Strategic Management in B2B Organizations

Brief

This paper deals with the use of strategic management in Business to Business (B2B) enterprises and the various ramifications it has on business organizations. ”Entrepreneurs and business managers are often so preoccupied with immediate issues that they lose sight of their ultimate objectives. That’s why a business review or preparation of a strategic plan is a virtual necessity. This may not be a recipe for success, but without it a business is much more likely to fail” (Business planning papers: Developing a strategic plan: What is strategic plan, 2009, para.1).

Purpose of this study

The main purpose of this study is to offer focus and thrust on all major areas of accountability in strategic management in B2B. This includes the basis on which strategic marketing and business policies and different underpinning models and theories are generated through optimistic and positive outlook

Research Hypothesis or Question for this study

How can positive utilization of strategic management be harnessed in the context of Business Management Organizations?

Goal and objectives of this research study

Laying a strong foundation for a better understanding of organizations, using B2B business models is the main focus of this study. This is also with a view to seeing corporates as ongoing concerns and positively using robust strategic management plans and programs for their growth and development. With this in view, the study of current academic literature on the subject and its currency and impact on Strategic management also assumes importance. The aspect of logistics in human capital is also significant. This is so because, ”As the world changes rapidly, profoundly, and in every dimension—social, economic, and political—the logistics workforce needs to continuously evolve and operate in a way that optimizes the human capital of the entire enterprise rather than individual parts” (Bell, 2008, p.3).

Introduction to this study

At the outset of this study, it is necessary to consider the definition of certain terminologies and terms used in this study and how these elements impact business. First, it is necessary to define the meaning and scope of these terms:

1.Business to Business (B2B) : This is defined as “Trading between firms (and not between businesses and consumers), characterized by

1. relatively large volumes,
2. competitive and stable prices,
3. fast delivery times and, often,
4. on deferred payment basis. In general, wholesaling is B2B and retailing is B2C “(Business to business, 2010, para.1).

One of the main aspects of B2B business is that it is restricted between o businesses only (no individuals) and most often than not, it needs to be bulk trading business in order to come within the ambit of B2B business.

However, a lot will depend upon the facts surrounding each circumstance and setting and courts will need to consider the characteristics before passing a judicial opinion.

Strategic Management

This has been best been described as “a process through which organizations analyze and learn from their internal and external environments, establish strategic direction, create strategies that are intended to move the organization in that direction, and implement those strategies, all in an effort to satisfy key stakeholders” (Strategic Management: Introduction, n.d, p.4). Thus, strategic management can be seen in terms of confronting, and staying ahead of the competition. This, again, concerns with setting goals and objectives which, while being in sync with corporates’ own strengths and advantages, can also keep the competitive and rival business at bay. Perhaps one of the major aspects of strategic management is that it is innovation, evolving, mobile and flexible to suit current company demands and market circumstances.

In a nutshell, it can be said that strategic management in the realms of B2B business will entail assessing own strengths and weaknesses, opportunities and potential threats from rival and competing firms (present and potential), and how these can be effectively and efficiently countered. Since B2B deals with bulk wholesale rather than retail business, its impact on a company’s bottom line can be quite overwhelming and emphatic.

In the later chapters, the review of current literature will need to consider, inter alia, the present status of strategic management as practices in B2B business, what are the its benefits, what the several strategies that are employed and also impact of strategic marketing in the context of burgeoning internet markets, and how electronic commerce (e-commerce) sustains strategic management needs.

This literature review also needs to consider how Strategic Management contributes to intranet and internet interfaces. Besides, area like global marketing, successful laying down and implementation of strategies for e-commerce and internet based marketing also need to be worked out. Specific solutions to particular problems are part of strategic management. Besides, “Our Customer Specific Solutions can be an adapted version of one of our open enrolment workshops. Or, we can create a completely customized management development program for your company” (SKF: Strategic marketing management for B2 B markets: Customer Specific Solutions to help you implement a new strategy, 2009, p.2).

Coming to the literature study on the aspect of strategic management in B2B businesses, it is first necessary to consider the works of Boone, David L. Kurtz, H.F. Mackenzie and Kim Snow in their co authored book “Contemporary Marketing.” In it they write that there is quite a lot of differences between B2C ( business to consumers) and B2B ( business to business ) not only in terms of who buys the goods, but also in terms of the reason and rationale for buying goods, services and utilities. Thus, in order to distinguish B2B buying with other genres of buying, it is necessary to inquire as to who is doing the buying and why the buying is taking place.

Unlike consumer buying, B2B purchases are made by businesses, government organizations and through marketing rendering to intermediaries to be resold or combined with other items to create a new finished product, either for reselling or to be used for day to day operations of the company. In B2B businesses, both the scope, volume, depth and quantum of business are quite different. These are basically of four types- commercial markets, trade and industry, governmental and institutional purchases and business. Thus, B2B is needed in order” to support production of other products, to facilitate daily company operations, or for resale” (Kurtz, et al, 2009, p.160).

Coming next to what has been written by Michael D. Hutt and Thomas W. Speh in their book entitled ‘Business Marketing Management’, (Hutt & Speh, 2010). This book emphasizes the right approach to customer servicing and orienting sales personnel to build long term relationships with customers for mutual benefits. It is well documented that B2B business certainly is the chunk of business of large companies, sometimes even accounting up to 50% of total revenues of the business.

Besides, in the 21^st Century, it is seen that the views about marketing goods, services and utilities are fast changing. So are the views held about strategic management in B2B environment. “As global competition intensifies, marketing manager are under increasing pressure to demonstrate the return on investments (ROI) from marketing spending, deliver strong financial performance and be more accountable to shareholders” (Hutt & Speh, 2010, p.8). Hence, strategic management can well be needed to mobilize and gear up modern business. Yet, while the writers have taken commendable pains to write about B2B, they have not really explained how B2B really works and how it can be used in strategic management driven enterprises in the world.

The authors go on to add that, ”To meet these performance standards, firms must develop and nurture customer relation management capabilities which include all the skills required to identify, initiate, develop and maintain profitable customer relationships” (Hutt & Speh, 2010, p.9). Next, it is necessary to discuss about how global competition and rivalry among products and services industry can impact strategic management in B2B industry.

As is well known, competition exists in every arena of life, and more so when the question of market shares, present and potential profitability, productivity and profits are concerned. Each large company is literally sitting on a seat of intense and even cut-throat competition and there is a need for strategic thinking, sometimes even out of the box thinking in order to become and sustain competitive success. Internet selling is one form to remain competitive since, in the long run it is less costly than brick-and-mortar selling or store selling. Yet its advantages and challenges are many. “It can become a threat to an entire industry, yet it can also be an extremely important tool for gaining strategic advantage for an innovative company. As a matter of fact, many executives who until 1998 were cynical about the strategic advantages of IT have completely reversed their attitudes.

They are seeing the potential of Web-based systems to provide competitive advantage to organizations, and Web-based opportunities and risks are now attracting universal attention in executive boardrooms” (Strategic information system for competitive advantage, n.d).To realize the full potential of B2B partnerships, it is necessary to undertake strategic partnerships. “While the need to partner with companies in their target industries has been coming to the forefront with the rise of industry-sponsored marketplaces, firms find that there is a further need to partner with other organizations to create more extensive and adaptive service offerings. The goal of this research is to support the view that forming strategic partnerships ….. The results support our view that partnering skills are critical for B2B marketplaces to improve their competitive position” (Lenz, et al, 2002, pp.100-111). Next, strategic management is also necessary for internet and intranet use. The benefits of intranet strategic management can be seen in terms of the following:

1. Companies can gain major advantages in relating themselves to their lines of business and locations all over the globe
2. Communications lines can be strengthened and made more robust and effective
3. The negative impacts of competitive business can be further reduced
4. Economies of large scale operations can be substantiated through strategic management on B2B operations
5. The entire unit can work in a coordinated, cohesive and well knit manner ensuring optimum operational functioning and cost savings.
6. Budgeting, cost and resource allocations, asset management and all other major areas of public accountability can be ensured.

Thus, it is seen that with a great deal of planning, organizing and strategic management programs, it is quite possible that major gains and advantages can be gained and threats and disadvantages dramatically reduced.

Next, it will be necessary to consider the aspect of methodology, the research design and how it is to be implemented. The method of carrying out a research program on the impact of strategic management in B2B business will obviously need to consider owners and directors of major business houses, what they feel about the impact of strategic management on their business and to what extent, benefits can accrue and risks can occur. The respondents shall be from a cross section of sample population who experience both aspects of strategic management- its advantages and disadvantages and how the cost benefit ratio can work to their advantage.

The methodology will entail personal interviews with around 45 respondents drawn from several B2B companies and commercial establishments. There needs to be a cross section of the B2B strategic management community in order to lend authenticity and legitimacy in the business. “One survey and two in-depth case studies were carried out to examine these practices and processes…” (Chard Lin, et al, 2007, para.1). Thus, the main thrust area of research will be in terms of execution of this program aligned into the human capital strategy with mission, goals and organizational objectives. “The agency has a human capital plan or other human capital planning documents that establish human capital goals, objectives, and investments that link to the agency strategic plan and reflect how human capital supports mission accomplishment“ (Human capital standard for success: Elements of YES, n.d, para.1).

Research Analysis and discussions

The results of the research conducted according to plan seem to validate the fact that, to a very large extent, strategic management can bulwark and underpin the business of B2B. Perhaps one of the most important aspects about strategic management is that it can also be used in governmental and quasi-governmental institutions with a reasonable degree of success, and is also flexible enough to change with the times. “Strategic management of human capital is necessary to ensure that USDA’s human resources are effectively utilized, and that they support the department’s vision and mission. This plan is intended to be flexible enough to accommodate circumstances not only as they are today, but also as they will unfold in the future. Although it is a roadmap that will enable USDA to accomplish its human capital goals over the 5 years, we expect to adjust the plan as we proceed” (Human capital plan, 2002, p.19).

Conclusions and recommendations

Besides, strategic management needs to be market driven, product focused and need to be totally customer oriented if it is to gain any effectiveness or efficacy. There are many aspects in business that may not be readily forecast, or many aspects that cannot be judged. Production may stall due to lack of materials and inputs, labor productivity may be erratic and unpredictable despite best efforts, power outages may occur, computers may stall, many unforeseeable aspects may occur, including natural calamities and disasters. While risk managers need to know about all possible aspects that affect business, it is also necessary to be able to plan and safeguard against foreseeable risks and threats that occur over time. The research has truly proved that strategic management, especially in a B2B environment is truly necessary or even indispensable, given that B2B, especially internet enabled, forms a major chunk of business today. “What began as an infrastructure for sharing computer-based information among government employees and academics is now commonplace in most homes and businesses” (Frederickson, 2003, para.2).

While strategic management is indeed a boon for B2B business, the cost and competitive impact cannot be overruled. It will not make commercial sense to invest in technology that fails to provide reasonable returns or which compromises on stakeholder benefits. “They shall be integrated” (Nature of strategic management, n.d.).

Again, it is seen that funding is an important criteria:

“Business-to-business credit is a particularly important source of funding for companies; the stocks and flows are typically twice the site of those for bank credit. However, an important aspect of this credit is the two-way nature of the transaction; many companies, particularly those at intermediate points in the value chain, both use B-to-B credit as customers (accounts payable) and provide it as suppliers (accounts receivable) “ (Paul, 2000, p.2). While funding is a major aspect in B2B business activities, it is also believed that market landscapes do dictate which strategies to adopt. “In a recession, revenue, market share and margins come under attack as consumers reassess what to buy and from whom. The very core of the value proposition comes into question which cannot be overcome with simple tactical fixes to the marketing plan. The perceptions of today’s conditions dictate a narrower window of opportunity with a more restrictive justification for expenditures” (Rich & Kincaide, 2010, para.1).

Under such circumstances, it becomes imperative to “Build a portfolio of strategic moves and know when to implement each” (Rich & Kincaide, 2010, para.4). Strategic Management in B2B landscapes is only as good as the people who utilize it and the environments that support and sustain these systems. Therefore it is imperative that management offers full co-operation and support for good identification, formulation and implementation of strategic management precepts and practices in their B2B scenarios for better business.

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