GROUP 6C’S REPORT ON TUTORIAL SESSION HELD ON

17TH OF MARCH, 2009

TUTORIAL TOPIC

Using a context/contexts of your choice, take stance in favour or against a standardized

approach to relationship management between an exporter and an overseas channel

intermediary

MODULE TITLE: INTERNATIONAL MARKETING

MODULE CODE: 56337

WORD COUNT: 11001

MODULE LEADER: JOHN NICHOLSON

GROUP: 6C

STUDENT ID: 200887310

200617055

200884888

200884876

200885167

1 – Excluding Front page, Contents, References and Appendix

 CONTENT

1.0 Introduction

2.0 Main tasks

3.0 Standardization and Adaptation

4.0 Trust, benefit and psychic distance

5.0 Summary

6.0 Questions

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1.0 INTRODUCTION

The aim of this report is to give a critical evaluation of the class tutorial session of 17th of

March, 2009. The aspects of the tutorial analysed include the presentation (group A), the

questions (group B) and the nature of the responses of group A to the questions presented to

them. An effort would be made to try and incorporate part of the presentation into this report,

however, additional new material and discussion would be brought in where necessary.

2.0 MAIN TASKS

The tasks that need to be answered from the tutorial topic can be broken down into 2 main

parts;

i. Choose a context(s)

ii. Take a stance for or against standardizing relationship management (RM) between an

exporter and an overseas channel intermediary (OCI)

In answering these two parts, the group presented five main constructs which they felt were

essential to answer the key questions which include standardization, adaptation, relationship

management (RM), exporter and overseas channel intermediary (OCI).

3.0 STANDARDIZATION AND ADAPTATION

“Standardization refers to a common approach to business throughout the world, while

adaptation requires a different approach in each market” (Ang and Massingham, 2007). In

terms of RM, standardization means that an exporter relates with its channel intermediary

(ies) in the same way in all markets (international or domestic) while adaptation on the other

hand means that its relationship approach differs across markets.

The group failed to clearly state the linkage between standardization and relationship

management. They focused more on standardization in terms of marketing strategy, the

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customer and the product. Their example using McDonalds was irrelevant to the topic in

question.

The group cited two main problems that could be faced if a standardized approach to RM was

adopted – friction and hindrance to international performance. Another point they cited

which is controversial is positioning.

The controversy with positioning is that for a firm to take advantage of an adapted RM

approach, it must possess the ability to leverage capability (Fung et al., 2007), transform or

combine the knowledge derived from the OCI to create competencies, capabilities (Ang and

Massingham, 2007) and into competitive advantage (Srivastava et al. 2001). If a firm that

adapts its relationship practices with its OCIs doesn’t possess such ability, then it may not

have a positive effect on its positioning.

It should also be bore in mind that adapting the relationship doesn’t guarantee that the OCI

will be willing to release any necessary information that could be of help to the firm. This

may result from the fact that it may not perceive a greater benefit from the relationship (Fung

et al., 2007). Therefore, an exporter must be able to identify a willing partner or a capable

partner (Walters and Rainbird, 2007) before taking further steps as regards its RM approach.

4.0 TRUST, BENEFIT AND PSYCHIC DISTANCE

Trust and benefit are two variables that are key determinants and motivation for a good

relationship. Whether to trust, who to trust (Doney, P. M., Cannon, J. P. & Mullen, M. R.

1998) or the cognitive or building process of trust are however dependent on the culture of

each party involved (Usinier, 2009). This gives rise to the construct called psychic distance

i.e. the extent to which the norms and values of two companies differ because of their

separate national identities (Conway and Swift, 2000).

The group, taking a stance that a good relationship takes time, patience and commitment to

develop, used the model developed by Conway and Swift (2000) to show how psychic

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distance changes depending on the time duration of the relationship i.e. psychic distance

decreases as the relationship develops.

The group took the side that the possibility of psychic distance makes it impractical to

standardize RM approach with OCIs. They concluded that such approach should be used

only in cases of cultural similarity between both parties involved. The group also used

Hofstede’s cultural dimensions to explain that trust also varies across cultures.

However, instead of defining relationship management, the group defined relationship

marketing.

5.0 SUMMARY

In summary, the group failed to choose a context which should have set the direction for their

discussion. This could be attributed to the group’s lack of time management and the

inclusion of certain irrelevant materials which made it impossible for the group to finish and

conclude their discussion. What could be deduced however from the presentation is that the

degree of standardization or adaptation in the exporter - OCI relationship has an overall effect

on performance.

6.0 QUESTIONS (see appendix for the four questions)

The group answered the question on commitment stating that its effect in an exporter – OCI

relationship is greater cooperation, group cohesiveness and increased efficiency (Anderson

and Weitz, 1992). Agreed that these three positive effects do occur, the facts not mentioned is

that commitment like information flow may not be a two-way dyadic interchange. This is

possible not only because the decision whether to be committed or how much to be

commitment is based on a party’s perception of the commitment of the other (Anderson and

Weitz, 1992) but because element of vulnerability exists and as a result, trustworthiness

becomes essential if the other party will willingly stay committed (Ruyter et al., 2001). This

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implies that one party may refuse to be committed because the other party is perceived not to

be trustworthy.

The group’s answer to the second question was adequate. However, as the tutor reiterated in

class, other factors may need to be taken into account aside psychic distance such as duration

of relationship, objectives in each market or region, level of market development, etc

(Howard and Squire, 2007). For example, basic communication infrastructure (landline,

mobile or internet) varies across countries (Howard and Squire, 2007) making it difficult to

standardize which form to use to share and exchange core information in a relationship with

an OCI.

The group couldn’t answer the third question on local legitimacy. Low level of trust in a

foreign company has been attributed to a lack of interpersonal sensitivity (empathy) (Chen et

al. 2002). This is said to have an effect on the perception of fairness by the locals concerning

the actions of the foreign company and as established in the previous question this could have

a negative effect on commitment. Therefore, local legitimacy may not be the most needed

factor but rather empathy on the part of the exporter that may account for a positive

relationship with an OCI.

The last question was well addressed but like said in earlier, using the case of Albaik in Saudi

and Kuwait, language similarity (high context, low psychic distance) was not sufficient to

choose a standardized approach.

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REFERENCES

1. Fung, K. O., Chen, S. N., & Yip, S. C., (2007), “Relationships and performance of

trade intermediaries: an exploratory study”, European Journal of Marketing, Vol. 41

No. 1/2: 159-180

2. Srivastava, R.K., Fahey, L. & Christensen, H.K. (2001), “The resource-based view

and marketing: the role of market-based assets in gaining competitive advantage”,

Journal of Management, Vol. 27: 777-802.

3. Walters, D. & Rainbird, M., (2007), “Cooperative innovation: a value chain

approach”, Journal of Enterprise Information Management, Vol. 20 No. 5: 595-607

4. Anderson, E., & Wietz, B., (1992), “The Use of Pledges to Build and Sustain

Commitment in Distribution Channels”, Journal of Marketing Research, Vol. 29, No.

1: 18-34

5. Ruyter, Ko de, Moorman, L., & Lemmink, J., (2001), “Antecedents of Commitment

and Trust in Customer–Supplier Relationships in High Technology Markets”,

Industrial Marketing Management 30: 271–286

6. Howard, M. & Squire, B., (2007), “Modularization and the impact on supply

relationships”, International Journal of Operations & Production Management, Vol.

27 No. 11: 1192-1212

7. Ang, Z., & Massingham, P., (2007), “National culture and the standardization versus

adaptation of knowledge management”, Journal of Knowledge Management, vol. 11,

no. 2: 5 - 21

8. Conway, T. & Swift, J. S. (2000), “International relationship marketing. the

importance of psychic distance”, European Journal of Marketing, Vol. 34, No.11/12:

pp. 1391-1413.

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APPENDIX

GROUP B’s QUESTIONS

1) Commitment to the relationship is defined as a firm’s intention to continue its

relationship with another (Geyskens et al., 1996; Morgan and Hunt, 1994). How these

commitments affect the relationship between the exporter and the importer and

channel intermediaries?

2) To what extent power distance influences the standardization or adaptation

process?

3) Why achieving and maintaining local legitimacy is important to firms in all

markets?

4) In what ways does the context of language-based communication have an

effect on Exporter and international intermediaries’ relationship management?