Strategy for finding a Trading
Partner in France
Via University College
Radina Ivanova
2nd January 2015
Student: Radina Gardeva Ivanova
Student number: 166895
Supervisors: Jes Holten Lützhøft
Study Program: Bachelor’s in International Sales and Marketing Management
Assignment code: Bachelor’s Project
Number of characters: 97 880
Submission date: 2nd January 2015
Acknowledgements
I would like to express my deepest gratitude to my supervisor Jes Holten Lützhøft who has been
very helpful not only during my internship and project writing period, but throughout the past
year.
In addition, I would like to express appreciation to the lecturer team of VIA, for their gracious
support and encouragement throughout the three years I have spent in VIA UC, campus Horsens.
Last, but not least, I am thankful to Kittner Anlagen-und Maschinebau for the support along the
way and for the supplied information.
Executive Summary
The purpose of this report was to analyse the external environment of Kittner and propose a
strategy for finding a new trading partner in France. In order to meet this purpose the PESTEL
analysis was used together with Porter’s 5 Forces plus three additional ones and the Value Chain
Model, which focusses on the internal structure of the firm. These tools provided the basis for
SWOT analyses, which was later used to discuss conversion strategies.
Following, the report pays attention to strategies in finding a new trading partner in France, by
looking into marketing and sales strategies. Additionally, strategy map, balanced scorecard and a
sales plan are outlined for the purpose of specifying what would be the objectives and value
proposition of Kittner when moving forward.
The report gives recommendations on how Kittner can improve its structure, productive capacity
and employee efficiency at the work place. Furthermore, suggestions are made in connection to
strategies that add value both for customers and salespeople. The report also highlights how
important it is for Kittner to apply various measures for its employees and therefore different
evaluation metrics are proposed.
In conclusion the report has met its purpose and objective and has outlined a strategy for finding
Kittner a new trading partner in France. It is strongly believed that the proposed
recommendations will help Kittner perform even better than at the moment and gain more
market share, by becoming more consistent internally.
Table of Contents
Executive Summary.................................................................................................................................
List of tables ............................................................................................................................................
List of figures ...........................................................................................................................................
1.
Project Description ....................................................................................................................... 1
1.1.
2.
3.
4.
Introduction............................................................................................................................. 1
1.1.1.
Kittner Anlagen – und Mascinenbau ............................................................................ 1
1.1.2.
France ............................................................................................................................. 1
1.2.
Purpose ................................................................................................................................... 1
1.3.
Problem Formulation .............................................................................................................. 1
1.4.
Learning Outcomes ................................................................................................................ 2
1.5.
Limitations and Delimitations ................................................................................................ 2
1.6.
Reflections .............................................................................................................................. 2
1.7.
Quality assessment and source criticism ............................................................................. 2
Methodology .................................................................................................................................. 3
2.1.
Objective ................................................................................................................................. 3
2.2.
Research Paradigm ................................................................................................................ 3
2.3.
Approach ................................................................................................................................. 4
2.4.
Strategy ................................................................................................................................... 4
2.5.
Method .................................................................................................................................... 4
2.6.
Time-horizon ........................................................................................................................... 4
2.7.
Theory and Models ................................................................................................................. 4
2.8.
Data and data collection ........................................................................................................ 4
2.9.
Type of research ..................................................................................................................... 4
External Environment ................................................................................................................... 5
3.1.
PESTEL Analysis...................................................................................................................... 5
3.2.
Porter‘s 5 Forces plus three additional ones........................................................................ 7
Internal environment of Kittner ................................................................................................. 10
4.1.
Value Chain Analysis ............................................................................................................ 10
4.2.
Kittner’s Supply Chain .......................................................................................................... 12
4.3.
Legal considerations and Kittner’s Terms & Conditions .................................................... 13
5.
SWOT Analysis ............................................................................................................................. 14
6.
Conversion Strategies ................................................................................................................ 14
6.1.
Organisational Structure ...................................................................................................... 15
6.2.
Time Driven ABC ................................................................................................................... 15
6.2.1.
6.3.
7.
Assumptions ................................................................................................................. 16
Motivation and level of control ............................................................................................ 18
6.3.1.
Motivation ..................................................................................................................... 18
6.3.2.
Organisational Control ................................................................................................. 18
6.3.3.
Change .......................................................................................................................... 19
Trading Partner in France .......................................................................................................... 20
7.1.
The Process of Internationalisation..................................................................................... 20
7.2.
Growth and competitive strategies ..................................................................................... 20
7.3.
Product Selling Strategies that create value ...................................................................... 21
7.3.1.
Kittner’s product positioning options .......................................................................... 21
7.3.2.
Value Added Strategy ................................................................................................... 23
7.4.
Startegy Map......................................................................................................................... 24
7.5.
Balanced Scorecard ............................................................................................................. 26
7.5.1.
Considerations .............................................................................................................. 27
7.6.
Sales Plan ............................................................................................................................. 29
7.7.
Prospecting and Relationship Marketing ............................................................................ 31
7.7.1.
Prospecting ................................................................................................................... 31
7.7.2.
Relationship Marketing ................................................................................................ 33
8.
Recommendations ...................................................................................................................... 34
9.
Conclusion.................................................................................................................................... 35
Bibliography ............................................................................................................................................ i
Appendices..............................................................................................................................................v
Appendix 1: Competitor worksheet .....................................................................................................v
Appendix 2: Old Project Description ....................................................................................................v
Project Description ..................................................................................................................................v
Background description ......................................................................................................................v
Purpose ............................................................................................................................................... vi
Problem Formulation .......................................................................................................................... vi
Learning Outcomes ............................................................................................................................ vi
Limitations and Delimitations ............................................................................................................ vi
Methodology ........................................................................................................................................... vi
Objective ............................................................................................................................................ vii
Research Paradigm ........................................................................................................................... vii
Approach ............................................................................................................................................ vii
Strategy ............................................................................................................................................. viii
Method .............................................................................................................................................. viii
Time-horizon ..................................................................................................................................... viii
Data and data collection .................................................................................................................. viii
Type of research ............................................................................................................................... viii
Theory and models ........................................................................................................................... viii
List of tables
Table 1: France‘s culture depicted in Hofstede dimensions ............................................................... 6
Table 2: Globalisation effects ................................................................................................................ 9
Table 3: Pull-Driven Supply Chains...................................................................................................... 13
Table 4: SWOT Analysis ........................................................................................................................ 14
Table 5: Time Driven ABC –Cost Rate Machine A .............................................................................. 16
Table 6: Time Driven ABC– Total Cost for Machine A ........................................................................ 17
Table 7: Time Driven ABC, cost rate for machine B ........................................................................... 17
Table 8: Time Driven ABC, total costs for machine B ......................................................................... 17
Table 9: BSC and Action Plan for the period of one year ................................................................... 26
List of figures
Figure 1: Onion Framework ................................................................................................................... 3
Figure 2: Porter‘s 5 Forces..................................................................................................................... 7
Figure 3: Value Chain Analysis ............................................................................................................ 10
Figure 4: Kotler’s 8 Stage Model for Implementing Organisational Change .................................... 19
Figure 5: Ansoff growth matrix............................................................................................................. 21
Figure 6: The Total Product Concept ................................................................................................... 22
Figure 7: Cluster of Satisfactions ........................................................................................................ 23
Figure 8: Salesperson evaluation matrix ............................................................................................ 28
Figure 9: Ferris wheel ........................................................................................................................... 32
1. Project Description
1.1.
Introduction
1.1.1. Kittner Anlagen – und Mascinenbau
Kittner Anlagen- und Maschinenbau is a B2B German company, which has based its
manufacturing facilities in Bulgaria. The firm exists since 1998 and has been growing ever since.
Kittner is manufacturing industrial machines made out entirely from stainless steel and sold to
different industries. The wide range of equipment the company is offering allows Kittner to
expand its customer base. The main product categories are: Hygiene equipment, Lifting & Tilting
equipment, Washing Machines, and Conveyors & Elevators. The company also offers customised
solutions to clients, who have specific requirements. The categories split into subcategories
where a lot of different products can be found. Those machines are sold to the food,
pharmaceutical, chemical and automotive industries. Some of the products have specific
applications to a specific industry, while others can be bought by very different trades. For
instance, the hygiene equipment can suit the needs of various customers.
Kittner Anlagen- und Maschinenbau sales markets are all over the world. The biggest share of its
revenue comes from European countries – Germany, Denmark, The Netherlands, Italy, Finland,
the UK, and Belgium. The rest of the sales come from Russia, Japan, South Korea, Singapore,
Canada and USA. The firm also has market shares in Central and Western Europe.
Kittner is aiming to keep competitive prices at all times in order to not fall behind its competitors.
Among the firm‘s clients, a trend can be seen in favouring different machines. For instance, in
Japan, customers prefer Washing machines for tumblers and crates, while Russia focusses on
conveyors and elevators.
1.1.2. France
Kittner has grown to having many trading partners in Europe and around the world. France is
chosen as a target market, because the company wishes to grow and develop itself further in new
markets. In many sectors French economy is considered among the strongest worldwide. The
country is in the leading industrial economies in the automotive, railway, pharmaceutical,
defence, cosmetics, and power generation industries. France‘s perceived weaknesses are related
to the high level of payroll taxes, which are currently the world‘s highest. In addition, the large
proportion of taxation has fallen on business, rather than individuals and this is also believed to
be the cause of the high unemployment rate at the moment.
1.2.
Purpose
The purpose of this report is to analyse the French market and in particular and outline marketing
and sales strategy for finding a new trading partner.
1.3.
Problem Formulation
How can Kittner Anlagen-und Maschinenbau best enter the French market?





How will the economic situation in France influence Kittner‘s expansion?
How can Kittner improve its internal environment in order to gain competitive advantage?
How can Kittner find a new trading partner?
What would be Kittner‘s value proposition?
Marketing and sales plan for the French market?
Date of submission: 2nd January 2015
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1.4.
Learning Outcomes
The report aims to gather as specific as possible information about France’s economy, possible
competitors of Kittner and summarise the threats and opportunities, which lay in front of the
company. Additionally, the report makes recommendations and conclusions about Kittner’s
marketing and sales plans when entering the French market. Furthermore, the report aims to
apply various strategic and entrepreneurial tools to help provide a framework of strategic
planning.
1.5.
Limitations and Delimitations
Limitations: The restrictions of this report in terms of date of submission and number of
characteristics have been established by its guidelines.
Delimitations: Despite the fact that Kittner operates both in B2C and B2B market, the report will
be delimited to discussing strategies only for the B2B industry. In addition, the report will not
separate Kittner’s products throughout the discussion and will delimit itself to examine only the
French market.
1.6.
Reflections
It is believed that the overall process of writing this report was confusing. Prior to the extensive
research that was carried out; it was believed a deeper competitor analysis could have been
achieved. As it turned out, there is limited information of and stainless steel machines industry.
Therefore, great part of the report is based on the information gathered from the three month
experience in Kittner Anlagen- und Maschinenbau. However, the process of applying different
techniques, models and frameworks, which depict significant information, is found to be good.
1.7.
Quality assessment and source criticism
It is believed the report has used reasonable amount of reliable sources such as journal articles
and books. In addition, the report is believed to have followed the set methodology and achieved
the learning outcomes. The only downside of the sources is the limited information available for
production companies similar to Kittner. However, the concluded results are considered to be
reasonable and obtainable.
Date of submission: 2nd January 2015
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2. Methodology
The research methodology represents a detailed analysis of specific methods, which explain how
the study is to be understood. The report will take into account the Sander‘s onion framework,
when discussing the particular assumptions this report will underpin.
Figure 1: Onion Framework
Source: (Saunders, et al., 2009, p. 108)
2.1.
Objective
The objective of this report is to examine the current market situation in France and bring forth
strateguc plans for entering the French market.
2.2.
Research Paradigm
The chosen research paradigm is a combination of positivism and hermeneutics. The reason for
that is the complexity of the subject in question. Objectivity is crucial when making business
decisions, hence positivism will be discussed as it is known for holding an objective view and it‘s
based on observation and experiment (Brooks, 2013). This paradigm also reasons that general
patterns exist, which can be predicted and used to control social phenomenon (Brooks, 2013).
This will be of importance when Kittner is basing its business decisions on external analysis
carried out for France.
Hermeneutics on the other hand has a circular structure. Hans Gadamar (Butler, 1998) suggests
that the whole consists of small parts and there is a formal relationship between those parts and
the whole. This paradigm will assist in understanding how different aspects are related and have
influence on each other. For instance, finding a new trading partner in France does not depend
solely on the French economy, but also on Kittner‘s products, service and business decisions.
Decisions of this kind are made after long and in-depth discussions; this is why it is important to
consider the Reductionist/Analytical dialectic technique. This form involves subjecting a social
Date of submission: 2nd January 2015
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phenomenon to structural analysis, in a way deconstructing the whole part into its consisting
parts in order to arrive to depth interpretations (Butler, 1998).
2.3.
Approach
This report will be based on an inductive approach, where the focus lies with observation and
recognition of patterns in order to develop conclusions. It is important to mention, however, that
the conclusions will be untested (Brooks, 2013).
2.4.
Strategy
The strategy chosen for this report is case study combined with grounded theory. Case study
strategies are mostly used in exploratory and explanatory research, here data collection methods
may vary: from observation to interviews and documentary analysis. In addition, this report is
based on a single and embedded case study. This is to say that this report will examine different
departments and group –units of the company in question (Saunders, et al., 2009, p. 146). The
second strategy that will be used in this report is grounded theory and it‘s believed to be able to
predict and explain behaviour. Also, this theory is helpful when exploring business issues
(Saunders, et al., 2009).
2.5.
Method
The chosen method for this project is qualitative, since it is solely based on theories, models and
analytical procedures, and not on quantitative data such as: questionnaires and surveys.
2.6.
Time-horizon
The phenomenon of finding a new trading partner, through research and analysis, which is to be
discussed in this report, is a cross-sectional study. This is to say that the research may be true
and relevant at a particular point of time (Brooks, 2013, p. 198). The aim of cross-sectional study
is to explain the connection between different factors, for example how can the economic
conditions of France influence the industrial sector and foreign investments.
2.7.
Theory and Models
The report takes into consideration the PESTEL Analysis together with Porter‘s 5 Forces to
evaluate the external environment of the stainless steel machine industry in France. Additionally,
an analysis of the French culture, using the Hofstede dimensions is carried out. An internal
analysis of the company is made using the Value Chain Analysis and attention is drawn to
logistics and supply chain management. The results are summarised using SWOT analysis, which
assists in drawing different conversion strategies to improve the internal structure of Kittner and
create competitive advantage. In addition, legal considerations are taken into account.
Furthermore, a strategy map together with a BSC is used followed by a sales plan for finding a
new trading partner in France. Following, the report discusses prospecting; value added strategies
and relationship management strategies.
2.8.
Data and data collection
The needed data will be colledted through desk research from textbooks, journals, articles and
official websites for statistical data.
2.9.
Type of research
Finally, the report will be based on secondary reserach. The nature of secondary research is that
the data is previously used for different purposes and it is not specifically collected for this report
(Brooks, 2013, p. 243).
Date of submission: 2nd January 2015
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3. External Environment
According to (Jobber, 2010) the marketing environment, companies operate in consist of various
factors and forces, that can influence the outcome of firms ‘performance. In order to adapt to
changes, minimise potential threats and capitalise on emerging opportunities, companies need to
learn how to monitor the macro and micro-environment they are in. Those environments shape
the opportunities and threats any firm faces and at times are considered uncontrollable. Having
this in mind, the report will discuss two models used for evaluating the external environment - the
PESTEL analysis (macro) and Porter‘s 5 Forces (micro), in order to outline the potential market
situation in France.
3.1.
PESTEL Analysis
PESTEL Analysis is considered one of the most common tools when one is analysing the external
environment of a business. The idea behind the model is that organisations need to react to
changes and fit their strategy according to the external market environment. Despite the many
advantages, the models offers there are some limitations to it, which will be discussed with the
purpose of being objective
It is believed that the external factors analysed in Pestel are changing very fast, hence making it
more difficult to predict how these element will affect the business. In connection to the data
gathering, it is thought that it is time-consuming and dependant on tracking down the ring and
latest sources, in order to obtain the correct information (Yüksel, 2012). Moreover, on its own,
Pestel analysis is insufficient when outlining a strategic plan and that is why it is used together
with Porter‘s 5 Forces and a SWOT. (Yüksel, 2012) also suggest that the factors in Pestel
analysis are inter-dependant and should not be looked as a separate elements.
PESTEL Analysis of France
Political factors: It can be assumed that the political system in France is not at its best at the
moment, the elected president failed to deliver on his promise to create more jobs (The
Telegraph, 2014) and make reforms (BBC, 2014) in the economy, which led to huge
unemployment. The cabinet of the ruling Socialist party is to come up with a plan which will boost
French‘s economy. Surprisingly, the bill, which is to be voted in January 2015, represents a mix of
business – friendly policies, which hopefully will steer the economy in the right direction. However,
the left wing considers the proposed changes to differ from the social progress and what socialist
stand for, which will test how far the government will go to fix France‘ economy (Economist,
2014).
Economic factors: France is one of the largest economies not only in Europe but in the world,
ranking together with the UK, Germany, USA and Japan. The GDP of the country has annual
growth of 0.8 % in the beginning of 2014, compared to 0.3 % at the last quarter of 2013 (Trading
Economics, 2014). The inflation rate of the country, last measured at 0.30 per cent, while the
unemployment rate is at 10.40 per cent for the last quarter of 2014 (Trading Economics, 2014).
France is suffering from a record high unemployment and it is believed fundamental reforms are
needed to deal with the situation (The Telegraph, 2014). Despite the fact that there was a slight
increase in the consumer spending index in the last quarter of 2014 (Trading Economics, 2014),
latest sources suggest that consumer spending is falling (Blackstone, 2014). The interest rate in
the Euro zone was last recorder at 0.50 per cent, which is controlled by the ECB (Trading
Economics, 2014).
Date of submission: 2nd January 2015
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Having in mind the purpose of this report, it is of significance to note that France from the goods
that France importing, are machinery and equipment, plastics and vehicles from Germany, Italy,
Belgium, the Netherlands and China (EW, 2013).
Social & Cultural factors: In 2014 the population of France was recorded at 64.6 million,
excusing overseas territories. Comparisons with past data show that France is growing
considerably and the birth rate exceeds the death rate (WPR, 2014). The official language of
France is French, and according to sources, people of France prefer to speak and be spoken to in
French. In addition, there are some cultural and business values that the French appreciate
highly. For instance, logical thinking, pride, work life balance and influence (Wellings, 2013).
Although the culture of a country is belived to be complex and difficult to understand, Hofstede
offers six dimensions, common to all countires, which can be used to analyse and compare
workrelated values (Soares, et al., 2007), table 1.
Table 1: France‘s culture depicted in Hofstede dimensions
France scores 68, children are raised to be
emotionally dependant and to afar degree
inequality is accepted. In connection to
Power Distance
business, companies have two hierarchical
levels more than comparable firms in
Germany.
France score 71, which shows the country is
individualistic, children are raised believe they
Individualism
should take care of themselves and their
family. It is believed to be an exception, since
high score in power distance and in
individualism is rare.
With a score of 43, France is considered to be
somewhat a feminine culture. A distinction is
Masculinity
made between upper class – scoring feminine
and working class soring masculine.
France score 86, which is an indication that
French don‘t like surprises, but rather structure
Uncertainty Avoidance
and planning. Frenchmen would like to have all
the information and will try to follow rules as
much as possible.
With a score of 63 which points to pragmatic
Pragmatism
society. People believe that truth depend on
situation, context, focus on achieving results.
France scores 48 on indulgence vs restrain
Indulgence
dimension which implies that French are less
relaxed.
Source: Adapted (Geert Hofstede, 2014)
Technological factors: France has been developing nuclear technology and that is why fuel
products and services are a major export for the country. In addition, France is the world largest
exporter of electricity. The country is building its first Generation III reactor and derives 75 per
cent of its electricity from nuclear energy (WNA, 2014) for now. Moreover, France has developed
a plant for disposal of nuclear waste (Broomby, 2014) setting an example for other countries.
Date of submission: 2nd January 2015
6
Environmental factors: In 2013 the French government, commited itself to implementing a
sustainable dvelopment in all areas, with five foces areas for 2014: jobs in the ecological centre,
water policy, environmental and sustainable education, develop recycling and waste recovery,
and policies related to the sea and oceans (Dimplamatie, 2013).
Legal factors: In connection to hiring, written employment contracts are a must. They are
mandatory for all grades and levels and should be presented in French. In addition, France is very
strict when it comes to letting people go. In order to fire an employee, the company in question
must specify one of the clauses mentioned in the French law (French Law, 2014). In regards to
taxation, France is considered to be the country with one of the highest tax burdens. The current
Socialist party in power has enforce 75 per cent taxes on earnings over one million euros (Wood,
2013). However, what it‘s of interest to this report are the taxes on imported goods. Import duties
are due only on goods coming from countries outside the EU countries and there are no taxes for
goods coming from EU member states. It is interesting that tax relief is offered to companies,
which import materials for processing into France, and then export the end products to other
countries (CC France , 2010).
3.2.
Porter‘s 5 Forces plus three additional ones
The microenvironment of a company consists of the actors in its immediate environment, which
can influence the firms operations and activities – customers, distributors, competitors and
suppliers (Jobber, 2010, p. 73). Porter‘s 5 Forces is the model, used when analysing industry
structure and strategic processes. The idea of the model is that the attractiveness of an industry
depends on its market structure, which in respect influences the strategic behaviour of
companies (Dälken, 2014). Therefore, firms‘ success and profitability is dependent on the market
structure and companies should aim and modify the four competitive forces in order to better
their position in the market place.
It is assumed that after analysing the five forces, companies can make define the attractiveness
of an industry and come up with a strategy. However, (Dälken, 2014) argues whether after 35
years the model of M. Porter is still as valid as before because attention was not paid to the
following three factors: digitalisation, globalisation and deregulation and their effect on the
industry‘s competitiveness. Having this in mind the report will consider the three additional
factors when analysing the stainless steel industry in France.
Figure 2: Porter‘s 5 Forces
Buying Power of
Suppliers
Threat of new entrants
Rivalry
Threat of Substitutes
Buying Power of Buyers
Source: Aopted from (Jobber, 2010, p. 706)
Date of submission: 2nd January 2015
7
Threat of new entrants: In general, profitable markets attarct new entrants and raise the level of
competition, thereby reducing the attractiveness of the industry. According to (Jobber, 2010) the
threat of new entrants depends on entry barriers such as economies of scale, proprietary product
differences (patents and rights), brand identity, switching costs, cost advantages, access to
distribution and government policies.
It is believed that the entry barriers for the stainless steel machinery industry are high and
therefore the threat of new entrants is low. To begin with this market requires significant capital
investments, which are required to entry the business. Organising a production plant and
acquiring the knowledge needed for building the machines are also considered as entry barriers.
In addition, Kittner is producing differentiated products for customers with specific requirements.
Another important barrier to entry is the brand name and value of a company. Building trust and
obtaining references in this industry takes time and effort. Kittner has been operating in this
market for over 20 years and is considered to be recognised as a company with strong brand
equity.
The Bargaining Power of Suppliers: Another source of competitive advantage are the company‘s
suppliers, since the cost of raw materials and components have huge influence on profitability
(Jobber, 2010). It is believed that the power of suppliers depends on differentiation of inputs,
switching cost of suppliers and firms in the industry, supplier concentration and costs relative to
the total purchases in the industry. However, there is one more factor that is thought to have
impact on how a company performance and that is current stock and delivery of needed
materials. It has been observed that Kittner does not have most of its materials on stock and
ready for production, but rather makes purchasing order ones they are needed to build a
machine, thereby increasing production and lead time. Having in mind, that Kittner is dependent
on timely delivery, it is believed the bargaining power of suppliers is high.
The Bargaining Power of Buyers: According to (Jobber, 2010), the power of buyers depend on
price sensitivity, buyer volume, buyer switching costs, substitute products, product differences
and quality performance. It is thought that organisation can influence buying power through
increasing their sales markets or customer base or find a niche market, which needs
differentiated products (Jobber, 2010, p. 707). Assumedly, the French buyer is price sensitive at
the moment, considering the high taxes businesses have to pay. This can serve as an opportunity
for Kittner to push French prices and offer quality products on lower costs. In addition, it is
believed that Kittner‘s products are highly differentiated and can be used in different industries,
and therefore the bargaining power of buyers is assumed to be moderate.
Threat of Substitutes: Industry‘s profitability is also dependant on the presense of substitute
products and is build upon the buyer‘s willingness to substitute, price and performance of
substitutes and the cost of swtiting to substitues (Jobber, 2010). Kittner’s machines are serving
four different industries – pharmaceutical, chemical, automotive and food. It can be assumed
that there are no current substitute products that can meet the needs of the firms working in
those markets. For example, large machines that need machines for washing crates, euro bins or
pallets, lifters for food (bakery industry), hygiene equipment for production plants, etc. Hence, it is
assumed that the power of substitute product is weak.
Industry competitors: According to theory, the intensity of rivalry will depend on the structure of
competition - large or small number of competitors, structure of costs – if high fixed costs are
present price cuts are required to fill the capacity, degree of differentiation, switching costs,
strategic objectives and exit barriers (Jobber, 2010, p. 708).
Date of submission: 2nd January 2015
8
The research has shown that there are companies that manufacture stainless machines in
France such as Dadaux and international trading organisations that represent foreign
manufacturers such as Vemag (Vemag, 2014), Sveba Dahlen (Sveba-Dahlen, 2014) and Kluthe
(Kluthe, 2014). In addition, it is believed that the production of stainless steel machinery requires
high fixed costs, also known as capacity-related costs. For instance, depreciation of factory
equipment, wages to production supervisors, property taxes and utilities (Atkinson & Kaplan,
2012, p. 90). Moreover, in case firms are pursuing build strategies, like Kittner, competition is
believed to be more intense. Rivalry may be weak if companies produce highly differentiated
products, which indicates high switching costs. Preceding from the carried out research it is
believed the rivalry is intense, since buyers are price sensitive and getting in contact with the right
people is believed to be a difficult and long process.
Globalisation: Globalisation impacts both customers and traders. The advanced processes in
logistics and communication assist companies in creating global collaborations and purchases. In
connection to customers, globalisation has facilitated the price comparison between international
companies and hence increased consumer’s choice. This influences the strategic behaviour of
firms, because the focus shifts from price to customer loyalty and partner networks (Dälken,
2014). In addition, five drivers of globalisation have been recognised- lower trade barriers, lower
communication costs, lower transportation costs, spread of technology and ICT development.
These drivers give rise to various effects, table 2.
Table 2: Globalisation effects
Larger Market Potential, potential clients,
competitors and potential suppliers and
partners.
Fragmented Value Chains, offshoring,
outsourcing, complex supply chains.
Size
Location
Pressure
Cost & Price Pressure, higher rate of change,
more diverse markets, lower start up barriers,
lower visibility.
Source: Adapted from (Dälken, 2014)
The implications of globalisation on Kittner are the following: the opportunity to form business
relations via professional social media channels such as LinkedIn, the opportunity to attract
customers via its website page, widens its customer base. However, with the widened group of
competitors, Kittner may need to monitor prices in order to stay competitive.
Deregulation: It is suggested that nowadays governments withdraw previously raised regulations
and by doing that they ease business operations. It is thought that deregulation benefits buyers,
since companies can compete in a free market and offer number of alternatives to consumers
(Dälken, 2014). Before the financial crisis, it is believed that the French government had been
reducing its involvement in the private sector. Unfortunately, now the country is going backwards
with the government being part time shareholders in some business (Economist , 2009). In
addition, a more recent source points out that the overall economic freedom of the country is
declining (Heritage , 2014).
Digitalisation: It is proposed that one of the most important factors influencing industry structure
is digitalisation. According to (Dälken, 2014), due to information technologies people have access
to extensive information resources, which leads to a new concept of business models for some
Date of submission: 2nd January 2015
9
industries. In addition IT affects sales communication and distribution, and offers an opportunity
to create large customer base at a low cost.
4. Internal environment of Kittner
The Porter‘s 5 Forces is a useful starting point when analysing external environment. However, it
does not assess the resources and capabilities of a company, which are also relevant to a firm‘s
profitability. Porter‘s Value Chain Model is a strategy tool, used to analyse and asses the primary
and secondary activities of trading companies. The idea behind the model is that the performance
of the company in each of the nine functions defines the size of the company‘s earnings (Dinitzen
& Bohlbro, 2010, p. 18). It is stated that a firm‘s value chain and its activity performance it‘s a
direct reflection of the company‘s strategy and that the value chain assessment creates
competitive advantage (IMA, 1996). Following an analysis of the internal structure of Kittner will
be carried out, using VCM. It is of high importance to note that the information regarding internal
processes in the company is gathered by a long period of observation.
4.1.
Value Chain Analysis
According to Porter there are two major types of activities in a company: primary and supporting.
Primary activities are the ones that transform inputs into outputs, while supporting activities
contribute to the primary ones (IMA, 1996).
Figure 3: Value Chain Analysis
Source: (Porter, 1985)
Date of submission: 2nd January 2015
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Primary Activities
Kittner‘s Inbound Logistics: Inbound logistics include the handling of materials and warehousing.
Kittner has a central warehouse solution (Dinitzen & Bohlbro, 2010, p. 160), the company‘s
production plant is based in Bulgaria. According to theory (Dinitzen & Bohlbro, 2010, p. 157),
central warehouses have low costs of inbound logistics, while the costs of outbound logistics
increase. With regards to warehouse operating costs, it is thought that central warehouse offer
lower costs because of efficiency gained via automation and skilled employees.
Kittner‘s Operations: Operations are related to transforming inputs into the final product (IMA,
1996). It is believed that Kittner can benefit from keeping stock and using Activity Based Costing.
This is because the company does not have stock and waits for an order to purchase the needed
materials and that creates delays and slows production time. In addition, it is thought that the
employee’s time is not spent efficacy enough and there is room for improvement.
Kittner‘s Outbound Logistics: Outbound Logistics concerns with order processing and distribution
(IMA, 1996). Generally, distribution costs include the build-up and maintenance of distribution
channels, owned shops or online shops, number of warehouses, and transportation (Dinitzen &
Bohlbro, 2010, p. 60). In Kittner‘s case the only relevant factor is transportation. It has been
noted that when the machines are built and ready to send the sales department contacts
different firms, which provide transportation. Usually, the customer is provided with a few options
as to how the machine can be delivered – by truck, train, plane, ship or a combination of those.
The price of the transport depends on the machines characteristics: weight, volume, pack size
(Dinitzen & Bohlbro, 2010, p. 161). There are also competitive parameters, which can influence
consumer‘s decision: delivery time, price, infrastructure between destinations (road network and
safety) (Dinitzen & Bohlbro, 2010, p. 161). It is of significance to note that at Kittner the price for
transporation is paid by the customer after he purchases the machine.
Kittner‘s Marketing and Sales Department: The Sales department at Kittner is divided into four
account managers, who handle different clients. The sales emplyees communicate often with the
purchasing department they need to know when needed good will be delivered (Dinitzen &
Bohlbro, 2010, p. 21). However, a perceived weakness is that the communication between the
production and sales department is not as it should be. Marketing activities such as organising
events and exhibitions, maintaining online presence and creating imagery are carried out the
Sales staff and by an external contractor. The management team of Kittner is fluent in four
languages: English, German, Russian and Bulgarian, which is of great advantage. The sales team
serves as key account manager and according to (Jobber & Lancaster, 2009, p. 285) key account
managers are offered various advantages: close – working relationship with the customer, follow
ups and better customer service, cooperation and integrated systems. However, there are risks
of pressure from the customer side for higher levels of service and attention, once they know they
have favoured customer status. Also, focusing resources on key account may lead to neglecting
smaller firms.
Kittner‘s Service: Service is related to installation, repairs, parts, order processing and after sales
service. It is believed that the after sales service in Kittner is good, in case of problems; company
members fly to designated countries and repair the machines. In regards to needed spare parts,
customers need to wait longer than expected because most of the parts are not available on
stock. This may effect customer satisfaction and loyalty.
Date of submission: 2nd January 2015
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Secondary Activities
Kittner’s procurement department: According to theory the procurement department of an
organization needs to understand business requirements, buy product and services at the right
price, from the right source, for the right time, evaluate and select suppliers, acting as a primary
contact with the supplier, etc. (Handfield, 2011). The procurement department of Kittner consists
of one employee who purchases all the needed materials. He needs to be informed when specific
goods need to be bought and preferable delivery times and hence communication between all
departments is vital.
Kittner’s Technology development: Competitive advantage is also achieved by using technology
in different ways. For example, latest technology can be used in production facilities to reduce
some costs and therefore add value in the company elsewhere or the implementation of
information systems in the sales department. Kittner has adopted a program, to which all
departments have access. This system contains information about customers, purchasing orders,
delivery times and suppliers. The possible problems that may arise are connected to the constant
infromation update in the program.
Kittner’s HRM: The function of HR is heavily involved in the organization of a company. It is
believed the HR has a job analysis, job description and job specification function (McKee, 2012,
p. 329). The HR department at Kittner deals with preparing and posting job offers, tracking down
relevant online or offline methods for acquiring new employees (such as Job websites and printed
ads). When a new employee steps into the company, the HR manager draws a contract, explains
company’s policies (do’s and don’ts) and outlines the structure of the firms, authority and
responsibilities.
Kittner’s infrastructure: Kittner is believed to have a hierarchical organization structure. The span
of control and leaderships is high which suggests centralized decision making. Advantages of
those systems are that for one everyone knows what who is accountable and responsible for
tasks, and another tall organisations yield greater consistency in key processes. The
disadvantage of having hierarchical structure is that it is very inefficient, slow and unresponsive
when it comes to internal needs and changes in the external environment (McKee, 2012, p. 298).
In addition it is believed Kittner has mechanistic organisation, which is characterised by routine
jobs, high degree of specialisation and division of labour (McKee, 2012, p. 304). In addition
(Dinitzen & Jensen, 2010, p. 33) argues that in mechanistic structures communication is vertical,
knowledge and control are centralised, there are many rules, tasks are clearly define and
authority is clearly distributed.
4.2.
Kittner’s Supply Chain
According to logistic management concepts, when a customer orders a product there are two
possible execution options: the goods can be taken from stock (push) or produced when ordered
(pull) (Dinitzen & Bohlbro, 2010, p. 108). Kittner has a pull-driven supply chain, meaning that
production begins once the customer places and order. This why, the customer is part of the
decision process regarding the product, thereby making the supply chain more flexible to sudden
changes and needs. Further advantages and disadvantages of pull driven supply chain are
discussed in Table 3.
Date of submission: 2nd January 2015
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Table 3: Pull-Driven Supply Chains
Strengths
-
Based on exact knowledge of customer
need;
If stock exists, it is of raw materials;
Less stock retention;
Flexible in connection to product
variation;
Cost – driven and relatively consumer
oriented.
Weaknesses
-
Slow delivery because goods are
produced when customers order them;
High demands of flexibility both from
employees and production facilities;
Source: Adapted from (Dinitzen & Bohlbro, 2010, p. 109)
4.3.
Legal considerations and Kittner’s Terms & Conditions
Kittner has already established a legal approach toward its customers, the firm’s terms and
conditions are stated in its website and are send to client with quotes and order confirmations so
that they are aware of them. However, it is believed it is of importance to discuss some of them.
Kittner is trading mainly with European countries, where approximately 85% of the member states
have ratified CISG, research shows. When two companies with places of business in different
states, CISG is accepted as a national law. It is important to note that CISG is non-mandatory and
applies only when the firms in question have not agreed on anything else (Pace Law School,
2010). According to this the seller’s obligations are to deliver the goods on the agreed upon time
and transfer the property of the goods. In regards to passing the risk or incoterms, Kittner is using
mainly EXW and CPT. According to theory, when using EXW the seller is responsible only for
making the goods available to the consumer; hence the buyer bears the full risk from the seller’s
premises to the identified destination. CPT requires the seller to deliver the ordered goods to a
designated carrier, which usually is provided by the buyer. Here, the risk is transferred as soon as
the goods are handed in (Ferfreight, 2010). According to the terms & conditions of Kittner
(Kittner, 2008) deliveries can be insured at the customer’s expense and customers can claim
damages only in cases Kittner themselves of the hired contractors have caused the delay. In
regards to warrantee, Kittner offers 12 months guarantee on parts produced by them and 12
months or more on the parts produced by its suppliers. When the goods are delivered customers
need to check immediately for potential problems and report in there are any, so that Kittner can
evaluate the situation and decide whether it was the company’s fault.
Date of submission: 2nd January 2015
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5. SWOT Analysis
Following, a SWOT Analysis will be made, depicting the main findings from the external and
internal environemtn of Kittner. Strengths and weaknesses are related to the internal
environment of Kittner and are considered to be controllable, while opportunities and threats are
connected to the external uncontrollable environment (Jobber, 2010, p. 46).
Table 4: SWOT Analysis
Strengths
 Established brand name;
 Accumulated customer and market
knowledge;
 Established long-lasting business
relationships;
 Low inbound logistics costs;
 Offerings are based on the exact wants
and needs of customers.
 Competitive prices;
 Participation in trading exhibitions;
Weaknesses
 Lack of stock of basic raw materials
that fit all of the machines;
 Tall organizational structure, difficult to
adapt to change;
 High fixed costs;
 Employee’s time management;
 Lack of communication between
departments;
Conversion strategy
Matching strategy
Opportunities
 Opportunity to study and learn the
French culture;
 Low power of substitute products;
 Globalisation;
 Deregulation;
 Digitalisation;
Threats
 France has high unemployment rates;
 Very high taxes;
 Foreign competitors who also have
representatives in France;
Conversion strategy
Source: Own Production
Once, a SWOT analysis has been made, attention can be paid in turning weaknesses into
strengths and threats into opportunities, also known as conversion strategies. Another way to use
SWOT analysis is to match strengths to opportunities, known as matching strategies (Jobber,
2010, p. 47).
6. Conversion Strategies
It is strongly believed that for Kittner to succeed expanding its operations, growing its business,
be internationally competitive and as efficient as possible, the internal organisation needs to
undergo some changes.
Date of submission: 2nd January 2015
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6.1.
Organisational Structure
It is believed that Kittner can benefit from changing its organizational structure, from tall to flat or
also known as horizontal. Flat organizations encourage more effective communication between
departments (McKee, 2012, p. 316). The importance here is on the decision making process. It is
recommended for Kittner to adopt more decentralized decision making and empower employees
in order to share responsibility and accountability. Among other advantages of decentralization
are that employees are becoming more motivated, once they have authority to make decisions
and the fact that employees closest to the problems often have the best ideas for solutions.
Probably, one of the most important benefits is related to change. Nowadays, changes are
occurring on daily basis and fast decision making is of high importance (McKee, 2012, p. 298).
However, it is fair to mention some downsides of decentralised decision making. For example, the
implementation of such a change depends highly on the type of individuals Kittner has. This is to
say that the employees need to have excellent critical and strategic thinking skills. In addition,
decentralised decision making can give birth to practices that are not consistent with the
company’s corporate identity and ethics (McKee, 2012, p. 298).
Overall, changing the internal structure of Kittner towards more horizontal is believed to save time
in decision making process and task completion. In addition, empowering employees is thought to
be at the heart of powerful organisational system (McKee, 2012, p. 452). Another advantage for
Kittner will be adaptability to react faster to changes.
6.2.
Time Driven ABC
Time-Driven Activity Based Costing is proposed in regards to employee time management. ABC is
a cost accounting approach, which aim to connect costs with their cost drivers (activities). This
model assist the management staff with understanding better where the company makes profit
and where it has got a waste – in time or resources, so to say which areas of a frim can benefit
most from cost reduction (Kaplan & Anderson, 2003). The starting point is the identify collection
of resources, which perform various activities. For instance, in regards to sales department those
will be: handling of customer orders and processing customer complains. In connection to the
production facilities, the following are example of activities that can be measured: running
machines, assembling products, building up machines, and inspecting the finished goods.
The time driven ABC takes another input to the costing equation: the cycle time for each activity,
therefore managers need estimates of two parameters: the unit cost of supplying capacity and
the time required to perform a transaction or an activity. It is believed that TD ABC is more
applicable for companies such as Kittner, who have production plants and building an accurate
time driven model is a possibility. Another benefit of implementing is the knowledge that it gives
regarding efficiency and efficacy of the company (Kaplan & Anderson, 2003). This is to say that by
implementing time driven ABC Kittner will automatically understand if there are any differences
between the total time that is needed to perform an activity and the time employees have left
available.
Date of submission: 2nd January 2015
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6.2.1. Assumptions
Following, examples will be presented in order to illustrate the point of time driven ABC. It is
significant to note that the structure of the examples is in accordance with (Kaplan & Andreson,
2007).
Let’s assume that the cost of capacity supplied of company X is 160 000 euro per quarter. In
order to estimate the practical capacity, the quantity of resources needs to be identified, in
general personnel or equipment that in fact performs work. Assumedly, the firm in question
employs 30 people, without taking into account managers and executives. It is inferred that every
employee works on average 20 days (60 days for a quarter) a month and is paid for 8 hours
workday (excluding lunch and coffee breaks). It would be also assumed the in this period of time
each employee shows to work every day, meaning that each employee contributes with 480 hours
for the three month period, 28 800 minutes.
It is fair to say the even though employees are paid for an 8 hours working day, they do not all
that time is available for work. For instance, time should be subtracted for breaks, training,
explaining and educating – assumedly 60 minutes. Therefore, the practical capacity of each
employee is 420 hours or 25 200 minutes each quarter. Hence, the practical capacity of all 30
employees of firm X is 756 000 minutes. Thus, the cost rate for supplying capacity can be
calculated.
160 000 euro
Capacity Cost Rate =
= 0,22 euro per minute.
756 000
When the management is calculated the capacity cost rate, what’s left is to gather information on
how much time employees need to perform each task, the time can be obtained either by
observation or by interview. It is believed observations are more objective since people can falsify
information on purpose. Since company X is producing different machines, just like Kittner is, it is
considered that they all have different time for preparation, assembly and testing. In addition, the
bigger the machine is, the more time will it will consume. Therefore, in order to illustrate the
second parameter of time driven ABC, it will be presumed that company X is producing only type A
and type B machines for the period of three months.
Table 5: Time Driven ABC –Cost Rate Machine A
Activity
Component Assembly for
machine A
Product Testing for machine A
Product Packaging for
machine A
Unit time in minutes
4200
Rate (at 0.22 euro per minute)
924 euros
700
120
154 euros
26.4 euros
Source: Own Production
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Table 6: Time Driven ABC– Total Cost for Machine A
Activity
Component
Assembly for
machine A
Product Testing
for machine A
Product
Packaging for
machine A
Unit Time
Quantity
Total Minutes
Total Costs
4200
25
105 000
23 100 euros
700
25
17500
3850 euros
25
3000
660 euros
125 500
minutes in total
27 610 euros
in total
120
Source: Own production
Table 7: Time Driven ABC, cost rate for machine B
Activity
Component Assembly for
machine B
Product Testing for machine B
Product Packaging for
machine B
Unit time in minutes
3500
Rate (at 0.22 euro per minute)
770 euros
800
120
176 euros
26.4 euros
Source: Own production
Table 8: Time Driven ABC, total costs for machine B
Activity
Component
Assembly for
machine B
Product Testing
for machine B
Product
Packaging for
machine B
Unit Time
Quantity
Total Minutes
3500
20
70 000
20
16 000
800
Total Costs
15 400 euros
316.8 euros
120
20
2400
88 400
minutes in total
148.5 euros
15 865.3 euros
in total
Source: Own Production
The total operational costs for producing machines A and B is 43 475.3 euros for the three
months, while the total time, for which those machines need to be produced is 213 900 minutes.
In order to calculate the percentage of the used capacity, the total minutes should be divided by
the capacity forecasted prior to the research. It was determined that the 30 employees have gave
capacity of 756 000 each quarter, hence the production capacity of firm X is only 28.3 %. It can
be concluded that there is huge gap in the production plant that needs to be filled with additional
orders from the sales department.
It is important to mention that the unit time required for producing machines will vary according to
their size and complexity, and to the fact that they are standard or custom. In addition, the
calculated costs above are only regarding operational activities and do not take into account
sales calls, telemarketing, sales staff travelling and communicating with the client and the overall
productivity of other departments.
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Generally, it is believed that the time driven ABC method will be of use to Kittner with the
mobilisation of its production plant. The depicted examples explain the connection between
activities and drivers of costs in a very close model. However, Kittner can apply the framework
and adjust it with more specific activities in order to increase its capacity and gain competitive
advantage.
6.3.
Motivation and level of control
6.3.1. Motivation
Assumedly Kittner finds issues with employees’ time management in terms of results and
produced output. This can be due to lack of proper incentive plan or motivation. According to
(McKee, 2012, p. 63) there are two type of motivation – intrinsic and extrinsic. Intrinsic
motivators are the basis for self-determination theory and refer to: the satisfaction of a job well
done, interesting and challenging tasks, empowerment, learning and relatedness. Extrinsic
motivators are the result of forced outside the self and are connected to financial or other
material rewards. Examples include people’s approval, security at the job place, social status, and
fame. This serves to prove that the manager or leader of the company needs to understand what
drives and motivates people to work more efficiently.
In addition, there are various theories regarding motivation, which attempt to explain how people
behave and what re they driven by. Keeping in mind Kittner’s production plants and types of work
people do there – specialised and mechanistic, it is believed that the Two Factor Theory will best
fit the situation and give a reason for possible motivators and discouragement factors (McKee,
2012, p. 68).
The Two Hygiene Factor theory, developed by Frederick Herzberg, suggests that satisfying specific
needs of employees can serve as a motivator. However, he also proposes hygiene factors which
can lead to dissatisfaction with the work place. The motivators that determine the level of
satisfaction are: achievement, recognition, meaningful work, advancement, growth, and
development. On the opposite site are the Hygiene factors, which do not motivate, but rather
cause disappointment with a job. For instance, physical and psychological factors of a job can be
dissatisfactory, these include: salary, bonuses, working conditions, supervisions, relationship with
co-workers and level of job security (McKee, 2012).
Understanding this theory, can help Kittner realise possible why people may not be satisfied with
their jobs and find a way to motivate them – financially or otherwise. In addition, company’s
employees are believed to a source of competitive advantage and motivating them to work more
efficient and become more devoted will strengthen the firm position and operations
6.3.2. Organisational Control
Organisational control, often overlooked by companies is considered to be a fundamental aspect
of companies (Sitkin, et al., 2010). Following, different types of control systems will be discussed
with the purpose of making a recommendation for Kittner’s internal control processes.
Bureaucratic control systems are those processes that use specific rules and standards to
achieve desired results. This type of control suggests that if purposes are not met corrective
actions are taken. The downside is that it discourages employees to innovate, apply personal
judgments in different situations in favour of following the rules. Other types of control systems
include output, behaviour and normative control. Output control concerns itself with outcomes
and metrics such as customer retention. This system is tied to rewards when employees meet or
exceed previously agreed metrics. Behaviour control is used in organisations which try to shape
Date of submission: 2nd January 2015
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their employees behaviour so they can meet company’s goals. Here, where rewards are given to
those who exhibit the desired behaviours. Following is normative control, which is about sharing
and embedding firm’s values and beliefs, so that employees can follow them and act accordingly
(McKee, 2012, p. 427).
It is suggested that Kittner needs to follow two types of control systems – one for its production
team and another for its sales department. This is because the two divisions have different
needs, expectations and tasks. For example, the production unit is concerned with efficient use of
its time to build machines, thereby providing the company with a competitive advantage.
Therefore, output control system should apply, where production employees are provided with the
needed incentives to serve as motivators. In connection to its sales department, which is dealing
with customer acquisition and retention, Kittner is advised to apply behaviour control systems.
The most common form of this system is the supervisor – employee relationship, in which the
supervisor assists employees to develop their skills and attend to their duties as effective as
possible (McKee, 2012, p. 427).
The OC systems are proposed because it is thought it will benefit Kittner. By clearly
communicating what is expected from employees and that they will be rewarded for exceeding
those expectations, Kittner will motivate them to work harder and apply time management skills
in order to advance at their work.
6.3.3. Change
By and large, there are different approaches to dealing with change. It is believed if Kittner
decides to implement the proposed changes it will experience a strategic type of change, in
particular – reorientation (McKee, 2012, p. 220). Reorientation is a change made in anticipation
to a future event and it concerns reorganization of a company. Since at the moment the company
is believed to have hierarchical structure it is assumed the change will be top-down, meaning that
any changes are introduced by the leaders. In relation to this, the report will discuss a top-down
model for dealing with change, figure 4. It is believed the Kotter framework will be useful to
Kittner as it outlines specific steps of change implementation, which involves all company
members and prompt them to participate.
Figure 4: Kotler’s 8 Stage Model for Implementing Organisational Change
Source: (McKee, 2012, p. 229)
Date of submission: 2nd January 2015
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According to Kotter, change begins with that all people in an organization feel the urge to change.
This is done by communication. For instance, Kittner can gather all it employees and announce
that as the market changes, the company should adjust as well. Having in mind that competitive
advantage is key aspect, the firm needs to increase its production capabilities as well as its
customer base and order to not only survive, but thrive and grow. The following step would be to
involve the right people to lead the change and develop a new strategic vision for the company.
Generally new strategies come from top management and require extensive information in order
to be formed. The next step is crucial, since the new vision needs to be communicated in all
departments so that it can be embraced and followed. It is important to note, that here managers
should find a way to motivate and excite people about new possibilities, rather than just sending
an email with changes. Following is the step in which, managers train and empower the right
people, who will lead the change. In Kittner’s case that a production supervisor or manager, who
will oversee staff’s work and interfere when orders are being delayed and tasks left unfinished. It
is significant for companies to consolidate small victories with their employees in order to show
them that the new changes are successful and motivate them to do even better. For instance,
acquiring a new big client may deserve a celebration or even something smaller, which will make
them satisfied and appreciated. The final step of change implementation is to solidify the new
ways in the company.
7. Trading Partner in France
Before proceeding with discussing possible marketing and competitive strategies of Kittner for
when entering the French market, it is of importance to stress upon one thing. Even though
Kittner is trading with both B2C and B2B companies, the following strategies and analysis will be
based on finding a B2B trading partner. It is believed it would be quite a challenge to find, contact
and attract B2C firms such as pharmaceutical, automotive, food and chemical companies at first.
Hence, Kittner must first enter the market by partnering up with the right representatives in order
to establish itself, build brand awareness and gain customer’s trust.
7.1.
The Process of Internationalisation
Internationalisation is the process, by which companies gradually increase their involvement in
foreign markets and thereby their economic profits (Conconi, et al., 2014). Finding a trading
partner is considered a significant market entry method, which allows companies to increase
sales, while reducing risks in overseas markets. It is also thought that the choice of strategic
partnership is a business choice, the goal of which is seeking international competitiveness
through learning new abilities and cooperation with foreign firms. Another greatly important
benefit of partnership is the reputation, achieved by association. However, for the partnership to
benefit participants, the communication and knowledge sharing between them is of high
importance (Kennedy & Keeny, 2006).
7.2.
Growth and competitive strategies
To begin with, when Kittner targets the French market, it would be following Market development
strategy (current products are sold in new markets), according to the Ansoff growth matrix
(Jobber, 2010, p. 370). Introducing new sales, distribution channels finding a trading partner are
considered to be different ways of developing a new market.
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Figure 5: Ansoff growth matrix
Source: (Edraw, 2014)
In connection to competitive strategy options, Kittner has the option to choose between four.
However, it is recommended together with the market development to follow a differentiation
strategy. The focus will be on uniquely positioning itself to meet customer needs and
expectations. For example, Kittner specialises in custom solutions, which may be of interest to a
lot of companies, which need unordinary machines. In addition, differentiation strategy is
generally associated with high prices and higher costs (Jobber, 2010, p. 714).
7.3.
Product Selling Strategies that create value
According to (Manning, et al., 2012, p. 136) today’s customers are highly educated and seek for
cluster of satisfactions, rather simply a product, which fulfils their need. The theory suggests that
customers derive satisfaction from the product itself, the company that distributes it and form the
salesperson that handles the sale.
7.3.1. Kittner’s product positioning options
Product positioning is a continuous process and applies both to existing and new products.
However, the strategy for positioning will differ for the two kinds (Manning, et al., 2012, p. 138).
Since, Kittner is offering mature (according to the PLC) and well-established products only the
relevant options for positioning will be discussed. Considering that Kittner is entering the French
market with existing and already proven machines and the selling strategy will be to focus on
brand superiority and uniqueness of product offerings. Moreover, it is of importance to provide
excellent customer service and retain existing market shares.
To understand how the product value is perceived by clients and potential customers, it is of use
to describe the product in four levels, figure 6.
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Figure 6: The Total Product Concept
Source: (Manning, et al., 2012, p. 143)
The Generic Product: The generic product represents the basic product that is being sold and it
describes its category, in Kittner‘s case for instance that would be a washing machine. It is
believed that the ability to deliver the generic product does not bring any competitive advantage;
it rather gives a right to the company to be in the marketplace (Manning, et al., 2012).
Expected product: The second layer of the model suggests that customers always have minimal
purchasing expectations, therefore the expected product represents customer‘s minimal
expectations. Therefore, the role of salespeople is to gather as much information as possible from
the customer, his needs and expectations. In regards to Kittner‘s produced goods, customers will
expect that the machines do everything that is anticipated from them and match the description,
provided from the salespeople. However, it is suggested that it is very difficult to build brand
loyalty and retain customer only by selling the expected product (Manning, et al., 2012, p. 143).
Value – Added Product: Value-added product happens when salespeople offer their clients more
than what was expected of them. The importance here falls onto the quality level of the staff, who
serves the customer. For instance, sales and the supporting staff can exhibit enthusiasm and
deeper level of commitment than needed, in order to satisfy the customer and build a strong
relationship. For example, when communicating with potential trading partners in France, the
sales team at Kittner may pay attention to the French culture, thus encouraging people on an
emotional level.
Potential Product: The potential product represents what is possible to be done in terms of
machine requirements, characteristics, prices, production and delivery times, since mutual
products are generally discovered in sales meetings (Manning, et al., 2012, p. 145).
Date of submission: 2nd January 2015
22
The importance of this model to Kittner lies in the clear distinction of four product categories.
Salesmen should always aim at offering value-added and potential products, in order to beat
competition and foster customer loyalty.
7.3.2. Value Added Strategy
Since the concept of customer importance became ubiquitous, a lot of attention has been paid to
customer value. Hence, scholars thought of different models, which explain the difference
between simple transactions and relationship selling methods and gave birth to customer
retention techniques.
When Kittner aims to outperform its competitors, it may be worth understanding and adopting
value – added strategy. Generally, value-added strategies focus on benefitting customers by
adding benefits via intangible factors. For example, better salespersons’ performance,
innovations or better after sales service. In order to understand the idea of value added selling,
the total product concept, which suggests that products have four dimensions, will be presented.
An example of a model, which focuses on value added selling, is the Cluster of satisfactions,
which suggests that clients receive value form the company’s product, the company itself and the
salesperson.
One of the main factors that customers will pay attention to when introduced to new firms is the
offered product - whether it best fits the client’s operations, if it meets the quality standards
required from the industry and will the cost allow the customer to keep its competitive advantage.
Here, Kittner can focus on the high quality of its stainless steel machines, their design and
durability. Another very strong advantage Kittner can offer customers is its customised solutions.
This suggests the company is flexible to customer needs, thereby gaining competitive advantage.
In addition, since Kittner has pull-driven supply chain, customers can be highly involved in the
production process of the machines and express their desires. This is believed to yield successful
future business relationships when working with the French.
Figure 7: Cluster of Satisfactions
Source: (Manning, et al., 2012, p. 136)
Date of submission: 2nd January 2015
23
After discussing the product, customers pay attention to the company’s brand, response times,
delivery and installation terms and even look for references or recommendations, which can
prove the machines’ quality. Kittner delivers its products once they are 100 % paid for. Generally,
the company organises transportation on behalf of the client, for which he pays, prepares packing
lists and sends the machines mainly EXW.
In addition, customers will pay attention to the company’s sales representatives. According to
(Manning, et al., 2012) clients observe whether the salesperson has the needed knowledge and
experience to recommend the right product and deliver the value proposition convincingly
enough. Other factors that are being considered are if the salesman can be trusted, will he
support after sales activities, does he understand the needs of the client. Kittner’s sales
employees have extensive knowledge about all technicalities of the machines. In addition, the
sales department of Kittner is fluent in four languages, which is of great advantage when
operating on an international scope. Hence, it is believed each potential client will be served by
trained professional and experienced salespeople.
Another way to a value added product strategy is through comparison of some main factors with
those of the competition and after outline points of parity. Later on this information assist the
sales department in making and delivering the value proposition, see Appendix 1.
7.4.
Startegy Map
According to scholars the companies have problems executing their strategies because they fail
to communicate it or describe it, because implementation fails due to lack of alignment among
employees, and thirdly because firms‘ fall short on devoting time and effort to track and measure
results. Strategy mapping, consists of six steps and is considered to be a cutting-edge approach
to strategy outlining since they allow companies to describe and communicate firm‘s strategy to
their shareholders and employees (Armitage & Scholey, 2006). In addition, strategy maps
describe how organisations build their growth and what their approach to productivity is.
Following a strategy map, regarding finding a new partner in France will be discussed, because it
is believed it will assist Kittner with since it will explain how the strategy will focus on how the
company will bring about change and improvement.
Specify and Overriding Objective: It is of high importance to start with the right goal, it can be
economic and non-economic objective, which provides competitive advantage. According to
(Armitage & Scholey, 2006) the overriding objective should be the first element in the strategy
map and contain a financial aspect and a time line. Kittner‘s prime goal will be to gain market
share in France. This is chosen as an overriding objective, since Kittner hasn‘t got any sales or
representative there and thus will aim to establish its brand and gain positions.
Value Proposition: Choosing the value proposition is a significant step for a company, since it
proved the source of value for customers. Taking into considerations Kittner‘s product offerings,
their variety, different applications and unique attributes, leads to a product leadership value
proposition. The main focus here will be differentiation of products. Kittner should stress upon
their flexibly in building the machines, high-quality of material used and innovations in product
development. In connection to prices, this value proposition suggests high end pricing. It is
recommended for Kittner to apply good-value pricing in order to be competitive on the French
Date of submission: 2nd January 2015
24
market. According to (Kotler & Armstrong, 2012, p. 293), this pricing approach takes into
consideration economic conditions, which influence all businesses and consumer price
perception. This is to be understood that marketers offer the right combination of quality and
good service at a fair price. In connection to relationship management, the chosen value
proposition meets the threshold standards (Armitage & Scholey, 2006).
Financial Strategy: Having chosen their value proposition, the following step for firms will be to
establish their financial strategy, which is strongly connected with the VP. Having in mind the line
of business Kittner is in; the selected financial strategy is asset utilisation. Asset utilisation
suggests that firms need to optimise their fixed costs, invest in space and machinery and aim to
get the most return on these investments. In addition, operational companies, such as Kittner,
are expected to impress with asset turnover1 and appropriate inventory.
Customer Strategy: Following, companies need to establish and clearly communicate their
customer strategy. Choosing a customer strategy is also dictated by the value proposition of a
firm. The chosen financial strategy for Kittner is to retain and add new customers. Having in mind
that Kittner aims to grow and expand to a new market, Kittner needs to invest in marketing
campaigns, promote word of mouth and loyalty programs and offer solutions. Here, strategic
planning must try to balance spending and profits (Armitage & Scholey, 2006).
Execute through the Internal Perspective Strategies: The fifth step of the strategy map involves
the steps which will assist in realising the above set strategies and how will they be
accomplished. Hence, the organisational processes in a frim must directly correspond with the
objectives of the firm. Again, the chose value proposition controls how a company could focus its
processes. The primary focus of product leadership VP is on innovation. Kittner should excel at
producing innovative machines, lowering its production and lead time and encourage and culture,
in which employees feel free to present new ideas for company‘s improvement (Armitage &
Scholey, 2006).
Learning and Growth Strategies: In the final step of strategy mapping, companies improve on
their learning and growth activities. Here the perspective is in identifying potential gaps that can
prevent the firm to execute its financial and customer objectives. The three primary areas of
interest are human capital, information and organisation capital. In relation to the chosen product
leadership value proposition for Kittner, here is the focus in the three categories.
It is believed that managed well, human capital can be an enormous competitive advantage for
Kittner. The focus should be on challenging it to innovate and perform better. In addition,
employees are preferred to be adaptable in order to meet market environment factors.
Information capital is related to organisations‘ knowledge sharing, implementation of
information systems, databases and files. It is recommended that Kittner optimises its
information systems and CRM systems and invest in faster and better performing PC.
Organisation capital is the firm’s ability to align employees’ goals to the corporate goals (Armitage
& Scholey, 2006). Here, Kittner needs to pay extra attention and implement changes in its
organisation structure, which will motivate employees.
Asset turnover: Company‘s ability to use its assets in order to generate revenue and create value, sales of
revenues divided by total assets.
1
Date of submission: 2nd January 2015
25
7.5.
Balanced Scorecard
According to (Atkinson & Kaplan, 2012, p. 43) the BSC is a measurement system, which tracks
organisational performance between four different but linked perspectives. Following, the report
will present a Balanced Scorecard in relation to finding a new trading partner in France in order to
show how the above set objectives and strategies will be achieved. In addition, specific targets
and financial and non-financial measures will be set in order to communicate better what is
expected from all employees. In addition the BSC will be discussed together with an action plan
for Kittner in order to break down goals into tasks and outline how the objectives will be achieved.
Table 9: BSC and Action Plan for the period of one year
Perspective Goals
Financial
Create
Revenue
Streams from
France.
Customer
Attract new
customers
and become a
preferred
supplier.
Internal
Process
The overall
goal for the
internal
process is to
create
scalability.
Learning &
Growth
Improve
training and
Objectives
Asset
utilisation in
order to
increase
capacity so
that current
demand is
met and
there is
additional
capacity for
more orders.
Be a
favoured;
Measures
Revenue from
new markets
Revenue from
new customers.
Targets
10% of the
total revenue
next year to be
coming from
France.
Actions
Internal
system to
support
utilisation;
Build
efficiencies;
Improve on
culture;
Acquisition of
French B2B
companies as
representative;
Find at least
one trading
partner as a
representative
in France
Operations
management
s: Time
Driven ABC is
recommende
d together
with ABM
CMP –
require a new
representativ
e; regulatory
and social
process:
communicate
clear
standards of
company’s
work.
Human
Resources:
On time
departures;
Machines
produced per
month;
Capacity
considerations;
Cycle time;
Engineering
efficiency
Increase
internal
capacity with
20 % monthly.
Prospecting
new clients,
customer
planning,
marketing
strategy and
expenses,
assign a
team of
salespeople
Communicate
clearly the
new strategy;
Offer
motivation
and
incentives to
all
employees;
Align
employees
with
corporate
mission and
values.
% of satisfied
customers;
100 % of the
new French
Date of submission: 2nd January 2015
Teach
delegation;
26
manufacturin
g learning and
time to
market
ensure all
sales people
understand
and can
communicate
the firm‘s
value
proposition;
Organisation
al Capital:
Assign the
task to
research,
analyse and
asses the
French
market.
Informational
Capital:
implement
new systems,
where
valuable
information
about
markets and
trends is
saved;
customers
need to be
satisfied with
Kittner‘s
products (the
clients to the
potential
representative)
Create
training
program
Source: Own Production
7.5.1. Considerations
Financial Perspective: It is believed that in order to create new revenues; Kittner must increase its
capacity levels in order to meet additional demand, potentially coming from France. In order to
find what is the current production capacity of the firm, Kittner is advised to apply Time driven
ABC and thereby conclude whether there is additional time for production. If so, Kittner needs to
motivate the employees and offer them the right incentives so that they work more efficiently. The
financial measures, also known as lag indicators2 are believed to be revenue per new market and
revenue per new customers. The target of 10% of the total revenue is set for the period of one
year and it’s considered reasonable since the new B2B customer will potentially have wide
customer base.
Customer Perspective: The customer perspective focuses on attaining a new B2B customer in
France and becoming a favoured supplier. It is very important for Kittner to point out its
competitive differences from its competitors and aim to supply better value than them, in terms
of production, sales staff and after sales service in order to gain the customer’s trust. In addition,
Kittner will have to decide on marketing and sales expenses, e.g. travelling, sales calls, customer
visits, time spent on researching, etc. so that can balance spending and profits.
2
Lag Indicators measure the tangible outcomes of a company.
Date of submission: 2nd January 2015
27
There are additional qualitative and quantitative measures for salespeople’s performance
(Jobber & Lancaster, 2009, p. 497)that are believed will be beneficial to Kittner.


Qualitative measures include sales skills (identification of needs, ability to question,
quality of sales presentations, ability to overcome objections and ability to close sales),
customer relationships (ability to retain customers, customer satisfaction with sales
service, number of complaints), self-organisation (keeping customer record up to date,
provide market information to top management), product knowledge (how well the
salesperson is informed with Kittner’s products, competitive and relative products),
cooperation and attitude (use if their own initiative, respond to change).
Quantitative measures are classified in two groups – input and output: Input measures:
calls per potential account, calls per active account, number of calls on prospects,
number of quotations. Output measures: sales revenue achieved sales per potential
account, number of orders, sales to new customers, number of new customers, sales
revenues as a percentage of sales potential.
After the management has performed an analysis and evaluated the sales team, (Jobber &
Lancaster, 2009) suggests a matrix with possible actions with regards to the sales team
performance results. For instance, a salesperson with poor quantitative and good qualitative
evaluation will suggest that input is weak and the reasons behind it need to be identified and
improved upon.
Figure 8: Salesperson evaluation matrix
Source: (Jobber & Lancaster, 2009, p. 503)
Date of submission: 2nd January 2015
28
Internal Processes: This is of high importance to Kittner, because internal communication is vital
to the strategic alignment of the set objectives throughout the organisation. The main objective is
to create scalability of internal processes. This is the ability to handle growing amount of work and
turn it into a competitive advantage, also it is thought that systems that improve their capacity
and grow after implementing changes in production and culture are scalable systems. In addition
the ABM method will seek for areas of the business, which are not operating optionally and are
losing business with the purpose of those activities to be eliminated or improved. The target is set
as 20% increase in monthly capacity and the measures are: cycle times, machines produced a
month compared to capacity and engineering efficiency.
Learning and growth: In order to improve all other perspectives and meet set objectives, it is
believed that Kittner can benefit most from task delegation. It is of significance for employees to
know what is expected of them and be aware that they might be sanction when the work is nod
done in time or done incorrectly, which cause the company to lose customers or its reputation. In
connection to human resources, employees are expected to foster a 100 % customer satisfaction
in order for Kittner to prove itself and become a preferred supplier to the French B2B company.
They are also required to perform analysis for the French market and customers in order to be
aware of current environment trends.
The overall idea of the Balanced scorecard is that by comparing current performance with the set
objectives, targets and measures, managers will be able to determine if the company is fulfilling
its aims or is it falling behind, and if so what are the reasons for it (Atkinson & Kaplan, 2012, p.
48). It is of importance to conclude that the Strategy map and balanced scorecard are composed
in the light of finding a new trading partner in France. Hence, Kittner may have other overall
objectives, strategies and targets. For example, the customer perspective of the overall strategy
may be not only to attract, but retain old customers.
7.6.
Sales Plan
The article written by (Wearne, 2009) argues the importance of reasonable and achievable sales
plans, which need to be constantly updated and improved. The process of developing a sales plan
is called sales management. Sales plans are at the bottom of pyramid and come after strategic,
business and marketing plans. This is because sales plans are believed to be very detailed so
that salespeople will know what to do every day of the week and those activities will reflect the
organization’s strategy. Therefore, a comprehensive sales plan will be developed for Kittner‘s
search of a new trading partner in France, based on the above Strategy Map and Balanced
Scorecard.
Sales Strategy: The strategic direction of Kittner in connection to France is expansion. The firm
wishes to enter the French market with its existing product, by finding a trading partner, which will
serve as a representative.
Sales Model: The sales model refers to the structure of the organisation. At the moment Kittner
has four sales representatives, all acting as account managers and is reasonable to assume that
a salesperson will be appointed to the French customer. However, it is believed that Kittner
should hire an additional employee who will take over the marketing side of the operations and
assist the sales department. Moreover, sales people rarely have the time to make marketing
audits. The new employee will be supervised and under the control of the Marketing and Sales
Director.
Date of submission: 2nd January 2015
29
Territory Plan: According to (Jobber & Lancaster, 2009, p. 444) within organisations with
international sales segmentation can be based on geographical size, sales potential, customer
expectations, product line widths, customer size and language spoken. In Kittner, the sales force
is based customer size and language spoken. It is assumed that French customers will be served
by someone who speaks fluently English and German and is very familiar with Kittner’s products.
Another option for Kittner is to hire KAM, with experience on the French market, to assist in
introducing the company. So far the report has discussed pros and cons of KAM to the sellers;
here the importance to customers will be discussed, since this will serve as a competitive
advantage. When the KAM forms a successful relation to his clients, they may feel reluctant to
leave and avoiding high switching costs. Also, Kittner offers a special portal in their website for
their customers, where they can find additional product information. Furthermore, clients can
benefit from improved terms and co-operation with research and development of the machines
(Jobber & Lancaster, 2009, p. 286).
Significant Sales Opportunities: Sale opportunities are asses with accordance to the sales
opportunity grid (Hutt & Speh, 2010, p. 357). Since high level of resources is needed for
improving the firm’s position and capturing French market opportunities, Kittner has moderate
organisation strengths. However, Kittner’s goods have high potential if changes in the
organisational structure are implemented, hence sales and marketing efforts should be employed
in order to capitalise on this opportunity.
Sales Budget: Since Kittner is not hiring any additional staff, which will be situated in France or
renting any offices, the costs of expanding are believed to be connected with its current
production plant. For instance, costs for asset utilisation, implementing CRM system, increasing
capacity in the face of new production employees or newer machines. In addition, in order to offer
motivation and the right incentives to employees, Kittner may need to focus on financial rewards.
Furthermore, costs will arise from the employment of a marketing person. Expenses such as
company telephone, computer, working space, salary, company trips and bonuses will occur.
Sales Activity Plan: To begin with, Kittner needs to identify potential representatives and France
and get as much information from the Internet as possible. Usually, the websites of companies or
free online directories contain little to no information regarding the decision makers of a
company. However, there are paid directories, form which needed data can be gathered and
sales calls made. It is assumed that at least couple of months are needed for finding and
communication with potential customers.
Sales Tactics: Sales tactics involve the way salespeople will capture customer’s attention.
Knowledge of the machines, company’s values, mission and strategies is a must. In order to add
value to a sales pitch or just to keep attention on the company, the KAM should invest time to
research the client’s needs and potential problems or business difficulties and after suggest how
he can be of assistance.
Once the salesperson make contact with the desired company he will most probably need to get
pass the gatekeeper. The Gatekeeper may be anyone who controls information and the screening
process, which is why they should be treated properly. Recently published article suggest a few
tactics to get past gatekeepers: treat them like gold, aim high, use a personal touch, send first an
email and call later, professionalism and integrity are also of importance (Conner, 2015).
Generally the purpose of companies is to get and speak to the decision maker. However, Kittner
is advised to also speak with the users of the machine, or the ones who operate with the
machines on daily bases and aware of specific needs.
Date of submission: 2nd January 2015
30
When in contact with a potential trading partner it is important to have a strategy. Presumably
that company will already have a supplier who provides it with similar machines, hence the
IN/OUT supplier approach will be discussed. During the communication the Out supplier, in this
case Kittner has to create the need for the product by delivering the value proposition correctly
and apply value added selling – offer additional training, support, warranty, etc. Once, Kittner is
accepted as an IN supplier it must not lose touch with the client, but rather stay on top for new
developments and changes in the markets that consider both Kittner and its customers (Hutt &
Speh, 2010).
Resource Plan: The resource plan strongly reflects the activity plan of the model. The marketing
assistant, who will execute campaign and contact potential customers, will be in need of a
working space, computer, company telephone and guidance from a supervisor.
Sales Incentives: Sales incentives are of significance when motivating performance. The sales
department of Kittner is perceived to be a revenue centre. Revenue centres control the revenue
stream but control neither the manufacturing, nor the acquisition costs of the product or service.
Revenue centres are measured on the revenues it generates (Atkinson & Kaplan, 2012, p. 495).
Kittner’s sales employees are being given percentage of the total revenue at the end of the year
as commissions and it is assumed this trend will continue once a French trading partner Is
acquired. The downside of this approach is thought to be that salespeople fail to be measured on
other important success factors.
Training Plan: It is assumed that the salespeople at Kittner possess the needed traits and skills
for the position. However, it is recommended that training is provided for the new marketing &
sales assistant.
Selling Expense Summary & Operations Plan: Expenses will highly depend on the marketing and
sales activities related to France throughout the year. Cost will be incurred for the salary and
purchasing new company phone and computer for the marketing and sales person.
7.7.
Prospecting and Relationship Marketing
Having made the strategy map together with a balanced scorecard and outlined a sales plan for
Kittner, attention will be paid to prospecting and the formation of B2B relationships. Prospecting
is of importance because it will ensure that profitable customers are brought in the company,
which is believed to be a difficult task in business-to business sales. After finding the right
customers, it is highly important to create long – lasting relationships, which will bring value to
both the customer and the supplier.
7.7.1. Prospecting
The process of identifying potential customers is known as prospecting. The goal of prospecting is
to build a qualified prospect base of current and potential clients. In relation to this, the Ferris
wheel model will be applied, figure 7.
Date of submission: 2nd January 2015
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Figure 9: Ferris wheel
Source: (Manning, et al., 2012, p. 176)
The Ferris is a model that presents the process of attracting customers, serving them for a while
and inevitably losing them to a variety of reasons, also known as customer attrition. The loss of
client over time is common, and is believed it is of importance for Kittner to now the reasons in
order to prevent those possible. Some customers may be lost due to failure in the relationship
between the customer and the salesperson, other may feel neglected and decide to move their
business, client may experience bankruptcy or move to another geographical location, or
customer need change in the product, etc. In addition, sales may be lost to competition because
of slightly better pricing or better value proposition. Nevertheless, the important factor is to keep
looking for new customers and increase prospect base through advertising and brand awareness.
Moreover, prospecting is an ongoing process and it can be improved in three ways: increasing the
number of people who board the wheel, improving the quality of prospects and quickly deciding
which prospects are qualified in terms of need to buy, having authority to make purchasing
decisions and has ability to pay (Manning, et al., 2012, p. 176). Another important factor is that
the prospecting process must be assessed and renewed often because of the constant changing
external environment. Following, applicable sources to Kittner of finding possible prospects will be
discussed.
Date of submission: 2nd January 2015
32






Referrals: The advantages of referrals are smaller sales cycles, higher close rates and
larger sales volume. It is not a coincidence that word of mouth is believed to be one of the
strongest advertising tools (Whitler, 2014). When sales people increase the value in the
sales process they increase their chances being referred to someone else.
Directories are another appropriate way for Kittner to look for potential prospects.
Directories provide a cheap and easy to access source for tracking down leads.
Trade Shows and Special Events: Exhibitions are an excellent way to meet customers for
B2B firms. Kittner already participates on its own and as a partner of its representatives
in various shows throughout the year. Studies suggest that it quite possible for sales to be
closed on while a company is exhibiting, because the audience there is already qualified.
Tele- and Email marketing are another source of prospecting and increasing brand
awareness. Even though telemarketing is widely used it is not recommended for Kittner.
Email marketing on the other hand is a cost efficient and effective way to reach out a lot
of potential buyers. The importance here falls on the message and its content – it should
concise, while containing the all relevant information.
Website: The Internet page of a company also represents a potential source for customer
acquisition. There is a lot said about SEO and tagging and how important it is for
companies to stand out and receive better ranking in google web pages. Kittner knows
that and recently has changes its website structure to more appealing and professional
look, while containing plenty of information about the sale staff and imagery of Kittner’s
machines.
Networking is believed to be a valuable way to find and attract potential customers.
Networking skills are of special importance to salespeople and referrals. There are three
types of networking: within the organisation, within the industry and outside the industry
salespeople are in. In addition, the following guidelines are suggested by successful
networkers when looking for referrals: never doing business while networking, meeting as
many people as possible, offer business card and take contacts in order to do a follow up
(Manning, et al., 2012, p. 185).
7.7.2. Relationship Marketing
In today’s competitive environment the value of creating and sustaining business relationships is
growing. This is because high-quality relationships result in repeat purchases and significant
referrals (Manning, et al., 2012). Strategically, business partnerships are considered as the
highest form of selling relationship and there are three keys for their successfulness:



The relationship is built on shared values: when the customer believes his supplier shares
the same ideas and beliefs, he is willing to entertain a long-lasting relationship;
Both parties need to understand the mission and purpose of the partnership and if
problems occur, they should both discuss them and find a solution;
The role of the salesperson must move from selling to supporting, he should be constantly
interested with the growth and development of the business of his partner.
Moreover, it is believed (Manning, et al., 2012, p. 44) that for establishing and maintaining
partnering type relationships, there are four group types; salespeople need to pay special
attention to:

Customers: In order to develop stable relationships with their clients, suppliers need to
keep regular contact with them;
Date of submission: 2nd January 2015
33



Secondary Decision Makers: Salespeople should not underestimate the importance of the
relationship with secondary decision makers, such as managers from other departments,
which also have influence to affect the end decision, without the knowledge of the
salesperson.
Company Support Staff: It is of value to keep good relationships with people form the
supporting staff of the customer, influencing them may assist in the future, for example
fulfilling special requests or accept new responsibilities. In addition, they may be
promoted going ahead and become one of the main points of contact in the customer
firm.
Management Personnel: Maintaining good relationship with top management at the
customer firm is very important for a long-lasting relationship.
Overall, it is thought that if followed these small tips will assist salespeople in creating long-lasting
and profitable relationships.
8. Recommendations
Firstly, it is believed that Kittner should take under consideration the current economic difficulties
in France when pricing its products and use this opportunity to enter the market and prove itself
as a supplier even at a lower profit. Following, when approaching potential customer, Kittner is
recommended to look into cultural factors, which affect how the French do business. Moving on,
the internal analysis of the company showed potential problems connected to the organisational
structure. Hence, Kittner is advised to adopt horizontal organisation and implement different
control systems – output control system in the production unit and behaviour control in the sales
department. In addition, it is imperative for Kittner to understand what motivates and drives
employees to work efficiently. The Hygiene- Factor model is proposed, which distinguishes
between motivators and factors that cause dissatisfaction with the work. Therefore, Kittner needs
to make sure that the hygiene factors need to be on a high level and not let them cause
disappointment to the employees. Additionally, top management should implement rewards
systems in order to motivate higher employee involvement. Moreover, Kittner is advised to use
time driven ABC, as shown in the report in order to compare the production capacity with the
actual capacity and see where the company. By doing that the firm will see where it is losing
money and will take according actions to eliminate waste and improve on internal processes.
Furthermore, a model for change implementation is prosed, which will guide Kittner through eight
different steps of change adaptation. Another imperative change that is recommended for Kittner
is to improve upon its stock levels, thereby reducing the time for producing machines and
increasing the customer satisfaction. Overall, the proposed internal changes are believed to
strengthen Kittner’s competitive advantage, improve on asset utilisation and increase revenue
streams.
Moreover, a strategy map, made for Kittner‘s expansion is outlined. It consists of sixth steps,
which are interlined and represent the overall objectives of the company. Moving on forward,
product leadership is chosen as a value proposition, because it is believed Kittner may stress on
its quality and variety of product when expanding to France. The strategy map is followed by a
Balanced Scorecard which depicts four of its main perspectives and presents them with goals,
objectives, specific targets and measures for a one year period. Additionally, it is recommended
for Kittner to use the BSC with an Action Plan in order to think of different activities to implement
and achieve the desired results. The report has recommended many actions in regards to the
internal structure of the company as to how it can be strengthen and improved upon – scalability,
Date of submission: 2nd January 2015
34
task delegation and better time management. Moreover, the report suggests various measures
for salespeople valuation based on the efforts they put in their work and the according results.
Following the report advises on the use of a sales plan when trying to implement new strategies.
It is suggested that Kittner hires a new marketing assistant to help with the research on the
French market and according marketing activities.
When it comes to finding a trading partner in France, there are further recommendations made in
relation to Kittner. To begin with, Kittner is following a market development strategy and is
advised to adopt a differentiation approach. It is strongly recommended for the sales people of
Kittner to apply value added selling strategies to increase competitive advantage and study the
total product concept, which describes four different levels. Additionally, Kittner will benefit from
implementing the cluster of satisfactions concept, which outlines the three main factors
customers pay attention to when introduced to a new firm.
Moreover, the report proposes different ways of how Kittner can increase its prospect base –
through referrals, networking, its website, email marketing and trade shows and exhibitions. In
addition, a KAM should be assigned to the new client and a strong relationship should be formed.
In connection to this, the report suggests a few tips on how to sustain partnership-type
relationships – shared value, communication on daily basis, keep good with other members of
the company and stay informed about market changes at all times.
9. Conclusion
By and large, it is believed that the purpose of this report has been met and he research
questions answered. The French market was analysed in terms of its economic, social and
cultural structure. In addition analysis of the industry was carried out and possible threats and
opportunities were outlined. The report also analyses the internal structure of Kittner, aiming to
find strengths and weaknesses in order to develop a marketing and sales strategy. Moreover,
many different recommendations were made in regards to Kittner’s organisational structure and
different approaches in finding a new trading partner are proposed.
The report has also found answers to the set research questions in the project description. To
begin with, the economic situation in France at the moment is not at its best and can influence
Kittner’s expansion negatively, having in mind the price sensitive customer. Furthermore, various
suggestions are made regarding the internal structure of Kittner, followed by e detail plan of how
the company can find, attract and retain new customers.
As a conclusion, it is thought that the proposed methods and changes are offering food for
thought on how and where the company can improve upon in order to gain competitive advantage
and strengthen its marketing positon.
Date of submission: 2nd January 2015
35
Date of submission: 2nd January 2015
36
Date of submission: 2nd January 2015
37
Date of submission: 2nd January 2015
38
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Appendices
Appendix 1: Competitor worksheet
Sources: (Manning, et al., 2012)
Appendix 2: Old Project Description
Project Description
Background description
Kittner Anlagen- und Maschinenbau is a B2B German company, which has based its
manufacturing facilities in Bulgaria. The firm exists since 1998 and has been growing ever since.
Kittner is manufacturing industrial machines made entirely from stainless steel and for different
trades. The wide range of equipment the company is offering allows it to expand its customer
base. The main product categories are: Hygiene equipment, Lifting & Tilting equipment, Washing
Machines, and Conveyors & Elevators. The company also offers customised solutions to clients,
who have specific requirements. The categories split into subcategories where a lot of different
products can be found. Those machines are sold to the food, pharmaceutical, chemical and
automotive industries. Some of the products have specific applications to a specific industry,
while others can be bought by very different trades. A perfect example of is the hygiene
equipment, which can suit the needs of various customers.
Kittner Anlagen- und Maschinenbau sales markets are all over the world. The biggest share of its
revenue comes from European countries – Germany, Denmark, The Netherlands, Italy, Finland,
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the UK, and Belgium. The rest of the sales come from Russia, Japan, South Korea, Singapore,
Canada and USA. The firm also has market shares in Central and Western Europe.
Kittner is aiming to keep competitive prices at all times in order to not fall behind its competitors.
Among the firm‘s clients, a trend can be seen in choosing favouring different machines. For
instance, in Japan, customers prefer Washing machines for tumblers and crates, while Russia
focusses on conveyors elevators. This fact will serve as a purpose of this report when researching
the French market and the different industries.
Up until now, the firm has gained its customers and clients through exhibitions and word of
mouth. In order to capitalise on the opportunity in France, a marketing plan together with a sales
plan will be drawn.
Purpose
The purpose of this report is to analyse the French market in terms of Kittner‘s competitors sales
shares, to analyse different retailers and what type of machines they are selling. Together with
that the report will aim to analyse which range of products will be best to enter the French market
with.
Problem Formulation
How can Kittner Anlagen-und Maschinenbau best enter the French market?
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How will the economic situation in France influence Kittner‘s expansion?
What will be the choice criteria in finding a new trading partner?
Through which products Kittner can best enter the French market?
What would be Kittner‘s value proposition?
Marketing and sales plan for the French market?
Analysis of Kittner‘s competitors.
Learning Outcomes
The report will aim gather specific information about Kittner‘s competitors in France, their reach
and share in the market, French economy, possible trading partners and make conclusions and
recommendations about how Kittner can best enter the French market.
Limitations and Delimitations
Limitations: The restrictions of this report have been established by the guidelines for it, where
specific date for submission together with number of pages is set.
Delimitations: The report will be delimited to the French machine industry, taking under
consideration different factors together with competitor and industry analysis.
Methodology
The research methodology represents a detailed analysis of specific methods, which explain how
the study is to be understood. The report will take into account the Sander‘s onion framework,
when discussing the particular assumptions this report will underpin.
Figure 10: The Onion Framework
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(Saunders, et al., 2009, p. 108)
Objective
The objective of this report is to develop a strategy for Kittner Anlagen- und Maschinenbau for
finding the right trading partner in France, who will sell products in a specific industry. In order to
meet the objective different theories and models will be taken into account together with analysis
of collected data.
Research Paradigm
The chosen research paradigm is a combination of positivism and hermeneutics. The reason for
that is the complexity of the subject in question. Objectivity is crucial when making business
decisions, hence positivism will be discussed as it is known for holding an objective view and it‘s
based on observation and experiment (Brooks, 2013). This paradigm also reasons that general
patterns exist, which can be predicted and used to control social phenomenon (Brooks, 2013).
Hermeneutics on the other hand has a circular structure. Hans Gadamar (Butler, 1998) suggests
that the whole consists of small parts and there is a formal relationship between those parts and
the whole. This paradigm will assist in understanding how different aspects and parts are related
and have influence on each other. For instance, finding a new trading partner in France does not
depend solely on the French economy, but also on Kittner‘s products, service and business
decisions. Decisions of this kind are made after long and in-depth discussions; this is why it is
important to consider the Reductionist/Analytical dialectic technique. This form involves
subjecting a social phenomenon to structural analysis, in a way deconstructing the whole part into
its consisting parts in order to arrive at in depth interpretations (Butler, 1998).
Approach
The report will be based on an inductive approach, where the focus will be on observing and
detecting patterns where possible in order to develop conclusions. It is important to mention,
however, that the conclusions will be untested (Brooks, 2013).
vii
Strategy
The stratgey chosen for this report is case study combined with grounded theory.
Method
The chosen method for this project is qualitative, since it is solely based on theories, models and
analytical procedures, and not on quantitative data such as: interviews and surveys.
Time-horizon
The phenomen of finding a new trading partner, which is to be discussed in this report is a crosssectional study. This is say that the research may be true and relevant at a particular point of time
(Brooks, 2013, p. 198). The aim of cross-sectional study is to explain the connection between
different factors, for example how can the economic conditions of France influence the industrial
sector and foreign investements.
Data and data collection
The needed data will be colledted through desk research from textbooks, journals, articles and
official websites for statistical data.
Type of research
Finally, the report will be based on secondary reserach. The nature of secondary research is that
the data is previously used for different purposes and it is not specifically collected for this report
(Brooks, 2013, p. 243).
Theory and models
The report will take into consideration the PESTEL Analysis together with Porter‘s 5 Forces to
evaluate the external environment of the stainless steel machine industry in France. An internal
analysis of the company itself will be made, evaluating their market shares, differentiation and
prospects using the Business Canvass Model. The results will be summarised using SWOT
analysis, which will assist in drawing a strategy for finding a new trading partner. A strategy map
together with a BSC will be used. Furthermore, an analysis will be made of the customer buying
behaviour. In addition an analysis of the French culture, using the Hofstede dimensions. The
result of these analysis will forms the marketing and sales plan .The sales plan encompasses
sales strategy, budget, territory plan, etc. Moreover, attention will be drawn to logistics and which
is the fastest way to transport goods from Bulgaria to France. In regards to this, incoterms will be
explained and different laws for possession of goods.
viii