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A Case Study of relationship management with customers in Chinese small BTB paint companies

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A Case Study of relationship management with customers in Chinese small BTB paint companies Supervisor: Robert Ormrod Written by: Mengjie Jia Department of Business Administration Date: May 2016 Number
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A Case Study of relationship management with customers in Chinese small BTB paint companies Supervisor: Robert Ormrod Written by: Mengjie Jia Department of Business Administration Date: May 2016 Number of characters: Page 1 of 47 Exclusive summary The aim of the bachelor thesis is to find the relationship management process when small paint companies deal with the relationship with BTB customer under the macro environment of China. In order to have a specific understanding of the process, the project is working based on Dwyer s Five-Phase relationship model. To enrich the model, the project also refer to the concept of negotiation and customer behavior spectrum that are necessary when company manage the relationship with customers. In order to make the project more persuasive, the project use the research method of qualitative research to collect real world data. The data come from a Chinese small BTB paint company called Nanjing Guangxia Coating Co., Ltd. By doing an interview with the department manager of Nanjing Guangxia, the project get sufficient and real information about the relationship management process, making the project more reliability since it combine theory and real world data. Relationship management process has five phases. In the awareness phase, small paint company seeks for new customers like construction companies and real estate companies based on its own current situation, value and standard. For Nanjing Guangxia, no risk is most important. Company then send customer manager to communication to customer s key person. Two companies will start a trial transaction in the exploration phase when two companies both think it is a suitable potential partner. When two companies both satisfy with the first transaction, the relationship will arrive to expansion phase, thus two companies consider long-term relationship. The relationship between two companies will become best in the commitment phase, then some relationship will terminate due to some reasons. Negotiation is throughout the relationship management. It is different between small and large company when negotiate with its customer. The negotiation process is simpler in small paint companies, they most focus on time and attitude, especially in the early phase of a relationship. After analyzing the interview data from Nanjing Guangxia, the company also follow the five steps to take some specific actions to manage customer s relationship. However, due to the nature of the company and its customer, for these companies, commitment phase may not stable as the model mentioned. The model and the interview with manager both emphasize the importance of trust. The interview transcript shows that the manager mentioned a couple of times of friendship and trust. The trust comes from psychology and physical. Because China is a country pay attention to interpersonal relationship, seller needs to build a stable relationship with people from buyer company, it is especially important for small paint company. The business start from the interaction between two people in both buyer and seller companies, they enhance the trust to each other by regularly communication and visit. Page 2 of 47 Because the relationship for small paint company is unstable, so the company need to pay more attention to maintain a relationship with customer. Despite increase the interpersonal interaction, company needs to increase the quality of paint, offering humanized service and technical support in order to increase buyer s trust from physical. Lower the risk of both side is also an important elements when increase the trust, because demand of paint is large in the BTB paint transaction and seller company s size is small. Nanjing Guangxia s actions of free sample, factory visit and 24 hours service are good methods to increase trust. The project analyze detailed about the relationship management process of Chinese small BTB paint company with customer and elements which need to be pay attention to when manage the relationship with customers. It may helpful to relevant companies to make a reference in the field of relationship management. Page 3 of 47 Table of Content Introduction.5 Aim of the project 6 Motivation.. 6 Problem statement 7 Delimitations 7 Theory 8 Ontological consideration.. 8 Project structure.9 Research method 9 Introduction of Nanjing Guangxia Coating Co., Ltd 11 Relationship Management: Five-Phase relationship model 12 Elements to maintain the relationships 32 Limitations, implications and future research.34 Conclusion 36 Bibliography 37 Appendix 1: Interview guide.39 Appendix 2: Interview transcription 41 Appendix 3: Company information 47 Page 4 of 47 Introduction Since the 21 century, under the influence of reform policy and joined WTO, China economy increase with a surprising speed. In 2014, The GDP of china reaches to billion USD (tradingeconomics.com, ). The economy growth of country bolster the development of native enterprises. Under the situation of globalization, foreign companies occupy a large proportion within Chinese market. Native companies, especially small private companies that have immature of corporate management, need to pay more effect if they want to survive in the competition. In China, social network is more important in daily life than other countries. It is same to business companies. As a result, how to manage the relationship with customers to achieve stable and long-term partnership is one of the most necessary courses for many Chinese companies. Relationship management is a main part of an enterprise in a BTB market world (David &Fiona, 2013). Regular meetings which prepare for maintain stable customers are frequently in BTB companies routine operation, because for BTB companies, more long-term customers means more considerable profit since BTB almost deal with transactions with large amount of money. General speaking, the way of manage relationship with customers is different in some fields in China. Jiangsu Province located in east of china is one of the most developed regions of China. Due to high economy growth, the business competition is more intensive than other places. Relationship management for companies are particularly important here to avoid been eliminated from the competition. Nanjing is the province capital of Jiangsu, which is a city with thousands of year s history. Nanjing has a population of 8.21 million until the end of 2014(tjj.nanjing.gov.cn/, ). It is a large market consider no matter its population or economy development. It attracts amounts of enterprises expand its business here. There are some differences between large and small, manufacture and service, BTB and BTC companies to manage relationship with customers. The project will use one small BTB paint company which located in Nanjing called Nanjing Guangxia Coating Co., Ltd as an example to analyze the relationship management steps of the company. Nanjing Guangxia Coating Co., Ltd is a small private enterprise located Nanjing which is set up in It is a company focus on producing construction paint (Contact NJ Guangxia, 2016). The company focuses on BTB market, which can get large profit due to large amount of demands (interview, 2016, Q2). The company used to get a large profit due to high demand from macro paint market. For this company, maintain the relationship with customers are the first thing to be considered. A stable customer group sometimes can be a determinant element of such a small company. For this reason, understand the processes of how the company build relationship with new customers Page 5 of 47 and keep relationship with old customers are important, relevant solution after analysis may help the company improve the relationship management in order to increase profit. Aim of the project The aim of the project is by using Nanjing Guangxia Coating Co., Ltd as an example to analyze the steps how small companies manage relationship with customers in BTB market, to find out the difference when company face with new customers and old customers. It hopes to find out the strengths, and weakness of the company s relationship management based on the previous management experience with old customers. The project also want to find out what is the unique and useful approach when the company deal with the relationship with customers. Based on the process analysis, the project can help the company to make an adjustment on the method of relationship management to improve the relationship with customers. The project also pursue to find elements benefit for this kind of companies to build a relationship in common situation and under the unique Chinese business culture, in order to build an effective long-term relationship with its later business customers. Motivation Finishing the project requires rich knowledge of marketing about relationship management and fund of empirical research data, which can reflect the logical thinking mode, study ability, writing ability of English, the ability to do an independent data research and the ability to analyze data both from theoretical model and empirical research. The project use a small Chinese private manufacture company as an example to achieve a basic understanding of Chinese business market, the transaction culture, the way that Chinese do business with customers and how do Chinese manage relationship with customers. It is benefit for the company to realize the current situation of itself, it also helpful to other native or foreign companies to get some preliminary knowledge about how Chinese do business. It is useful for companies to reduce some resistances when cooperate with Chinese business partners. It also helps the same or similar kinds of companies to solve the problems which are searching for the relevant research. Page 6 of 47 Problem statement As mentioned in previous paragraph, the aim of the project is to analyze the relationship management process of Nanjing Guangxia Coating Co., Ltd and customers to find out the relationship management approach of the company, then give relevant suggestions to help the company improve the management method. The project will base on theory and empirical research to find a suitable answer. As a result, the research question of the project is: How does small paint company in China manage relationship with BTB customers? Delimitations The project focuses on relationship management analysis on BTB market in China, so theory and method in the project almost related to marketing management, other courses knowledge related to the research question but not relevant to the topic will not be used. There may exist difference relationship management ways between difference regions of China. The case of Nanjing Guangxia Coating Co., Ltd in the project is just a representative of small manufacture company in east China. There may exist other special situation in other regions of China when do business. Since it is a Chinese company, the relevant documents and resources may be in Chinese, such as websites, etc. The translation will made for easily read. The company once has a website, but the company stop using it 1 year ago, as a result, all the information about the company come from the contacting with company s manager. Because I have had an internship experience in the company, some information may base on my own experience. The project will make sure to promise sufficient and convincing as much as possible. However, due to the limit research time only for almost 3 months, there may exist some shortcomings on empirical data research. And due to the distance, there is no opportunities to do specific market research in Nanjing, some data will come from the market research during the internship period. Page 7 of 47 Theory In order to ensure the solution of research question is persuasive. It is necessary to have some relevant theoretical evidence to support the finding the project gets. Literatures and models help build a framework of the whole research which make the project more scientific. Relationship is important in BTB market. A harmonious and long-term relationship is benefit for company s long-term development. However, maintain the relationship with customers is sometimes difficult. Except depending on different business cultures in different regions, the concept of relationship management will also help the company. In order to understand the steps of how Nanjing Guangxia manage the relationship with customers, it needs to know the situation from the most beginning when the company decide to cooperate with customer, then the development of relationship, it stops until the end of relationship. It is a systematic process that the five-phase relationship model can be used to support to analyze the process. This model can help the company to find out that whether the company follow by a scientific ways when manage relationship, it also find out whether there exist the unique methods only belongs to the company that the model doesn t have. The project refers to concepts of negotiation and Customer behavior spectrum which cannot be ignored when analyze the process of relationship management. The theories give a formal solution to the problem statement. The suggestion on how to build a relationship will based on the theoretical analysis and empirical data research, while empirical data research based on real world experience from the company can make the project more persuasive and reality. Ontological consideration The project focuses on find out the result of how Nanjing Guangxia maintain the relationship with customers. It has a tight connection with the people s real thinking and behaviors in real society. The true feeling of social groups in the project is more important the theory reference. The research strategy relates to this requirement is constructionism which prefer the natural knowledge (Bryman & Bell, 2015). In the aspect of constructionism, the channels that people achieve information from surrounding world depends on society and nature. Society interaction is important in constructionism consideration (Bryman & Bell, 2015). People may have different considerations about the society. In that ways, the problem solution will depend on specific situation. In the project, the considerations of people work in Nanjing Guangxia will be the most suitable knowledge source to solve the problem statement. Page 8 of 47 The project discuss about the Nanjing Guangxia and business partners, the data research, people investigation, etc. are not independent exist, company s considerations about steps of relationship management and the connections with society are looked as a whole, answers are come from nature. As a result, using constructionism as a research strategy is suitable for the project. Project structure The project will first talk about the research method and data analysis. It mentions the method which the project research will use to get the empirical data, and the specific description about how to do the research, people involved and the approach to make sure the validity and reliability. The project will then describe the current situation of Nanjing Guangxia Co., Ltd, which will contain the company s organization structure, the mission and vision of the company, strength and weakness that may influence the company s relationship management. The third part is relates to analyze the relationship management process of Chinese small paint company, using Nanjing Guangxia Coating Co., Ltd as an example. It based on the five-phase relationship model. Then the project will followed by analyzing the elements which can make relationship management more successfully and give some suggestions if the relationship management process can be improved, stand on the points of both theory and Chinese current business culture. The project ends with a summary of the company s relationship management and a conclusion about the whole project. Research method The suitable research method for the project is qualitative method research. The project needs specific and in-depth information from the company s point about how to build a business relationship with its customers. Qualitative research is a research strategy that usually emphasizes words (Bryman & Bell, 2015, page 38) means qualitative research more consider about people s words, feelings and behaviors. To the contrary, quantitative research more focus on collected data (Bryman & Bell, 2015). According to the information which the project should involve, qualitative research can gather abundant, detailed information from Nanjing Guangxia by direct contact to the managers and employees. The project choose semi-structured interview as the method of qualitative research. It bases on a normative interview guide, but allow interviewees expand reply scope according to their own Page 9 of 47 experience during the interview (Bryman & Bell, 2015). This method help to get in-depth, rich and professional data from interviewees. Despite to get the answer of question from interview guide, semi-structured interview can also achieve some answers based on interviewees own develop. In this project, by interviewing the manager of Nanjing Guangxia Co., Ltd, it is easy to know how the company manage the relationship with its customers. I first prepare the interview guide before contacting Nanjing Guangxia. The question design of interview guide based on the five phase of relationship model. It has different types of questions, for instance, what, How and why based on the principle of semi-structured interview in order to have a whole understanding of the company s opinion. I contacted the company on 22 nd of February, 2016, and ask whether I can make an appointment with one of the manager to take an interview. Because I once have an internship in the company, and I got on well at work with the employees, so they agreed immediately and said they were very happy that they can help me with the interview. The initial plan is to do the interview with general manager, however due to the schedule of the project, general manager was busy on that time, so I change the target interviewee to department manager, Mrs. Huo. The interview took place on 17 th of March and last for almost 2 hour. Because we are at different countries. The interview proceeded by the way of online video. The whole interview process was recorded by record software. The interview followed the steps of interview guide. During the interview, I used different ways to ask the question to make sure the answers were related to the questions and in-depth. I tried best not to guide interviewee when she answer the question. Suitable follow-up questions and stop are exist during the interview process. The interviewee is department manager of Nanjing Guangxia Co., Ltd who knows the situation of Nanjing Guangxia very well and offered amounts of information which cannot be found on external environment. And she totally stood on the point of the company to think about the answer of questions. The whole interview was recorded, making sure there will have no missing when transcript. Although the language during interview was mandarin Chinese, I try best to contain all useful information when I translate the language into English. These approaches promise the reliability and validity of the interview. However, there exist some defects that due to it is a video interview, I cannot directly face-toface communicate with the interviewee but through computer screen, it resulted that I loss some eye contact and body language. And the translation may have some difficult points because of the different ways of expression in Chinese and English. The interview is recorded in Appendix 2, the reference of analyze Nanjing Guangxia also based on interview transaction from Appendix 2. Page 10 of 47 The data analysis method will based on discourse analysis which can due to there is a systematic interview of commun
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