Collaboration of PSfs with Business Partners-Samples for Students

Question: Critically analyze the risks and benefits associated with the collaboration of Professional Service Firms with business partners. Answer: Introduction The full form of PSF is Professional Service Firm. Professional service firms can be defined as those organizations which sell knowledge or expertise that are not tangible, physical products. PSFs involve firms that operate in a range of sectors like financial, engineering and management consulting providers. The business of these firms is characterized by providing intensive knowledge and customized services that are interactively designed and delivered by the PSFs. Considering the fact that PSFs have a different type of business strategy, these firms have different requirement and often faces different types of challenges. Several Professional service firms are now operating in a confounding and uncertain environment where the competition is much stronger. In order to cope up this highly competitive and turbulent environment, the professional service organizations are collaborating with external parties that include consumers and suppliers. This collaboration is crucial for the PSF s in order to provide high quality service to the consumers and thus strengthen and maintain their competitiveness in the global market. It is really crucial for PSFs to successfully collaborate with their business partner due to their dependency on the business partners for successfully developing and delivering services. Along with that, this collaboration is also important for the high-contact and customized characteristics of the services offered by PSFs. Some of the mention worthy examples of business to business (B2B) PSFs that have successfully gained market value by leveraging the knowledge and resources of their business partners are Accenture, IBM and Deloitte (Heirati et al., 2016). While a good amount of information is available about B2B marketing of PSFs associated with their collaboration with business partners, very limited amount of information is available when it comes to collaboration of PSFs with their suppliers and consumers under various environmental conditions. In this report, detailed discussion about the benefits and risks of PSFs while executing collaboration with consumers and suppliers ha ve been discussed. Apart from this, this report also contains the managerial implications of the PSFs in order to establish a successful collaboration with their consumers and suppliers. Discussion Benefits of collaboration with suppliers and customer for the PSF In order to enhance the quality of the services provided and hence the overall revenue, the PSFs engage with independent partners like suppliers and consumers in order to jointly develop and deliver professional services. Some of the benefits of the above mentioned collaborations with suppliers and consumers are discussed below Benefits of collaboration with the suppliers The collaboration of the PSFs with the suppliers for new products or service development ranges from simple consultation about various ideas to full responsibility of the suppliers for designing the system, components, services and processes. One of the major benefits of this collaboration is that this collaboration enables a supplier and a PSF to integrate and combine their capabilities and resources so that the final service delivered to the consumer can be highly satisfactory. The collaboration between PSFs and suppliers allows the former to develop high quality services and enhance the resource synergy across the firms by importing best practices from the suppliers and complementing the PSFs own resource with that of the suppliers. Suppliers play a major role in providing complementary services to the PSFs. Complimentary services can be considered as a major requirement for development of superior services by the PSFs since several PSFS do not poses the required processes and resources that are required to provide effective services to the consumers (Sarrami-Foroushani et al., 2014). Thus it can be clearly understood that collaboration between the PSFs and the suppliers is highly advantageous since it can be considered as the origin of the knowledge and complementary resources that not only enhance the flexibility and efficiency of PSFs but also ensure customer satisfaction by providing superior services. Another major advantage of the above mentioned collaboration is that usage of the expertise and knowledge of the suppliers in order to complement the internal capabilities can effectively reduce the concept to consumer cycle costs, time and quality issues along with improving the overall design effort (Heirati et al., 2016). Hence in can be concluded from the above discussion that collaboration with the suppliers can be highly beneficial for the PSFs since it not only enhances the capacity of the PSFs to assess greater level of diverse resources but also enhances their capabilities to meet the needs of the consumers effectively as well as drive a service performance. Benefits of collaborating with Consumers According to researchers, PSFs must collaborate with consumers to effectively understand specific needs of the consumers and create services that can efficiently fulfill the requirements (Halinen Jaakkola, 2012). With the help of effective collaboration with the consumers, both the PSFs and consumers can work together to develop customized services and products. According to recent studies associated with service marketing, consumers are not just passive service receivers but they play a major role in creation and deliverance of services. Therefore, it can be clearly understood that PSFs should facilitate consumer collaboration to encourage the consumers to take active role in the developing the services. Another benefit of collaboration of PSFs with the consumers is that effective collaboration can make a firm work more diligently by using its own sources of knowledge in order to address the requirements of the consumers. While PSFs have the urge to collaborate with their consumers in order to enhance their quality of services, consumers are also found to be interested in active collaboration. The main reason behind this is the desire of consumer to gain more control over the attributes and performance of the Professional Service Firms. Thus it can be clearly understood that collaboration of PSFs with the consumers is not only beneficial for PSFs but it also represents a mechanism that allows consumers to customize the attributes and configurations of the service by interacting with PSFs (Sarrami-Foroushani et al., 2014). Thus consumer collaboration can be seen as a key mechanism to satisfy the consumers along with developing services that can efficiently solve various service relate d issues of the consumers. Another added advantage of PSF-Consumer collaboration is a formation of strong and positive relationship between consumers and the service firms. Building strong relationship not only helps the PSFs to enhance the consumer loyalty and the brand equity, it also proves to be beneficial for the consumers since a positive relationship with the PSFs allows them to access PSFs help whenever required. In the highly competitive market of today, when the numbers of competitors are increasing each day, it has become more difficult for the consumers to decide which Professional Service Firm they want a service from. Thus building closer relationship with the consumers helps the PSFs to retain their consumers and prevent them from switching to another service firm. Thus it can be clearly understood that one of the chief target of PSFs is to develop trust in the minds of the consumers. This trust in turn, helps the service firms to gain confidential knowledge from the consumer that provide guidan ce to the PSFs to address its unmet requirements. Considering the fact that the consumers are the best source of information when it comes to customer requirements, PSF-Consumer collaboration not only ensures detailed and specific knowledge about the consumers requirements but also act as a crucial source of new and innovative ideas. Apart from these two benefits, the collaboration between PSFs and consumers helps in minimizing design errors along with ensuring a service solutions functionality and attributes to effectively meet the requirements of the consumers. Finally it can be concluded that an effective collaboration between the consumers and the PFS enhances the capability of the later to identify consumer requirements, minimize design errors and customize service attributes which in turn enhances the quality of services provided by the PSFs. Risks associated with such collaboration under conditions of intense competition and turbulent environment It has been found that, though collaboration with the suppliers and stakeholders has several advantages for the PSFs, a good number of risks have been encountered due to this collaboration under the condition of turbulent environment and intense competition (Huovinen, Haugblle Oostra, 2017). In this report, several negative effects of establishing collaboration with the suppliers and consumers on competitive intensity and environmental turbulence have been discussed bellow. Negative effects of Competitive intensity on the collaboration between PSFs and the suppliers and consumers According to contingency theory, environmental factors like competitive intensity can turn the bright side of PSFs collaboration with the consumers and suppliers into a dark side. Considering the fact that the degree of competition in the market has increased hugely, consumers are developing the tendency to switch services by comparing which professional service firms are providing them with superior services at equal amount of price. Hence it is very crucial for PSFs to gain competitive knowledge and develop resources to provide superior services to the consumer. However, PSFs face difficulties to gain access to the necessary recourses that are required to develop and successfully commercialize imitation. Besides that, successfully developing a innovation also requires a high financial background. Thus, in order to reduce the cost of innovation while availing the advantages of marketing knowledge, several PSFs have developed the tendency of imitating their competitors. The collabora tion of PSFs and Suppliers has enhanced the risk of imitation. This risk of imitation is more in service contexts since there are no patent rights and barriers that can prevent imitation of new offerings to the consumers. Considering the fact that a single supplier can work with several PSFs, the system of collaborating with the suppliers acts as transfer mechanism of knowledge. Thus, collaborating with a supplier helps PSFs to gain complementary knowledge without internal cost development. Besides that, during the collaboration, suppliers develop overlapping knowledge which in turn enhances their ability to provide effective services to the consumers. Thus there is a high risk that suppliers may turn to competitors after they have gathered enough knowledge to start their own business. However no potential risks are found in establishing collaboration with the consumers. Moreover, collaboration with the consumers helps the PSFs to develop competitive knowledge and thus cope up with the increasing competition in the market. Negative effects of environmental turbulence on the collaboration between PSFs and the suppliers Environmental turbulence can be defined as the frequency and degree of technological changes in the business environment of the PSFs. The major sources of these changes are instability and speed of changes in the requirements of the consumers along with highly variable market changes. The origin of technological changes is instability and rapid changes in market technology due to technological innovations. These rapidly changing technologies often make the PSFs less competitive in the market by cannibalizing their services. Thus it can be understood that in order to gain market advantages in the turbulent environments, PSFs needs to modify their services in order to address changing preferences of the consumers. It has been found that, in order to cope up with the highly turbulent environment, the managers of Professional Service Firms often favor quick results (Heirati et al., 2016). However, several PSFs are there which are more oriented towards the long term view by implementing i nvestment strategies along with financial assets. They also invest their time to establish effective collaboration with their business partners. However studies have found that a majority of PSFs seeks quick results from the collaboration with the suppliers which in turn enhance the environmental turbulence. There are three major reasons behind the tendency of service firms to seek quick results. The first reason behind this I the lack of patients to allow the collaboration to flourish. As a result PSFs have the tendency to treat the interfirm collaboration merely like a one-off business transaction. Secondly, due to constant pressure that originates from high environmental turbulence, PSFs often are not being able to wait for a prolonged amount of time waiting for their collaboration with the suppliers to reach the optimum level. Thirdly, due to increasing environmental turbulence, PSFs are becoming doubtful about the abilities of the suppliers to fill the gap caused by the environmental turbulence. Managements of PSFs are not sure that suppliers will be able to handle the changes in technologies and core knowledge that is needed to meet the requirements of the consumers. Several cases are there where service firms have terminated their collaboration with their existing suppliers and sw itched to a new supplier who posses appropriate technological competencies. This opportunistic behavior of PSFs are imposing negative impact on the commitment of the suppliers along with their intention of sharing crucial information and effort to stand by the PSFs in achieving the target of effectively satisfy the consumers. From the above discussion it can be clearly understood that environmental turbulence is making the relation between the consumers and the PSFs too short turn to develop a positive relationship between them. Due to the development of short term relationship, both the PSFs and the Suppliers are developing tendencies to exploit each other. The suppliers are not paying less attention to the outcome of the service and the satisfaction of the consumers. This in turn is imposing negative impact o the business of both the PSFs and suppliers as they are not able to satisfy the consumers. Negative effects of environmental turbulence on the collaboration between PSFs and the consumers In spite of the fact that collaboration with the consumers helps the PSFs to gain complementary knowledge and understand the changes in the market, one of the negative impact of consumer collaboration is that is highly time consuming. Due to high environmental turbulence, PSFs often found it difficulties to invest time for proper interaction, exchange of crucial information and effecting learning about the requirements of the consumers. Often it is seen that, in order to save their time, PSFs uses unproven solution processes and technologies in order to develop faster services. These services are often found to be of low quality and are not able to meet the requirements of the suppliers. This lack of perfection and time investment also imposes a negative impact on the relationship between the consumers and PSFs. Consumers are getting de-motivated to collaborate with the PSFs and hence are getting less interested to share valuable information and dialogues that provides appropriate instruction about their collaboration requirements (Sarrami-Foroushani et al., 2014). This in turn is negatively affecting the business of the PSFs since they are not able to gain complimentary and confidential knowledge from the consumers. Lack of knowledge is lowering the efficiency of the PSFs to create products that are highly satisfactory and all these are resulting in consumer attrition. Furthermore, the fact that consumers want quick changes but themselves remain confused about how to adapt this changes, may affect the business of PSFs in a negative way in a market of environmental turbulence. Under such conditions, it is collaboration with the consumers may confuse the PSFs and henc e can diminish their quality of services. Conclusion Considering the facts that PSFs are suffering from a lot of issues associated with their collaboration with the suppliers and the consumers, several managerial implication that can effectively eradicate the issues are being discussed in the report. Two crucial implications for the managers can be suggested in order to implement an effective collaboration between PSFs and business partners. Firstly, in order to cope up highly turbulent market, PSF should put more emphasis to establish a better PSF-supplier relationship. Necessary Knowledge should be shared with the suppliers so that suppliers can provide a better service. Along with that PSF managers should stop putting pressure on the suppliers to produce quick result in order to satisfy their own consumers. Managers are advised to leverage mechanisms like commitment promotion through economic and rational tools. Secondly, managers are advised to establish a strong collaboration with the consumers in order to cope with highly turbulent and competitive market. Although the pressure from environmental turbulence may force the managers of PSFs to use the practices from previous projects to save time, developing service without updated knowledge and practices can make the service obsolete and less effective. Thus in order to gain competitive advantages in the market, PSFs should invest their time to effectively collaborate with the consumer and gather complementary knowledge for understanding the latest requirements of the consumers. In spite of the fact that all the managers of business firms are advised to maintain a strong collaboration with their consumers, this factor is highly crucial for B2B professional service providers. The complex issues of business consumers should be handled effectively in order to build their trust on the organization. This will not only ensure consumer loyalty but will also help the PSFs to gain advantages in the turbulent and highly competitive market. Reference list Halinen, A., Jaakkola, E. (2012). Marketing in professional services firms: turning expertise into customer perceived value.Handbook of Research on Entrepreneurship in Professional Services,219. Retrieved from https://books.google.co.in/books?hl=enlr=id=SIHOPPWxCkECoi=fndpg=PA219dq=Halinen,+A.,+%26+Jaakkola,+E.+(2012).+Marketing+in+professional+services+firms:+turning+expertise+into+customer+perceived+valueots=Az7npm1QY4sig=NofzIYNPiTvhbSjrTos7KX9quJw#v=onepageqf=false Heirati, N., O'Cass, A., Schoefer, K., Siahtiri, V. (2016). Do professional service firms benefit from customer and supplier collaborations in competitive, turbulent environments?.Industrial Marketing Management,55, 50-58. Retrieved from https://www.researchgate.net/profile/Aron_OCass/publication/284189960_Do_professional_service_firms_benefit_from_customer_and_supplier_collaborations_in_competitive_turbulent_environments/links/57329d9f08ae9ace8404825d.pdf Huovinen, P., Haugblle, K., Oostra, M. (2017). Shaping client-driven business management concepts for modern construction markets.WELCOME TO DELEGATES IRC 2017, 830. Retrieved from https://usir.salford.ac.uk/44058/7/IRC2017_Proceedings_12102017_optimised.pdf#page=831 Sarrami-Foroushani, P., Travaglia, J., Debono, D., Braithwaite, J. (2014). Key concepts in consumer and community engagement: a scoping meta-review.BMC health services research,14(1), 250. Retrieved from https://bmchealthservres.biomedcentral.com/articles/10.1186/1472-6963-14-250