Master MSC thesis presentation cristina_nazaremartins_19nov2010_eng version

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In a business global world, outsourcing is every day a real and successful management tool in all areas. This is a study of the impact of outsourcing and the competitive advantage that that brings in …

In a business global world, outsourcing is every day a real and successful management tool in all areas. This is a study of the impact of outsourcing and the competitive advantage that that brings in the Marketing area.

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  • 1. Master MSc Thesis Presentation The impact of a strategic alliance through outsourced Marketing (OM) in thecompetitive advantage of the Small and Medium Enterprise (SME’s) in Portugal Friday, 19th November 2010 cristinanazaremartins@gmail.comThe impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 2. Introduction State of the Art Methodology Field research and results’ analysis ConclusionThe impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 3. IntroductionThe impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 4. The Strategic Alliances• Lin and Lin (2010): … through complementarity can enhance synergies between them.• Hynes e Mollenkopf (2008): … can reach the point of creating competitive advantages.The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 5. Theory, Domain and focus Marketing 5The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 6. Problem and Research Questions • Central question • Research questions• “The strategic alliances • The resources’ management through Outsourcing is correlated through Outsourced with the factors of businesses’ Marketing has impact in the competitiveness? SMEs’ competitive • The resources’ management through "periphery" Outsourcing advantage?” has an impact on company’s performance? • The resources’ management through Outsourcing has an impact on the efficient cost management? • The Marketing’ significance in a company has an impact on the decision to engage Outsourced Marketing services? The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 7. State of the ArtThe impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 8. Marketing Management Analytical approach Voluntary approach MarketingStrategic Marketing Operational New Opportunities Existing opportunities Tactics: Choice of Tactics: advertising, products/market sales, price, Proactive behaviour promotion Medium-long term Reactive behaviour perspective Short term perspective Cross-functional Marketing function responsibility responsibility Adapted from Lambin (2000) The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 9. Outsourcing: Strategic Alliances Strategic alliances cooperation Business Partnership Strategic Alliances Activities with complementary resources Partial assumption of the risks Focus on company’s core business Gain of sustainable competitive advantageThe impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 10. Risks as Advantages Disadvantages outsourcing increases Over the Outsourcing of Focus in core activities activities exhaust the Trust and control issues (Quinn, 1999) competitive basis (Hamel, (Das e Teng, 2001) 1992 in Mol: 2007) High coordination costs Reduced levels of costs by Diversity of business associated to excessive Outsourcing non core relationships (Aubert et outsourcing (Hendry, activities (Quinn, 1999) al, 1998) 1995) Increased strategic Difficulty in learning and Complexity of managing flexibility of the company, innovating (Hendry, contracts (Aubert et al, through ease of suppliers’ 1995) 1998) switching (Quinn, 1999)The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 11. Marketing OutsourcingThe future is indeed in Outsourcing (Kotler, 2005) Marketing suppliers = Business partners that will bring value added for very long time (Mcgovern and Quelch, 2005) “even core competences as engineering, research & development, production and Marketing can – and most of the time should - be outsourced.”. (Gottfredson, Puryear and Phillips, 2005:132) The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 12. Theories •Relevant characteristics of core competencies, in terms of customerCore competences theory •Resources and know-how of the product that distinguish the company from the(Kruger and Homp, 1997) competition •Utility of the resource Resource-based •Resource analysis •Comparison with the competition theory(hunt and Morgan, •Verifying whether to create, or not, that which will differentiate them, i.e. the 1997) competitive advantageTheory based on collective •"Collective learning organization" •Coordination of diversity-generating skills learning (Prahalad and •Integration of the several technology streams that generate competitive advantage Hamel, 1990) •Decisive: The company skills and know-how •The value chain categorizes the activities of the company and helps to identify the core Competitive advantage competencies: strategic activities (essential to the implementation) and the resources required on the activity (crucial for the success of the activity) theory (Porter, 1985) •The three generic strategies are cost leadership, differentiation, focus (on cost or on differentiation)The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 13. Performance management Marketing Marketing In general (Financial indicators) (Non financial indicators) Implementing the Sales volume Market share strategic vision Value creation Net Profit Sales management Assessment of Internal rate of return business performance People’s motivation ROI Cash-flow Font: Kotler, 2008; Murray, Kotabe and Wildt (1995); IAPMEI (2010)The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 14. Analytical ModelThe impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 15. MethodologyThe impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 16. Adopted MethodologyPositivist Paradigm:The reality and the results arerigorous, external and objectives.Interpretativist Paradigm:Through preliminary supporttechniques to the questionnairesurvey and final interviews tovalidation/results interpretation.Quantitative methodology based inthe hypothetical-deductivemethod.The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 17. Techniques of data collection Sample and sampling proceduresNon-documentary research Universe 297.000 SMEstechniques and non-participantobservation, in the form of surveys and Sample103 SMEsinterviewsInstrument for data collection: Activity sectors (7): retail (31,7%), construction1st phase: survey by questionnaire, the (13,9%), energy (0,1%), manufacturing industrypopulation of 297 000 SMEs in Portugal (14,3%), extractive industry (0,3%), services(IAPMEI 2007), having been (30,1%) and tourism (9,5%).obtained a sample of 103 SMEs. Portugal (Continent and islands): North2nd phase: Final interviews , for a better (30%); Center (20%); Lisbon (30%); Alentejointerpretation and validation of the (5%); Algarve (5%); Madeira and Açores (10%).obtained results, to five Marketingconsultancy companies (“Designarte”,“Love2Brand”, “QSP Marketing”, “MPG Random sampling method (probabilistic)Media Global Agency”, and “Jotoliveira”.The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 18. Field research and results’ analysisThe impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 19. Statistical Analysis• The questionnaire was seen until thedate of April 29, 2010,by 940 addressees;•523 started to fill it• Just 181 completed it• The remaining 342 droppedout completing, after starting toanswer the questions (cancelledquestionnaires).The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 20. Descriptive analysis Marketing significance (%) The marketing manager’s skills are crucial to consider Marketing relevant to the organization Attitude towards Marketing Management (%) Insourcing No Minor Average Signifi- Verysignificance significance significance cant significant Companies that do not Totally disagree Disagree consider Marketing Marketing Management Efficiency and effectiveness Neither agree nor significant choose to function outsourced of outsourced Marketing disagree Agree Outsource (Azhar 2008) Totally agree The qualification of the marketing manager provides levels of efficiency and effectiveness The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 21. Descriptive analysis SMEs choose to relegate more operational marketing activities to third parties, opting to maintain inside the business strategy. Current management resources of Marketing (%) Outsourced Marketing services (%) Strategic Marketing plan Operational Marketing plan Communication plan Sales plan Brand and Communication plan Product and price management plan Product distribution plan No answer Others Strategical Strategical Operational Marketing + Marketing Marketing Operational MarketingThe impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 22. Descriptive analysis Relationship between OM and obtained results (%) Total Total• Majority Increase of financial agreement disagreement indicators (0,1% - 20%) Gaining a competitive advantage• Only 12% of respondents Preference of outsourced Marketing over insourcing say they disagree and totally Efficiency in managing disagree the statements about the sales impact of OM on the Deliver the desire results results achieved by SMEs Benefit Increase in financial indicators (%) Good satisfaction in sales management Increase demand of products and brands Notoriety (awareness) increase Market share increase Return on investment (ROI)Turnover Profit Market Intern rate Cash flow Other Cost efficiency share of return Effectiveness inNo Very few Few Average Quite Drastically the sales targetsincrease increase increase increase increase increase(0%) (>0% (>5% (>10% (>20% (>30%) < 5%) <10%) <20%) < 30%) Totally disagree Disagree Neither agree nor disagree Agree Totally agree The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 23. The variables intersection: H1 Significant correlations between Outsourced Marketing (OM) and Competitive advantages Independent variable Correlation (+ / -) Dependent variables In SMEs exists a positive + Competitive advantage association Resource to OM + Notoriety between OM and + More efficient sales management competitive Competitive advantage advantage: • 41% of the answers Totally disagree Disagree were positive Neither agree nor disagree Agree Totally agree Notoriety More efficient sales management Intersection between OM and Competitive advantages ( in number of cases)The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 24. The variables intersection: H2 Correlations between Outsourced Marketing (OM) and the financial indicators’ performance In SMEs exists Independent a positive variable Correlation (+ / -) Dependent variables association + Profit + Internal rate of returnbetween OM and: Resource to OM + Cash flow •Profit + Return on investment (ROI) (88%), Profit Totally •Internal rate of disagree return (90%), No increase (0%) Very few increase (>0% < 5%) •Cash-flow Few increase (>5% <10%) Average increase (>10% <20%) Totally Disagree (90%), Quite increase (>20% < 30%) Drastically increase (>30%) agree •ROI (41%). Cash flow Internal rate of Agree Neither agree nor return disagree Intersection between OM and Performance concerning Intersection between OM and Performance the increase in financial indicators (in number of cases) concerning the achievement of the ROI (in number of cases) The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 25. The variables intersection: H2 Correlations between Outsourced Marketing (OM) and the non financial indicators’ performance Outsourcing has an Independent Correlation (+ / -) Dependent variables variable impact on Marketing More efficient sales management + management Resource to OM concerning the non + Good satisfaction in sales financial management performance: Totally disagree • More Efficient sales management (50%); Totally agree Disagree More efficient sales management• Good satisfaction in Good satisfaction in sales sales management management(41%). Agree Neither agree nor disagree Intersection between OM and the Performance of the financial indicators (in number of cases)The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 26. The variables intersection: H3 Correlations between Outsourced Marketing (OM) and cost efficiency When SMEs opt Independent variable Correlation (+ / -) Dependent variables for Marketing Resource OM + Cost efficiency Management through Outsourcing occurs a Totally disagree positive impact on cost efficiency: Totally agree Disagree • In 48% of the SMEs it was observed such increase. Agree Neither agree nor disagree Cost efficiency through the resource to Outsourced Marketing Intersection between OM and cost efficiency (in number of cases)The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 27. The variables intersection: H4 Correlations between Marketing significance and the resource to OM Correlation Independent variable Dependent variables (+ / -) There is a positive association between Importance attributed to Marketing + Attitude on the existence of an internal probability of resource marketing department + to OM and the variables Attitudes towards the reliance on Probability to OM set. outsourcing for the function of Marketing + Manager Preference for Marketing Outsourcing +As variables set increase ordecrease, also increases or Not at all important decreases the resource to outsource Marketing. Unlikely Very important Minor Less likely Likely Most likely Certain Important Averagely important Intersection between OM and probability to outsource Marketing (in number of cases)The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 28. The variables intersection: H4• 50% of SMEs claim to be likely the resource to Intersection between the attitude towards marketing management and probability of resource to OM (in number of cases) OM. • 20% of these SMEs claim be certain to recourse to OM.• 46% of the SMEs agrees with the use of outsourcing for the Marketing manager function. • Only 20% of the Marketing Managers have academic education in the area. Less likely resource Most likely resource Less likely resource Most likely resource Less likely resource Most likely resource Likely resource to Certain resource to Certain resource to Likely resource to Certain resource to to OM OM Likely resource to to OM OM to OM OM to OM OM to OM OM to OM OM Unlikely resource to OM Unlikely resource to OM Unlikely resource to OM• 45% of SMEs surveyed prefer the OM vs. 36% that Intern Marketing Outsourcing the Marketing Preference of OM over the prefer Insourcing Marketing. department manager function Marketing insourcing Totally disagree Disagree Neither agree nor disagree Agree Totally agreeThe impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 29. Factorial analysis and Cronbachs Alpha reliability test It was observed that all variables tested, after having carried out the factor analysis, and having found the components associated to variables, present a satisfactory internal reliability consistency . Highlights : • Factsassociated to the OM’s performance; •Facts and opinions in favour of OM. Reliability Test from obtained scales Cronbachs Variables Scale Alpha Marketing resource management Behaviour 0,844 Performance associated to MO Facts 0,984 Marketing and its management Attitude towards Marketing 0,755 Outsourced Marketing Facts and opinions towards MO 0,958The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 30. ConclusionThe impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 31. Conclusions about the research hypotheses The management of resources through outsourcing creates competitive factors in SMEs, with an impact on performance. Significance of Marketing in SMEs increases the use of outsourcing leading to efficient cost management. Management of non- core competencies in SMEs inOutsourcing of Marketing are synonym of competitive advantage.The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 32. Contributions Matrix of relationship between core competencies and strategic importance to management Both the Operational Marketing and Strategic Marketing are susceptible to be Outsourced. This research leads to a new frame about the make or buy decisions regarding the practice of marketing. Font: own elaborationThe impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 33. Limitations Limited availability of SMEs to provide information, in order to ensure some barriers to entry to new competitors; Legal limitations: Law for data confidentiality; Portuguese business culture: resistance to outsourcing, issues and sensitive topics.The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 34. Recommendations1. The questions should be asked to executive directors or even to the SMEs’ shareholders.2. Focus on only one sub-theme and simplification of the questionnaire for a higher concentration and adherence.3. Outsourcing practices in human resources management or in research and development can be compared to this investigation.4. Make a cultural and geographical comparison to understand whether the results are exclusive to Portuguese SMEs or are also the same results in other European countries.5. Cluster analysis in terms of characterization ofSMEs, as defined by IAPMEI. The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins
  • 35. Master MSc Thesis Presentation The impact of a strategic alliance through outsourced Marketing (OM) in thecompetitive advantage of the Small and Medium Enterprise (SME’s) in Portugal Friday, 19th November 2010 cristinanazaremartins@gmail.comThe impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins