Developing linkage among transactional value, acquisition value, relationship value and the cycle of failure of the informal service sector of uncertainty avoidance society

1. Literature review:
Heskett, J. and L. Schlesinger (1991) Most managers recognize that good service is a direct result
of having effective, productive people in customer contact positions. You need winners at the front
lines, not just warm bodies. But most service companies perpetuate a cycle of failure by tolerating
high turnover and expecting employee dissatisfaction. Schlesinger and Heskett explore the reasons
that so many managers have trouble breaking this cycle. They spotlight a number of companies that
are developing winning customer service teams, including one that pays twice the industry average
to its frontline employees while its sales and profits have soared. Instead of submitting to the cycle
of failure, they argue, managers should take advantage of ways to break it, and get their
organizations onto the cycle of success.
Grewal, D., K.B. Monroe, and R. Krishnan, (1998) The authors expand and integrate prior price-
perceived value models within the context of price comparison advertising. More specifically, the
conceptual model explicates the effects of advertised selling and reference prices on buyers‟ internal
reference prices, perceptions of quality, acquisition value, transaction value, and purchase and
search intentions. Two experimental studies test the conceptual model. The results across these two
studies, both individually and combined, support the hypothesis that buyers‟ internal reference
prices are influenced by both advertised selling and reference prices as well as the buyers‟
perception of the product's quality. The authors also find that the effect of advertised selling price
on buyers‟ acquisition value was mediated by their perceptions of transaction value. In addition, the
effects of perceived transaction value on buyers‟ behavioral intentions were mediated by their
acquisition value perceptions. The authors suggest directions for further research and implications
for managers.
Zajac, E.J. and C.P. Olsen (1993) This article examines inter organizational strategies from a
transactional value, rather than transaction cost, perspective. It argues that the transaction cost
perspective has at least two major limitations when used to analyze inter organizational strategies:
(1) a single‐party, cost minimization emphasis that neglects the interdependence between exchange
partners in the pursuit of joint value, and (2) an over‐emphasis on the structural features of inter
organizational exchange that neglects important process issues. We propose instead a transactional
value framework for analyzing inters organizational strategies that address (1) joint value
maximization, and (2) the processes by which exchange partners create and claim value. We discuss

2. the implications of the present approach for the study of inter organizational strategies and for the
transaction cost perspective itself.
Tabba, F., A.W. Hay, and J.R. Goodman (2009) This workshop paper explores some ideas for
value prediction and data speculation in hardware transactional memory. We present these ideas in
the context of false sharing, at the cache line level, within hardware transactions. We distinguish
between coherence conflicts, which may result from false sharing, from true data conflicts, which
we call transactional conflicts. We build on some of the ideas of Huh et al. [1] to speculate in the
presence of coherence conflicts, assuming no true data conflicts. We then validate data before
committing. This dual speculation avoids aborting and restarting many transactions that conflict
through false sharing. We show how these ideas, which we call Transactional Value Prediction, can
be applied to a conventional best-effort hardware transactional memory. Our preliminary model, β-
TVP, does not alter the underlying cache coherence protocol beyond what is already present in
hardware transactional memory. β-TVP requires only minor, processor-local modifications to a
conventional best-effort hardware transactional memory. Simple benchmarks show that β-TVP can
dramatically increase throughput in the presence of false sharing, while incurring little overhead in
its absence.
Shleifer, A. and R.W. Vishny (1988) According to the authors, corporate managers have many
personal goals and ambitions, only one of which is to get rich. The way they try to run their
companies reflects these personal goals. Shareholders, in contrast, deprived of the pleasures of
running the company, only care about getting rich from the stock they own. The takeover wave of
the 1980s put the manager-shareholder conflict to a new test. Where other checks on management
failed, hostile takeovers could now wrest control from managers who ignored the interests of their
shareholders. More so than ever before, fear of such disciplinary takeovers has forced managers to
listen to shareholder wishes. But even now, many acquisitions are not of this disciplinary variety.
Ironically, making acquisitions is often just the quickest and easiest way for managers to expand the
scope of their control by directing the firm's cash flows into new ventures. In this paper, we appraise
the acquisition process from the managerial perspective. Has the pressure brought by hostile
takeovers effectively restricted non-value-maximizing conduct by managers? Are acquisitions
themselves driven by non-value-maximizing behavior on the part of acquiring managers? We
conclude with some recommendations for improving the takeover process.

3. Ulaga, W. and Eggert, A. (2006) The authors established models of buyer‐seller relationships do
not reflect managerial emphasis on supplier performance evaluation when modeling business
relationships. They propose that relationship value should be included as a key constituent in such
models. Aims to explore the construct's links with key constituents of relationship quality, i.e.
commitment, satisfaction, and trust.
Discussion:
The Cycle of Failure
The „Cycle of Failure‟ denotes a situation in a service organization where employee turnover is high
and the level of employee morale is low due to uncompetitive compensation they receive,
inefficiencies associated with workplace and job design and a range of other reasons. It is referred
to as a cycle because no proactive approach is taken by managers in such organizations to improve
the situation, and therefore the scenario tends to repeat for new employees.
Figure: The Cycle of Failure

4. Some managers in organizations experiencing the „Cycle of Failure‟ are aware of the negative
impact high level of employee turnover causes the business. However, they fail to improve the
situation largely due to their assumptions about the labor pool, attitudes and biases about the
technology, availability of excuses, preference for short-term gains, and not knowing the real cost of
damage caused by the “Cycle of Failure‟ (Schlesinger and Heskett, 1991)
Nevertheless, “the consequences of this cost-containment strategy include stressed employees who
are forced to carry a heavier workload and/or disgruntled employees who feel underpaid and
unappreciated” (Levoy and Levoy, 2007, p.263).
There are many real life case studies where neglecting the “Cycle of Failure‟ has contributed to the
bankruptcy of the firm. For instance, it can be convincingly argued that poor level of customer
services along with lack of clear market positioning strategy were the main reasons behind one of
the top UK brands, Woolworth becoming a history.
Moreover, the list of service organizations that have failed to address the “Cycle of Failure‟ in an
appropriate manner resulting in their collapse during the global financial crisis of 2008-2010
include UK tour operators XL Leisure and Silverjet.
Acquisition Value
Acquisition value shows what relative value buyers see in a product or service. It can be defined as
a subjective weighted difference between how much a person is able to pay and how much the
product actually costs.
Acquisition strategy
The Acquisition Strategy defines the approach the program will use to achieve full capabilities‟
either evolutionary or single step; it should include a brief rationale to justify the choice. It is a
comprehensive plan that identifies and describes the acquisition approach that Program
Management will follow to manage program risks and meet program objectives. The Acquisition
Strategy guides program execution across the entire program life cycle and is updated at every
major milestone and review.

5. 1. Diversification strategy: A company may elect to diversify away from its core
business in order to offset the risks inherent in its own industry.
2. Adjacent industry strategy: An acquirer may see an opportunity to use one of its
competitive strengths to buy into an adjacent industry. This approach may work if the
competitive strength gives the company a major advantage in the adjacent industry.
3. Full service strategy: An acquirer may have a relatively limited line of products or
services, and wants to reposition it to be a full-service provider. This calls for the
pursuit of other businesses that can fill in the holes in the acquirer‟s full-service
strategy.
4. Geographic growth strategy: A business may have gradually built up an excellent
business within a certain geographic area, and wants to roll out its concept into a new
region.
5. Industry roll-up strategy: Some companies attempt an industry roll-up strategy, where
they buy up a number of smaller businesses with small market share to achieve a
consolidated business with significant market share. While attractive in theory, this is
not that easy a strategy to pursue. In order to create any value, the acquirer needs to
consolidate the administration, product lines, and branding of the various acquires,
which can be quite a chore.
6. Low-cost strategy: In many industries, there is one company that has rapidly built
market share through the unwavering pursuit of the low-cost strategy. This approach
involves offering a baseline or mid-range product that sells in large volumes, and for
which the company can use best production practices to drive down the cost of
manufacturing. It then uses its low-cost position to keep prices low, thereby preventing
other competitors from challenging its primary position in the market.
7. Market window strategy: A company may see a window of opportunity opening up in
the market for a particular product or service. It may evaluate its own ability to launch a
product within the time during which the window will be open, and conclude that it is

6. not capable of doing so. If so, its best option is to acquire another company that is
already positioned to take advantage of the window with the correct products,
distribution channels, facilities, and so forth.
8. Product supplementation strategy: An acquirer may want to supplement its product
line with the similar products of another company. This is particularly useful when
there is a hole in the acquirer‟s product line that it can immediately fill by making an
acquisition.
9. Sales growth strategy: One of the most likely reasons why a business acquires is to
achieve greater growth than it could manufacture through internal growth, which is
known as organic growth. It is very difficult for a business to grow at more than a
modest pace through organic growth, because it must overcome a variety of obstacles,
such as bottlenecks, hiring the right people, entering new markets, opening up new
distribution channels, and so forth.
10. Synergy strategy: One of the more successful acquisition strategies is to examine other
businesses to see if there are costs that can be stripped out or revenue advantages to be
gained by combining the companies. Ideally, the result should be greater profitability
than the two companies would normally have achieved if they had continued to operate
as separate entities. This strategy is usually focused on similar businesses in the same
market, where the acquirer has considerable knowledge of how businesses are operated.
11. Vertical integration strategy: A company may want to have complete control over
every aspect of its supply chain, all the way through to sales to the final customer. This
control may involve buying the key suppliers of those components that the company
needs for its products, as well as the distributors of those products and the retail
locations in which they are sold

7. Transaction Value
The price paid or payable for goods or service is called transaction value.
Transaction Value Strategies
Growing your business by increasing your number of clients alone, as most businesses do, is the
most expensive, demanding and time consuming option available to you. The cost of selling them
more is inconsequential in comparison. Increasing both your number of clients and the average
amount each client spends on each transaction they do with you, using some of the techniques listed
here, is the fastest and easiest shortcut available to you to reach your goals.
Up-Sell and Cross Sell: Up-selling is a sales technique where a seller induces the customer to
purchase more expensive items, upgrades or other add-ons in an attempt to make a more
profitable sale. Cross-selling is the action or practice of selling an additional product or
service to an existing customer.
Packaging products or services: Packaging is the science, art and technology of enclosing
or protecting products for distribution, storage, sale, and use. Packaging also refers to the
process of designing, evaluating, and producing packages. Packaging can be described as a
coordinated system of preparing goods or services for transport, warehousing, logistics, sale,
and end use.
Offer larger units of purchase: Increasing the size of your minimum purchase unit is a
powerful and remarkably easy way for you to increase your average transaction value.
Increase pricing and margins: The pricing margin on any product you sell is the difference
between your cost and the price at which you sell the product to your customers. People will
willingly pay more for most products or services as long as they believe they‟re getting
better value.
Positioning yourself further up-market: If you‟re good at what you do, moving your
products or services further upmarket and positioning your business at a higher level of
distinction or quality than your competition can improve your business dramatically.
Point of sale promotions: Point of sale promotion is advertising or promotion of the
product at the point where the consumer is actually buying the product. This is intended to
influence the consumer into buying the product while they are in an appropriate place to do
so. It is also known as merchandising.

8. Increase horizontal penetration: If your customers are unaware of the full range of
products or services you offer, they‟re also unlikely to think of you when a problem arises
that could be solved by your product or service. Educating them to use your full range of
products and services using a simple yet powerful matrix will immediately allow you to
focus on the penetration of each of your products or services into your existing customer
base.
Increase vertical penetration: Vertical penetration is a scalar measurement of distance, of
the maximum altitude an object, most often an aircraft can gain at any particular moment in
time, thereby converting all of its energy from kinetic to gravitational potential.

9. Acquisition and Transaction value Model
Maximum
acceptable price
Actual Price
Perceived
reference price
Perceived benefit
Perceived
monetary
sacrifice actual
Perceived
monetary
sacrifice
reference
Acquisition value
Transaction value
Perceived value
Willingness to
buy
Perceived
reference price
Actual Price
Perceived
quality
Perceived
monetary
sacrifice actual
Perceived
monetary
sacrifice
reference
Redemption
effort
Acquisition
value
Transaction
value
Perceived value
Willingness to
buy

10. Effects of Acquisition and Transaction Value on Willingness to Buy
Willingness to buy is defined as the likelihood that the buyer intends to purchase the product
(Dodds, Monroe, and Grewal 1991). All things being equal, willingness to buy is positively related
to overall perceptions of acquisition and transaction value. Buyers' willingness to buy is positively
linked to their perceptions of acquisition and transaction value.
Relationship Value
The concept of relationship value is defined as that any relationship could create certain values for
the two sides in the relationship as the process that both sides developed their trust and sought
mutual benefits (Wilson & Jantrania, 1994).
Value requires four characteristics
1. Value is a subjective concept.
2. It is conceptualized as a trade‐off between benefits and sacrifices.
3. Benefits and sacrifices can be multi‐faceted.
Building relationship strategies for your business
Successful businesses don't just communicate with prospects and customers for special sales.
Today, making your company indispensable is a vital key to marketing success. It's a terrific way to
add value, enhance your brand and position against your competition.
1. Communicate frequently. How often do you reach out to customers? Do the bulk of your
communications focus on product offers and sales? For best results, it's important to
communicate frequently and vary the types of messages you send. Instead of a constant
barrage of promotions, sprinkle in helpful newsletters or softer-sell messages. The exact
frequency you choose will depend on your industry and even seasonality, but for many types
of businesses, it's possible to combine e-mail, direct mail, phone contact and face-to-face
communication to keep prospects moving through your sales cycle without burning out on
your message.
2. Offer customer rewards. Customer loyalty or reward programs work well for many types
of businesses, from retail to cruise and travel. The most effective programs offer graduated
rewards, so the more customers spend, the more they earn. This rewards your best, most

11. profitable clients or customers and cuts down on low-value price switchers-customers who
switch from program to program to get entry-level rewards. Whenever possible, offer in-
kind rewards that remind your customers of your company and its products or services.
3. Hold special events. The company-sponsored golf outing is back. With the renewed interest
in retaining and up-selling current customers, company-sponsored special events are
returning to the forefront. Any event that allows you and your staff to interact with your best
customers is a good bet, whether its springtime golf outing, summertime pool party or an
early fall barbecue. Just choose the venue most appropriate for your unique customers and
business.
4. Build two-way communication. When it comes to customer relations, "listening" can be
every bit as important as "telling." Use every tool and opportunity to create interaction,
including asking for feedback through your Web site and e-newsletters, sending customer
surveys (online or offline) and providing online message boards or blogs. Customers who
know they're "heard" instantly feel a rapport and a relationship with your company.
5. Enhance your customer service. Do you have a dedicated staff or channel for resolving
customer problems quickly and effectively? How about online customer assistance? One of
the best ways to add value and stand out from the competition is to have superior customer
service. Customers often make choices between parity products and services based on the
perceived "customer experience." This is what they can expect to receive in the way of
support from your company after a sale is closed. Top-flight customer service on all sales
will help you build repeat business, create positive word-of-mouth and increase sales from
new customers as a result.
6. Launch multicultural programs. It may be time to add a multilingual component to your
marketing program. For example, you might offer a Spanish-language translation of your
Web site or use ethnic print and broadcast media to reach niche markets. Ethnic audiences
will appreciate marketing communications in their own languages. Bilingual customer
service will also go a long way toward helping your company build relationships with
minority groups.
7. Visit the trenches. For many entrepreneurs, particularly those selling products and services
to other businesses, it's important to go beyond standard sales calls and off-the-shelf
marketing tools in order to build relationships with top customers or clients. When was the
last time you spent hours, or even a full day, with a customer-not your sales staff, but you,

12. the head of your company? There's no better way to really understand the challenges your
customers face and the ways you can help meet them than to occasionally get out in the
trenches. Try it. You'll find it can be a real eye-opener and a great way to cement lasting
relationships.
References:
1. Heskett, J. and L. Schlesinger, Breaking the cycle of failure in services. Sloan Management
Review, 1991. 32(3): p. 17-28.
2. Grewal, D., K.B. Monroe, and R. Krishnan, The effects of price-comparison advertising on
buyers‟ perceptions of acquisition value, transaction value, and behavioral intentions.
Journal of marketing, 1998. 62(2): p. 46-59.
3. Zajac, E.J. and C.P. Olsen, From transaction cost to transactional value analysis:
Implications for the study of interorganizational strategies. Journal of management studies,
1993. 30(1): p. 131-145.
4. Tabba, F., Hay, A. W., & Goodman, J. R. (2009). Transactional value prediction.
In Proceedings of the Fourth ACM SIGPLAN Workshop on Transactional Computing.
5. Shleifer, A. and R.W. Vishny, Value maximization and the acquisition process. Journal of
Economic Perspectives, 1988. 2(1): p. 7-20.
6. Ulaga, W. and Eggert, A., 2006. Relationship value and relationship quality: Broadening the
nomological network of business-to-business relationships. European Journal of
marketing, 40(3/4), pp.311-327.
7. Levoy, R. P., & Levoy, B. (2007). 222 Secrets of Hiring, Managing, and Retaining Great
Employees in Healthcare Practices. Jones & Bartlett Learning.