Master of Business Administration Program in

International Business
National Sun Yat-sen University
--------------------------
Course: IB527– Customer Relationship Management

INDIVIDUAL ASSIGNMENT 1

Name: Nguyen My Linh

ID: M074610032

October, 2019
 I. Table of content

I. Table of content ............................................................................................................ 1

II. Introduction ................................................................................................................. 2

III. Customer Relationship Management theory ........................................................... 3

1.1. The Industrial Marketing and Purchasing (IMP) school ............................................. 3

1.2. Customers building example for Industrial Marketing and Purchasing (IMP) ............. 3

2.1. The Nordic school ....................................................................................................... 4

2.2. Customers building example for the Nordic school ..................................................... 5

3.1. The Asian (guanxi) school ........................................................................................... 5

3.2. Customers building example for the Asian (guanxi) school ......................................... 5

4.1. The Japan – Keiretsu school ....................................................................................... 6

4.2. Customers building example for the Japan – Keiretsu school ...................................... 7

IV. Summary ................................................................................................................... 8

V. Reference ...................................................................................................................... 8

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 II. Introduction

What is Customer Relationship Management (CRM)?

There are many different definitions of CRM. Most of the time, people referring CRM to the
technology and software that the company used to control their contacts and sales data. For
example, according to salesforce, Customer relationship management (CRM) is a technology
for managing all your company’s relationships and interactions with customers and potential
customers (salesforce, n.d.).

Unquestionably, technology plays a crucial part in customer relationship management, since

without it, it is impossible to manage a million customer database or have a better
understanding about your customers. However, in order to fully understand of CRM and
practice it effectively, we need a managerial rather than a technological point of view. In
another definition, CRM is the core business strategy that integrates internal process/functions,
and external networks, to create and deliver value to targeted customers at a profit (Buttle &
Maklan, 2015).

In short, the goal of CRM is simply as improving the business relationship with its customers.
However, the term “customer” is not only limited to clients but also includes vendors,
transporters, government, NGOs, staff, …

Why CRM is important?

A business can generate greater sales volume and in turn greater revenue if it knows its
customers well and have a good relationship with them. Thus, solely for economic purposes,
every business wants to have healthy relationships with its customers.

Firstly, CRM can help reduce marketing costs. For example, according to statistic research,
attracting a new customer can cost five times more than retaining an existing one (Wertz, 2018).
Secondly, CRM gives business better insight into their customer including personal
information, behavior, interaction, and preference. Last but not least, CRM can help companies
create and nurture customer lifetime value (CLV). With CLV, customer should not be viewed
as a set of independent transactions but as a lifetime income stream (Buttle & Maklan, 2015).
It means a business can earn more money from existing customers as they become loyal
customers and keep purchasing your products.

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III. Customer Relationship Management theory

In order to offer different perspective of relationship between business and customer, there are
eight main school of thoughts including the Traditional Transaction school, the Industrial
Marketing and Purchasing (IMP) school, the Nordic school, the Anglo-Australian school, the
North American school, the Asian (Guanxi) school, the Korean – Chaebol and the Japanese –
Keiretsu.

1.1. The Industrial Marketing and Purchasing (IMP) school

While Traditional Transaction school emphasizes the relationship between business and
customer (B2C) based on transaction cost, the Industrial Marketing and Purchasing (IMP)
school focus on business and business relationship (B2B). Since B2B transactions occur in the
context of a broader and long-term relationship, this kind of connection between buyer and
customer is built on the basis of activity links, actors bonds and resource ties.

Specifically, actor bonds are interpersonal contacts between actors in partner firms that result
in trust, commitment and adaptation between actors (Buttle & Maklan, 2015). The relationships
between actors normally highly influenced by their social bond. On the other hand, activity
links are the all the connection is formed through the interaction between buyer and supplier
including commercial, technical, financial, administrative activities… Lastly, resource ties are
formed when one or some resources such as human, physical, financial, intellectual are shared
between supplier and customer in their business activities. Resources that are deployed in one
B2B relationship may strengthen and deepen that relationship.

However, using IMP might have some opportunities cost. For example, when resources (human,
money) was built a deep tie with one partner, it might be hard to build a relationship with others;
or the relationship was built from the social bond can disappear when the company changes
personnel.

1.2. Customers building example for Industrial Marketing and Purchasing (IMP)

The example for the IMP school of thought is one experience in my first job. At that time, I
worked in PR & marketing department in Vietnam. Because that was a start-up company so
we didn’t have many relationships with the media and advertising company. As a result, we
not only had to spend a lot of time and effort to find an appropriated partner but the quotations
from them also higher than we expected.

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In that situation, our department’s manager used the connection that she had from her previous
job to find a new advertising agency. Since my manager has a good relationship with the head
of Hanoi office of that agency, we not only got a discount but also find other contacts with
media, printing company and designers through that agency. Personally, I had a good
opportunity to learn more about advertising, SEO and Facebook ads while working with them.

2.1. The Nordic school

In general, the Nordic school of thought base on service-dominant logic and emphasize on the
role of service quality in the relationship between supplier and customer in both B2B and B2C
environment.

Figures 1: CRM from the Nordic school of thought

The Nordic school identified three main characteristics of the commercial relationships as
interaction, dialogue and value. For interaction, the Nordic school argues that as customers and
suppliers interact, each one provides a service to another. Customer provides information and
supplier provides solution. For dialogue, while the traditional transaction assumes that
communication can be one-way, from company to customer, the Nordic school emphasizes the
fact that communication is bilateral and essential for the survival of the relationship. Last but
not least, the Nordic school emphasize that business needs to generate service performance to
maximize customer’s perceived value (Buttle & Maklan, 2015).

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Figures 2: Value-in-use in the Nordic school of thought

There are three kinds of value that a commercial exchange can give customer functional value,
image value and experience value. The value is created when customers use the goods or
services is known as value-in-use. Therefore, the supplier needs to helps the customer to extract
this value-in-use by marketing, purchasing and after-sales service that help the customer
experience more and better value.

2.2. Customers building example for the Nordic school

In reality, I had experienced the importance of service quality to customer relationship

management. Before I went to Taiwan, I had bought a Lenovo laptop in U.S with the belief
that I will have a three-year international guarantee. Last year, I had a small problem with the
keyboard so I tried to have my computer fixed in Vietnam. However, everything turned out so
disappointing when I cannot have a guarantee in Vietnam. This situation makes me so
disappointed since I expected to have my guarantee period globally for three years.

With the last hope, I contacted Lenovo branch in Taiwan. At first, I was a little bit worry
because I am not able to speak Chinese but the customer service staff was really nice and
helpful. In the end, they sent staff from Tainan to replace my keyboard for free. I have very
appreciated the effort, attitude of the staff and quality of Lenovo customer service in Taiwan.
This is the best customer service experience I have ever had and it really helps to improve my
impression toward Lenovo after bad service in Vietnam.

3.1. The Asian (guanxi) school

Guanxi is a philosophy for conducting business and other interpersonal relationships in the
Chinese, and broader Asian, context. Therefore, it has a significant impact on Asian societies
and economies (Buttle & Maklan, 2015). In Chinese, guanxi means intricate and pervasive

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networks of social relationships. Guanxi also can be translated into passing the gates and get
connected. The mentioned gates are the inter-personal or inter-organizational and Guanxi is the
key to open the door. This “key” works in two different levels, the inter-personal role and the
inter-organizational role. In other words, different from the actor bonds in IMP school, guanxi
refers to informal social bonds that result from some common social context, for example,
families, friendships and clan memberships.

In fact, if the companies don’t understand about guanxi school of thought, it will be difficult
for them to do business in Asia, especially in China.

3.2. Customers building example for the Asian (guanxi) school

As a Vietnamese, the Asian (guanxi) school of thought is really family with me. Mostly, it is
often caught in state-owned companies or government organizations. When I was in Vietnam,
I worked as a purchasing staff in a trading company. In order to import products, we need to
apply for an import license and it normally takes us seven working days. However, sometimes
it takes longer and the government officer gives an excuse that they were overload or the person
in charge was on a business trip. At such time, we will ask a special staff in our department for
help. He rarely does anything at work, however, he was recruited because his uncle is the head
of the import license office. With his relationship, he could help us to have the license within
the same day.

To be honest, sometimes other staff feel unfair but he is actually helping our department work
go smoothly and solve the emergency problems. We are working in Asia so we need to adapt
to the social norm and business environment in Asia.

4.1. The Japan – Keiretsu school

Keiretsu is the structure of major company in Japan which steeped in tradition and relationships.
The origin of this corporate formations was termed "zaibatsu," which translates to English as
"monopoly." Zaibatsus began as a kind of family-owned enterprises, which is similar to
Chaebol in Korea. As Japan's economy grew, zaibatsu grew to evolve into holding companies
and create a new type of structure Keiretsu. Nowadays, the Keiretsu structure divides into
Modern Horizontal Keiretsus and Modern Vertical Keiretsus.

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Figures 3: Typical Keiretsu business group structure

Today's keiretsu horizontal model still sees banks and trading companies at the top of the chart
with significant control over each company's part of the keiretsu. Shareholders replaced the
families controlling and change holding companies to stockholding companies. Vertical
integration is still a part of the more massive horizontal structure of today's keiretsu. For
example, each of Japan's six car companies belongs to one of the big six keiretsus, as do each
one of Japan's major electronics companies (Twomey, 2018).

In Keiretsu, banks regularly owned a small percentage of their keiretsu members' stock, and
members owned a portion of the bank's stock. This formed an interlocking relationship,
especially if the member company borrowed from the horizontal member bank. Interlocking
relationships allowed the bank to monitor borrowings, strengthen relationships, monitor
customers, and help with problems such as supplier networks.

4.2. Customers building example for the Japan – Keiretsu school

Typical of a Japanese horizontal keiretsu is Mitsubishi. The Bank of Tokyo-Mitsubishi sits at

the top of the keiretsu. Mitsubishi Motors and Mitsubishi Trust and Banking are also part of
the core group, followed by Meiji Mutual Life Insurance Company, which provides insurance
to all members of the keiretsu. Mitsubishi Shoji is the trading company for the Mitsubishi
keiretsu (Twomey, 2018).

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Their purpose is strictly distribution of goods around the world. They may seek new markets
for keiretsu companies, help incorporate keiretsu companies in other nations, and sign contracts
with other companies around the world to supply commodities used for Japanese industry. As
a conspicuous evidence, many companies within this keiretsu have "Mitsubishi" as part of their
name.

IV. Summary

In this assessment, I have discussed four typical schools of thought is customer relationship
management the Industrial Marketing and Purchasing (IMP) school, the Nordic school, the
Asian (Guanxi) school and the Japanese – Keiretsu. Each of these schools was applied in
different business environments as well as emphasize different values. However, the ultimate
goal of CRM is building relationship with all the customers in order to improve business
performance and earn more profit.

V. Reference

Buttle, F., & Maklan, S. (2015). Customer Relationship Management: Concept and
Technologies. Routledge.
Salesforce. (n.d.). Retrieved from CRM 101: What is CRM?:
https://www.salesforce.com/crm/what-is-crm/#
Twomey, B. (2018). Investopedia. Retrieved from Understanding Japanese Keiretsu:
https://www.investopedia.com/articles/economics/09/japanese-keiretsu.asp
Wertz, J. (2018). Forbes. Retrieved from Don't Spend 5 Times More Attracting New
Customers, Nurture The Existing Ones:
https://www.forbes.com/sites/jiawertz/2018/09/12/dont-spend-5-times-more-
attracting-new-customers-nurture-the-existing-ones/#313f813a5a8e