4.5 Testing and analysis of the third hypotheses (A strategic integration framework)
There’re 3 point of view could be differentiated which include the integration of inter -functional, process, and business concept which can move the integration between marketing and supply chain management on More strategic level.
The proposed framework builds on these perspectives, which captures the integration between marketing and supply chain into business unit and moves them onto more strategic level. Integrating marketing and supply chain strategies involves the management of the following levels of integration:
- Strategic corporate, customer, and shareholder integration.
- Strategic supplier integration.
- Strategic marketing and SCM with the local marketing talent integration.
Introduction on the proposed framework
When we describe these three levels of integrations as they related to each other, we have to put the first and second levels under the third level that’s “strategic integration between marketing and SCM with the local marketing talent “to realize and understand well the research main idea and the additional factor that added on the framework that’s local marketing talent.
First level of integration (strategic corporate, customer, and shareholder integration)
The firm’s objectives of the business or unit should be aligned for customer and share holder value creation specially on the large firms, as we understood from the literature review chapter as well as from the pervious paragraphs that, the integration between Marketing and supply chain management are mainly focusing on linking the customer value creation and market performance, but as we mentioned that specially on the large companies such as the Multinational firms, the focusing should includes the shareholder value creation, actually this can be done through the strategic integration between marketing and supply chain management, so from this point we argue that this strategic integration could mediate the link between customer value and shareholder value creation specially both are already sharing common and same asset base which they build on, basically we can judge and evaluate marketing on how it develop and improve the share holder value as well as the main important criteria which we can measure the marketing performance is; its efficiency on customer value creation. From this point we can conclude that customer and channel relationships shouldn’t only seen as an objects of marketing actions because of, it should be seen as a strategic asset of the firm which have to be well established, according to the supply chain which have highly concern from the top management at any firm, on its relation with marketing , we can measure the supply chain performance as a partner within the supply chain network through its efficiency on improving the short term cost effectiveness (Lacefield, 2007) , so from this point the risk on destroy the shareholder value as (Christopher and Ryals 1999) discussed that supply chain as an element to improving the short term profit which based on the supply chain can destroy a shareholder value if they undermine a firm’s financial health in the longer term. Some researchers develop the framework in the way of linking market based asset on market performance and ultimately shareholder value and also others extended the principles and link between asset, performance and value to include the integration between marketing and supply chain management, and this research are developing the framework to including the strategic integration between marketing and SCM with the local marketing talent, as the Multinational firms serving diverse markets which have diverse customers so the strategies ,operations should be achieved through effective information flows within the supply chain network. Hence the role of the local marketing talent emerges, which will be discussed on more details on the third level of integration within the proposed framework of this research.
Come back to the first level of integration within the proposed framework of this research which is (strategic corporate, customers, and shareholders integration)
Shareholder value is created when the firm’s performance within the market generate high returns which is compensate the investments of the total expenses and costs which occurred through the investors as well as a premium which more than compensate for the additional risk incurred. We can say that the strategic assets considered a basis for the shareholder value and this is because of they facilitate and enable the firms to generate strategies and implement it which enhancing its effective and efficient performance within the market as well as ensure the competitive advantage, but this strategic assets have no value unless it converts and transmitted into the customer value creation. From this point we can say that marketing and supply chain management build on the same strategic assets that is (customer, channel, supply chain) relationships. To realize this point we have to understand the marketing and supply chain roles on this issue.
Supply chain relationships comprise upstream and downstream relationships with customers and suppliers and on this point, the researcher will discuss it on the second level of integration as the marketing is playing a vital role in ensuring the information flow within the supply chain network as well as the Supply chain management and marketing have a significant effect on balance and link between customers and suppliers. Marketing is doing a very important role which can be described on the marketing channel relationships take a downstream perspective on the firm’s integration with the partners within the supply chain network, as the researcher mentioned on above that marketing department play a vital role in ensuring the information flow as on this chain the Multinational firms will deal with internal and external suppliers either locally or Globally. Hence the role of local marketing talent play a vital role which facilitate the Multinational supply chain network activities in different markets across the world which requires high and professional skills as well as good understanding of the local culture and business environment in the foreign market.
Marketing and supply chain strategies are linking these assets to the key shareholder value driver of accelerated cash flow, both doing an effective activities beside accelerating cash flow such as improving the cash flow operation as well as reducing the changes or vulnerability of the cash flow for instance marketing strategies as one of its main important objectives to enhancing and developing the long term relationships with customers and through this, the firm can reduces the time for market penetration and for the multinational firms which the time is considered as an important element, the local marketers can enhance the Multinational firms ability to reduce the time on penetrate the market then the cash flow will be accelerated also the local marketers could developing the customers loyalty and this also will enhance the cash flow or reduce the volatility in cash flow among the stability in the relationships with the local customers that need close relationships according to their different culture and behaviors. Supply chain strategies in turn also play a vital role on this through it can comprise the time and shorter end to end pipeline time so it has a positive significant effect on the relationships between the parties within the supply chain network. Finally the integration between marketing and supply chain on foreign market will enable the Multinational firm to have high response to the market rapid changes which lead to reduce the risks and uncertainty or lost the market share and revenues. When we talking about the strategic customers that; the Multinational firm should make the customers as we mentioned above that customers are a strategic asset which should build and enhanced on their relations with the firm through the integration between marketing and supply chain within the supply chain network, we can say that customers value creation process considered as the starting point for the segmentation as the customers characteristics has highly dynamic changes so the integration between marketing and supply chain management should move into more strategic level and this research suggest that local marketing talent which should be integrated with the global supply chain management design in more strategic level not only operational and tactics level, as the information flows and customization of products and services play a vital role on enhancing the Multinational firms competitive advantage within the global market.
Also strategic customers including focusing in customer needs and value creation approach should be aligned with the firm’s value propositions, as the research idea emphasized that the Multinational firm should understand the different customer characteristics and needs through the local marketing talent so this required understanding of the customer value creation process as well as it aims to maximizing the co-creation value across target customer segments which considered as the main objective that drives the close interaction between marketing and supply chain management.
The value co-creation perspective based on the customer is always co-producer, that’s means the customer is interact with the firm, we can say that customer value creating process as the starting point for segmentation.
The customer value creation can be described as a set of activities which done by the customer in order to achieve a specific goals, when the company seek to increase the degree of customer integration. It should develop the customer value creation by using a specific process such as enhancing the customer capability to utilize the available resources in higher degree of efficiency and effectiveness such as according to the marketing perspective; customers can use the brand in their own advertising. And according to the supply chain perspective; short lead-time and short cycle time requires in delivering the products or services to the customers. We can conclude that, the ideas of the customer value as co-created value involving well understanding what are the features of the customer value and translated to the value proposition as the customer demand is highly dynamic and highly changed as well as has differences from market to another, so according to the Multinational firms which is serving in different markets, the local marketing talent play a vital role to link between the marketing’s perspective & process as well as supply chain’s perspective & process within the supply chain network as the information flows is highly utilized.
To summarize the strategic corporate, customers, and shareholders integration, we can say that the strategic integration between marketing and supply chain management should link between focusing with customers value and shareholders value creation through what the researcher mentioned above on this paragraph.
Second level of integration (Strategic supplier integration)
On this level of integration, the firm’s co-creation, which based customer segmentation is integrated with the approach of supplier’s value creation, it includes synchronized downstream customer and upstream suppliers segmentation. On this strategic supplier integration we can find many researcher which emphasized on the integration between customer and supplier, the companies which with upstream and downstream integration outperform others, so we can conclude that to handle this issues the company should be aware of a range of performance indicators such as market share, profitability and return on investments as well as return on assets or overall customer service, some researchers such as (Lee, 2002) adopt logic strategy which designed to balance the uncertainties on customer demand with supply side uncertainties, Lee said that from an integration perspective; the supplier strategy cannot be suffice in express in terms of the closeness and quality of the social relationship (e.g. Gundlach et al., 1995). . On this point, this research is seeking to continue on this concept, which is that social relationships are not sufficed for strategic supplier integration. To realize the researcher point of view according to this point, we have to remember the interview, which the researcher did with the material planner director of Almaraie Company, which is in a joint venture partnership with PepsiCo. We can say that according to the supply chain’s point of view; the marketing of the firm is considered as the internal customer of the supply chain and logically according to the marketing perspective the supply chain is considered as the internal supplier, as the research discuses the integration between marketing and supply chain within supply chain network also we have to put the external supplier of both marketing and supply chain in high consideration which requires effective information flows. Hence the Multinational firm, which is serving in different markets, should improve the local marketing talent in its foreign market to ensure the ability to meet the dynamic customer demand as well as the led time cycle and the example of PepsiCo and Almaraie Company is the best example, which can describe the researcher point view on this issue.
Also there’s a very important point that the Multinational firm should take in consideration which is customizing the products or services that offering on a particular market which already demonstrated high level of excellent operations provides the opportunity to the supplier to become an integral part of a customer’s business, as the supply chain management is highly depend on close relationship with customers so the way on how to customized the products or services in a particular market which is also should be aligned and consistent with the firm’s general strategy and ideology is the key point of success which requires high skills instrument and one of the main important instrument is the local marketing talent.
To summarize the main purpose of the strategic supplier integration level, we can say that the extension of the integration between customers and suppliers can be done among strategic supplier partitioning approach, which is supported by the experimental evidence of an effective performance on the vertical upstream and downstream collaboration which is depend on high interactive between marketing and supply chain management which is in turn requires effective local marketing talent which will be discussed in more details on the third level of integration (Strategic marketing and SCM with the local marketing talent integration) which the research proposed framework built on.
Third level of integration (Strategic marketing and SCM with the local marketing talent integration)
On this research’s proposed framework, we have to put the first and second levels under the third level to realize and understand well the research main idea and the additional element that added on the framework that’s “local marketing talent”. But before reviewing the marketing talent we have to talk about the marketing and supply pipeline strategy integration.
The strategic task of this level of integration lies on the questions of how the marketing and SCM define customer co-creation propositions as well as the approach of supplier partitioning which could be translated into the process of delivering the value that ensure the effective activities from the customer to supplier or from supplier to the customer according to the co-creation value which should be with the configuration process engaged on the integration marketing and supply chain management, from the market conditions and experience. The researchers considered the customer as an factor who engaged in co-creation of value because of the customer has the ability to improve the performance of the firm while ensuring that the effectiveness of the underling marketing strategy is not only including the marketing and supply chain management field through linking the respective strategies to the customer and market segment characteristics which considered as the emphasizes of integrating marketing and supply chain strategies to achieve the competitive advantage. To make the idea more clear we can say that marketing is focusing on the activities of marketing mix such as product, price, place, promotions. The marketing strategy types based on interrelated decisions regarding these divers instruments such as aggressive marketers, mass marketers, marketing minimizer and value marketing strategies and all theses instruments to deliver the value to the customer, and logically depend on the supply chain which is focusing on enhancing the duration of life cycle and lead time and mainly focusing on the quality of raw materials that’s also depend on the market characteristics both integrating to deliver the value to the customer that depend on the market segment characteristics that is different from market to another which is highly depend on the local marketing talent because of the integration between marketing and supply chain need to be orchestrated across different markets, when the researcher said orchestrated logically it refers to the need to be driven from the local marketing talent point of view and driving the operations required highly skills and proficiency to gain the advantage which could be mixed with the advantage of quick response from the local marketing talent to the highly dynamic customers demands
The following figure can explain the integration between marketing and supply pipeline strategy.
To explain the figure idea on brief its about that every segment required a specific marketing and supply pipeline strategy which is need either high responses or high understanding of the market characteristics from the marketing and it provides short lead time with varying delivery volume, low price sensitivity or the other option provide long lead time, stable delivery volume, which both depend on different strategy of supply chain which both strategies should be aligned and integrated within the supply chain network .
To summarize the integration between marketing and supply pipeline strategy, we can say that it reflects the process of configurations which are designed in order to deliver the value propositions for the different customer segments supported by strategic marketing and supply chains’ decisions and we can highlighted on the word of decisions to conclude that; the strategic integration not only depend on implementation or acting activities but it’s highly depend on decisions which requires proficiency and high skills within effective supply chain network.
Now we are moving to the marketing talent, which will take also more discussion on the last section of this research. It can be described as the following:
Marketing talents are concentrating on everything related to the market and competition involving the value of talent that enabling the firm to cover the benefits of economical areas, customer satisfaction, competitors, quality productivity, cycle time, market capitalization as well as costs and revenues, rationally those activities can’t be achieved by computerized techniques so it should be achieved trough talented persons, so the firm’s process to improve the management and marketing talent not only including hiring the most qualified and valuable employee but focusing on how to retain them and the main important to improve their skills and knowledge, so the local marketing talent should be integrated with the global supply chain management for the multinational firms in more strategic level as it considered as a vital player on the strategic integration between marketing and supply chain management , as the world business is becoming highly dynamic and the customer demands and perception have a rapid change so the Multinational firms which are serving in different countries and the efficiency of the managing the multinational firms relationship can be measured through managing relationships with targeted customer segments as we conclude from the research the importance from this in order to more strategic integration between marketing and supply chain management, so the Multinational firm should respond on this dynamic customer demand’s, through focusing on customer relationships and cross functional integration which requires from the Multinational firms more focusing on their customers outside the firms and shoring up the emphasize on cross functional processes inside the firm and this can be achieved through strategic integration between marketing and supply chain management as we realized from the above paragraphs the importance of this integration on a strategic level as well as we realized that marketing talent play a vital role to move this strategic integration to more strategic level. Talent marketing is a subset of talent management which is becoming highly needed for advancement in all areas, so the local marketing talent as its importance to be integrated within the supply chain management design for the Multinational firms that will gain advanced benefits in the particular market which the multinational firm is serving on also the potentially to be exploited to other markets which has similar cultures and business environment which will be discussed on the fourth Hypotheses.
Finally on the third hypotheses by conducting this proposed framework the integration between marketing and supply chain management will move into more strategic level which leads the multinational firms to gain more competitive advantage, customer loyalty and more strategic benefits through improving the local marketing talent to be an integral part within the global supply chain management design for the multinational firm not only on the operational and tactics level but on a strategic level.
4.6 Testing and analysis of the fourth Hypotheses (The strategic integration between global supply chain management for Multinational firms and the local marketing talent will lead to utilizing the concept of Economies of scale & scope in the best usage)
When the multinational firms focusing on developing local marketing talent fled. It can gain tremendous benefits from this not only on the particular single market which the local marketing has been developed within, but it can exploit the local marketers who are becoming more proficient and advanced skills through engaging in the global supply chain management design of the Multinational firms.
First, we have to discuss why supply chain management tanning to knowledge-based learning “talent management”: one of the main requirements of supply chain talent; is finding and hiring as well as evolving the talented people then it can placing them in suitable roles. Successful firms are the firms that can gain a competitive advantage that mainly depends on the changing supply chain game, the firm has to be professional to choose the right skills in the right place, and according to the research’s main idea, the multinational firms should focusing a lot on this field specially on FMCG.
During the great recession talent management took a back seat within a lot of firms in different industries, but on the FMCG, the firms decided to move aggressively against this trend, however, they layoff huge numbers of their employee and decreased about 10% of the overall salaries but they set an effective strategy and plans to enhancing and evolving the talent management. Logically almost of the firms did this because they realized the importance of talent management in this industry, especially in the large firms – Multinational firms serving in various markets, local marketing talent should be a priority and should be integrated into their global supply chain management design on a strategic level as the research mentioned above, we can say that the multinational firms can exploit the marketing talent by transferring it into another market which has similar characteristics and business environment and by this it can also reducing its overall costs, this point take us to the concept of economies of sale and economies of scope which is very relevant to achieving this point.
Multinational firms which serve a lot of different customers in different countries across the world. Could gain benefits from the concept of economies of scale and scope through transferring the experience gained from one country to another country in terms of similarity in culture, customer characteristics, and business environment. From this point, we can conclude that if the firm is concerned with improving the local marketing talent in different nations, it can exploit the experience that the marketer could gain and use it in another country, that shares a similar culture, customer characteristics, and business environment and according to the industry which the research is focusing on “FMCG” firms can exploit the local marketer in Egypt in a lot of countries within the Middle East Region especially they are sharing one language and similar cultures Egypt considered as Hollywood of the Middle East, through this, the multinational firms can use the Egyptian celebrities and make common campaigns that can be suitable in all countries within the Middle East Region and also make its campaign more consistent as well as reducing advertising costs, so this required great collaboration and integration between marketing and supply chain management on a strategic level.
When we measure the similarities between for example Egypt, United Arab Emirates, and Kuwait we can find, the 3 countries share a common language, traditions, and a proper percentage of cultural and customer characteristics similarities, as the researcher mentioned above that Egypt is controlling the media in the Middle East and it considered as the Hollywood of Middle East, so this concept has high potentially to be achieved and the percentage of the success is very high.
This is a comparison between cultures in Egypt, the United Arab Emirates, and Kuwait.
So we can conclude that when multinational firms enhance and evolve the local marketing talent, that is serving within, it can gain a competitive advantage in this particular country as well as beyond this country.
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