that they have now, because the environment and dynamic competitors will
respond to the competitive advantages possessed by making competitive advantages
that exceed what the company has.

One way to maintain a sustainable competitive advantage is through a strategic

relationship. Strategic Relationship is building relationships with business partners to
achieve a goal (goals). This strategy is not a new innovation in the business world but
the importance of this strategy is increasing in order to face complex environments and
global economic risks, as well as the limited resources and expertise of a single
organization.

Obtaining ever-increasing business benefits requires cooperative relations to access

technology; expand resources, increase productivity and quality and penetrate new
markets. A clear and effective relationship strategy is a characteristic of a market
company, and the relationship between traditional sellers and competitors can continue
to be replaced by cooperation to provide superior value.

B. PROBLEM STATEMENT

Based on the description above, the following is explained in detail some of the matters
that formulated the problem as follows:

1. What is the rationale for inter-organizational relations?

2. What are the types of organizational relationships?

3. How to develop effective relationships between organizations?

4. What is the global relationship between organizations?

4
 CHAPTER II

DISCUSSION

A. BASICS OF INTER-ORGANIZATIONAL RELATIONSHIP

In the past companies often established a relationship to achieve goals, such as sales in
small foreign markets. Today strategic relationships between organizations consider the
strength of the overall competitive elements: technology, costs, and marketing. Unlike
the tactical relationship, the effectiveness of strategic agreements between companies
can affect their long-term performance and persist.

Several factors create a desire to establish strategic cooperative relationships with other
organizations. These influences include opportunities to increase value to customers;
global business environment diversity, chaos and risk; expand the complexity of
technology; the existence of large resource requirements, the need to gain access to
global markets; and the availability of a good information technology readiness to
coordinate operations between companies.

According to Craven (2006) there are three main driving factors that lead to the
emergence of relations between organizations (stated in Figure) as follows.

Figure 1 Drivers of the Interorganizational Relationship

5
1. Value - Increase Opportunity

Today's opportunity in the market is that organizations can combine their ability to offer
superior customer value. Even when partners are not needed, a strategic relationship can
result in a value that is far more attractive.

Arrangement in the product and bidding design process is a basic agreement to explore
interorgational capabilities in creating superior customer value. It consists of "building a
complex product or process from smaller subsystems that can be freely designed, but
functioning together as a whole. A key feature of modularity is the flexibility obtained
by designers, producers and product users. Companies can cooperate with other people
in the design and production of modules or subsystems.

Companies that are not partnering (single organization) may be able to provide superior
value for customers (superior customer value), but when a company partners with other
companies, of course, will have more powerful resources (skills) and expertise. So with
the provision of more powerful resources and skills, these partner companies can create
more superior and attractive values for customers (value - enhancing opportunities).

2. Environmental Circles and Diversity

Diversity refers to differences between elements in an environment that include people,

organizations, and social forces that influence resources. Coupled with the existence of
linkages with the global market resulted in significant challenges for the company.

The diversity mentioned above reduces the company's ability to react quickly to the
needs (needs) and wants (wants) of customers as well as making new products (new
product development). So that it makes it difficult for companies to bring together
buyers with goods and services that meet their needs and desires in the market
(marketplace).

In order to overcome environmental diversity, it can involve internal organizations and

build partnerships with other organizations (strategic relationships). Strategies for
building relationships with other organizations include collaboration with suppliers
(suppliers) and producers (producers), strategic alliances (competitors) with competitors

6
(competitors), joint ventures with industry members (industry members) and
networking with other organizations.

The business environment creates risks for organizations that are unable to make
changes quickly. A turnaround and risk response is to establish relationships with other
organizations, thereby avoiding ownership investments in sources of supply, production
and distribution. The overall ownership of a value added system might reduce
effectiveness and be more risky in an environmental cycle.

3. Skills and level of resources

Over the past two decades, research and development spending has grown three times
faster than expenditure on capital assets. Skills and power resources in terms of
technology have exceeded the capabilities of individual organizations. So that
individual companies can build these capabilities even faster through partnerships.
However, sharing technology in partnerships has a high risk. Therefore the complexity
of technology is the driver of the emergence of partnership strategies. Besides financial
constraints, market entry (access to market), the availability of information systems
(information system availability) encourages the emergence of relations between
independent organizations, briefly explained as follows.

a. Increased complexity of technology

Technology limits affect the giant industry as well as small companies. Small
companies with special competitive forces can achieve impressive bidding positions
with larger companies because of their high level in specialized technology areas and
their ability to substantially compress development time

b. Financial limitations

Financial needs to compete in global markets are more often outside the capacity of a
single organization. As a result, many companies must find partners in order to obtain
resources to compete in many industries or to spread the risk of financial loss with other
companies.

7
c. Access to markets

Organizational relations are important for gaining access to the market. Products are
usually distributed through brokers such as large trade retailers in order to access end-
user selling. This vertical distribution channel is important in connecting demand and
supply.

d. Information Technology

Information technology establishes organizational relationships can be done easily, in

terms of time, cost, and effectiveness. Progress in information technology provides an
important resource for increasing the effectiveness of both internal and
interorganizational alliances.

B. FORM OF ORGANIZATIONAL RELATIONS

The types of relationships that might be formed by a company are suppliers and buyers
(vertical), horizontal (lateral), and internal relations. A useful way to test organizational
relations is to consider whether the bond between companies is horizontal or vertical

Gambar 1 Jenis Hubungan Organisasi

8
The development of global relations between organizations is tested in a section as
follows.

1. Vertical Relationship

The production process through several stages in the value-added process often involves
the relationship of suppliers, factories, distributors, and end-consumers of goods and
services in a vertical channel.

a. Customer-Supplier Relationship

The more complex process of value creation, requires specialization and efficiency in
the value-added process. So that the emergence of collaboration between suppliers and
manufacturers is increasingly widespread in various industries. This type of relationship
is found in the automotive and computer industries.

One characteristic of this relationship is the existence of outsourcing from value-chain

process activities, such as: transportation, repair and maintenance services, information
systems, human resources. The above allows companies to expand sales without capital
investment in all stages of the value chain. However, this relationship also has risks,
namely the fear of leakage of company secrets, labor goals and loss of control.

NIKE shoe company does not have a factory, NIKE outsourced the process of making
shoes, where NIKE does not have a special factory but builds factories in potential
countries, one of which is Indonesia. NIKE focuses on marketing activities and building
a Brand.

b. Distribution Channel Relations

Vertical relations also occur between producers and intermediaries (middlemen and
retailers). This relationship provides access that connects producers to end users (end
users). Strong collaboration occurs in the Vertical Marketing System (VMS). A famous
example is the franchise system. This system is managed by one of the channel
members, such as a retailer, distributor, or manufacturer. VMS may be owned by a
company channel, linked together by means of an agreement contract (a monopoly

9
system), or shared by a strong and influential company that regulates the relationship of
the channel.

c. End-User Customer Relationship

This strategy is related to how to build long-term relationships with customers.

Reicheld and Sasser (in Craven, 2000) say that profits increase sharply when companies
successfully reduce the level of customers who are traitors, because the cost of
maintaining existing customers on a regular basis is cheaper than the cost of getting new
customers. Therefore the company must focus on the customer.

The most important thing is that the company must assess customer value, which is to
assess customers who will provide benefits to the company, in other words the company
must foster long-term relationships to profitable customers (relational marketing). So
that comes the concept of CRM (Customer Relationship Management).

2. Horizontal Relationship (Lateral)

The form of horizontal relations is the relationship between two companies that have the
same level in the process of making a value chain. This form of relationship is divided
into two, namely:

A. Strategy of the Alliance

An alliance strategy between two organizations is an agreement to work together to

achieve one or more general strategic outcome targets. The alliance intended here is an
alliance between companies that compete in certain industrial domains.

According to Morgan & Hunt (in Craven, 2000), this relationship is paradoxical, in
order to be an effective competitor, the company must learn and implement cooperative
strategies. The alliance is not a merger between two free companies. Although alliance
words are often interpreted as a one-party acquisition of the other party. However, the
alliance places more emphasis on commitment to actively participate in joint projects or
programs that have a strategic scope.

10
Each organization contributes to the alliance intended to complement the partner's
contribution. The Alliance requires each participant to produce a portion of his freedom:
"Alliances mean sharing control." An alliance is not a merger between two independent
organizations, although the terms of an alliance can promptly lead to a single partner
procurement by another partner. launched by two companies or a relationship that is in
accordance with a formal contract between organizations.

The success of an alliance can be felt in the real competition in survival and success in
the complexity and rapid changes in the business environment encouraging companies
to form strategic alliances in the many industry differences.

Various types of alliances involve marketing, research and development, operations and
/ or financial relationships between these partners. Capabilities may be exchanged or
shared. In addition to the functions performed by aspects of alainsi cover market
fulfillment and effectively find the characteristics of partners. The Alliance helps each
partner obtain business and technical skills and those rights are not found in the internal
company.

The success of an alliance can be very dependent on the effectiveness of bringing

together the ability to take part in the organization and towards the success of the full
commitment of each partner in the alliance. One important thing in alliance relations is
that partners can gain access to confidential technology and other information on
ownership.

Vulnerability of the alliance is important to recognize that the alliance may be fragile
and difficult to support effectively, especially if there is a distrust between partners.
Moreover, careful analysts are needed regarding the impact of a failed alliance on a
company's ability to compete and survive after that.

B. Joint Ventures

Join Venture is an agreement between two or more companies to establish a separate

entity. This relationship is often used to develop a new market opportunity; accessing
international market costs and financial risks, obtaining profits from a local factory
profit, or acquiring core business knowledge or technology.

11
A study of joint venture competition in Japan produced several interesting findings
regarding the strength and dependence of organizational relationships:

• Collaborative research is likely to be successful for projects that include its application
compared to basic research.

• Research and development costs are reduced and opportunities for successful projects
are enhanced when partners provide complementary resources and skills.

• Large companies have a greater incentive to work together, even though they like
small partners.

• Small companies if they master the necessary resources and skills, like to conduct
Research & Development themselves.

C. Internal partnership

Internal partnerships occur between business units, functional departments and

individual employees. The goal is to encourage and facilitate cross-functional, which is
to eliminate the arrogance of each department - each due to specialization. Some
guidelines for developing effective internal relations include:

a. Appointment of supporting management.

b. Starting with the pilot team

c. Make small squads and always be together

d. Connect the team to the strategy

e. Look for complementary skills for the team, and look for potential ones.

f. Education and training

g. Designate an issue from team leadership.

h. Motivate and reward team achievements, not just individual performance.

This form of relationship is ultimately expected to create a strong internal structure so

as to realize a culture of employees who focus on customers.

12
C. EFFORTS TO MANAGE RELATIONSHIPS BETWEEN ORGANIZATIONS

It has been explained previously that in forming and regulating partnership relations
between independent organizations is a complex matter. Therefore, in this section we
will discuss how the process of establishing an effective partnership. The first is to look
at the objectives to be achieved by the partnership that will be formed and then discuss
some management guidelines in forming the partnership.

There are several objectives that can be achieved through partnerships, including:

1. Identification and achievement of new competencies and technologies

This goal is sustainable for many companies because it increases technological

complexity and short turnaround times between identifying and trading new
technologies.

There are several ways to place and utilize external research and development
resources:

a. Collaboration / collaboration with university departments and other research

institutions.

b. Precompetitive R & D collaboration to spread research resources more broadly.

c. The company makes systematic investments within the company to get a clue to
future market technologies and applications.

d. Joint ventures and other forms of strategic alliances that enable companies to gain
new competitiveness by "borrowing" from companies that are in the position of leaders.

2. Building a New Market and market position

This strategy requires potential partners who have marketing capabilities, and / or a
strong market position. This collaboration is done to enter the market - new products or
to expand market positions that are already available.

13
3. Market selection strategy

Competing in the market often involves both market dominance and market
intelligence. Characteristics of competition in this market are small core companies and
several smaller competitors concentrating all businesses into market segments.
Companies with small market positions need to adopt strategies that allow them to
compete in market segments, where they are unique and / or enter segments that do not
attract large competitors.

4. Restructuring and cost savings (cost-reduction)

Competing in international markets often requires companies to reorganize and / or

reduce product costs. Restructuring will form cooperative relationships between parts of
the organization and cost savings to encourage companies to find cheap resources.

Along with the increasing need for partnerships between organizations, the availability
of concepts and methods for managing partnerships is still limited. So to fill the gap,
Collins and Doorley (in Setiawan, 2012), conducted research on strategic relationships.
The study identified 8 key instructions for strategic relationships management as
follows.

1. Planning (Planning)

Comprehensive planning is very important when combining skills and resources from
two independent organizations to achieve one or more strategic goals. Target results
must be established, evaluating alternative strategies to achieve success goals, and
decisions about how relationships are organized and arranged.

2. Trust

Successful collaboration involves trust and mutual respect among the participants and a
willingness to share personal interests with others. Relationship Confrontation will not
be successful. Informal experiences may be useful in showing whether participants can
work together better on strategically structured projects.

3. Conflicts

14
Companies that have succeeded in their cooperative relationships cannot avoid disputes,
the company must develop an intermediary mechanism to be able to quickly respond to
and overcome these differences by training employees involved in cooperative relations,
forming an inter-organizational council or committee, and appointing representatives
that can be accepted by all parties to resolve the problem

4. Leadership Structure

A leadership strategy can be achieved by developing an independent leadership

structure and giving responsibility to one of the participants. Failure to create an
effective leadership structure can be fatal; making coordination difficult and expensive,
slowing development, and can seriously erode the decision-making process.

5. Flexibility

Understanding the interdependence between partners is important for building the

success of the relationship. Each organization has different results and objectives.

6. Culture Differences

Strategic relationships between companies from different countries are influenced by

cultural differences. Both partners must accept this fact. If partners fail to react to
cultural variations, relationships may work poorly. This difference relates to the stages
of industrial development, political systems, religion, economic issues, and corporate
culture.

7. Technology Transfer

When partnerships involve both in developing technology and transferring technology

to commercial applications, special attention must be paid to implementation. Important
issues that must be considered include organizational problems, identification of
commercial sponsors, designating a team to make transfers, and forming a transfer
mechanism towards planning.

8. Learning from partner's strength (learning process from partner strength)

15
In accordance with the objectives of the organization that companies must learn the
skills of companies that work together, also complete special projects or programs by
maximizing the skills and experience of participants.

-How Strategic Relationships Increase Value

 Improve market vision and learning by combining partners' knowledge and

experience
 Increase customer value by integrating unique partner competencies
 Bersama Joint analysis of what is needed to create superior customer value for a
particular market segment
 Take advantage of opportunities for migration of inappropriate values for one
organization
 Reforming the organizational structure to gain greater efficiency and
adaptability to change

D. GLOBAL RELATIONSHIP BETWEEN ORGANIZATIONS

Companies that compete in the global market will certainly have relationships with
other organizations. One example is the Multi National Company (MNC). This
relationship is carried out in order to gain access to enter the global market and improve
the ability of the company.

The need to build a flexible organizational form to compete in a rapidly changing global
market is reflected in two types of organizations, as follows.

1. The Network Corporation

This type of organization consists of core companies that coordinate activities and
functions between supplier sources and end-user products. The network has a relatively
small workforce.

2. Trading Companies

Since trading companies are divided into several characteristics of organizational

networks, existing forms of organization have increased alongside interorganizational
relationships.

16
Role of the Government

The government plays an important role in regulating and facilitating a free business
climate and playing an active role in business organizations. For example: The Japanese
government encouraged the development of sogo shosha. There are 3 types of relations
between government and private industry as follows.

1. Single-country cooperation

The government of a country can form cooperation with one or a group of companies to
develop industry or achieve other national goals.

2. Inter-state cooperation

Regional cooperation between countries can encourage companies to form consortium

relationships (financing is borne jointly on a project) in the selected industry.

3. Government corporations.

Countries operate companies owned by the government themselves.

17
 CHAPTER III

CONCLUSION

1. Strategic Relationship is building relationships with business partners to achieve a

goal (goals). According to Craven (2006) there are three main driving factors that lead
to the emergence of relationships between organizations, namely: (1) Value-increasing
opportunities, (2) environmental turnover and diversity, and (3) Skills and level of
resources.

2. The type of relationship formed by a company is the distributor and buyer (vertical),
horizontal (lateral), and internal relations. The form of vertical relations is in the
production process which goes through several stages in the value-added process, which
often involves customer-supplier relations, distribution channels, and end-consumers of
goods and services. The form of horizontal relations is the relationship between two
companies that have the same level in the process of making a value chain. This form of
relationship is divided into two, namely alliance strategies and joint ventures. Internal
relations occur between business units, functional departments and employees
individually with the aim to encourage and facilitate cross-functional, which is to
eliminate arrogance towards each department due to specialization.

3. In developing effective relationships between organizations there are 8 key strategic

relationship management guidelines, namely: (1) Comprehensive planning, (2) Trust
and mutual respect, (3) can overcome conflicts that occur, (4) appropriate leadership
structure, (5) Flexible relationships, (6) accepting cultural differences, (7)
implementation of technology transfer, and (8) learning processes from partner
strengths.

4. Global relations between organizations are carried out in order to gain access to
global markets and enhance company capabilities. The government plays an important
role in regulating and facilitating a free business climate and playing an active role in
business organizations. There are 3 types of relations between the government and
private industries, namely: (1) Single-country cooperation, (2) Inter-state cooperation,
and (3) Government corporations.

18
 BIBLIOGRAPHY

Craven, David W & Nigel F Piercy. 2006. Strategic Marketing, International Edition.
McGraw – Hill.

Craven, David W. 2000. Pemasaran Strategis. Edisi ke – 5. Jakarta: Erlangga.

Setiawan, Raymon B. 2012. Kemitraan Strategis (Strategic Relationship). Jakarta: Pusat

Pengembangan Bahan Ajar – UMB. (Online), (https://www.scribd. com), diakses
01 November 2017.

19