It has been found out that organizations are to concentrate and invest their efforts upon the development and maintenance of resources that would assist them in developing strategic capabilities and skills for implementation of strategies that create value (Chatterjee and Wernerfelt 1991; Hunt and Morgan 1995; Wernerfelt 1989).
It is argued by Pelham and Wilson (1996) and others (e.g., Day 1994; Slater and Narver 1999) that organizational performance can be increased by a market oriented culture of the organization that can serve as a strong source for the development of strategies. In a study of small firms by Pelham and Wilson (1996) it was observed that the effect of the structure and strategy of the organization impacted a little on performance than a market-oriented culture.
A management intervention can be regarded as a systematic approach to enhancing organizational performance through developing a market oriented culture. In a work setting the planned changes that are intended to change the individual organizational behavior of members and hence lead to enhanced organizational outcomes can be viewed as management interventions (Porras and Silvers 1991).
There have been continual conflicts in the conceptualization of market orientation over the past years. There are several views of market orientation out of which one view has offered the concept from an attitudinal and informational perspective (Han, Namwoon and Srivastava 1998; Hooley, Lunch and Shepherd 1990; Narver and Slater 1990). This viewpoint proposes that organizations that are market oriented are actively interested in maintaining and using information about competitors, customers and general market trends. The unique focal point for this view was the kind of information of the market the company maintained and the level to which employees were involved in it.
A second approach to market orientation is behaviorally focused (Deshpande 1999; Jaworski and Kohli 1993; Kohli and Jaworski 1990). This approach suggests three basic behavioral elements which are needed for an organization to work and perform with a market orientation. The foremost one out of the three is the intelligence generation which incorporates verbalized preferences and needs of the customers and also the analysis of exogenous factors influencing their needs and preferences (Kohli and Jaworski 1990). The second element is defined as intelligence dissemination which relates to the communication and flow of the information throughout the organization. It is important to provide all organization employees with market information because it smoothen the progress of the third element that is the responsiveness to market intelligence (Deshpande 1999). When the entire organization has the knowledge related to the needs of the competitive marketplace then the responsiveness to market information happens to be quicker and more effective.
Appiah-Adu (1997) in his studies related to small firms has shown a positive impact of market orientation upon business performance. Moreover Appiah-Adu and Ranchhod (1998) have found market orientation is considerably associated with increase in market share and as a whole related to performance and profit margin. Pelham and Wilson (1996) in their research on small firms have suggested a significant control of market orientation on small-firm performance measures. Considering an example, these two researchers have reported that over the current years the market orientation has positively influenced the level of profitability. Moreover they suggested that market orientation had a significant relationship with the product quality, growth share and profitability. In the end they concluded that a competitive advantage can be won by small organizations with high level market orientation.
In a research Pelham (2000) stated that in small organizations market orientation is positively correlated with sales and marketing effectiveness, also the growth and profitability. Most recent researches have suggested that the influence of market orientation on the performance of organizations can be moderated by factors like the strategic direction of the organization (Matsuno and Mentzer 2000) or by the economic volatility at its extreme (Grewal and Tansuhaj 2001). At the organizational level mounting evidence has mostly supported the association between business performance and market orientation. This leads to a general conclusion that within definite constraints, an organization performs better with additional market orientation than the ones with less market orientation.
Using relevant examples from organizations of your own choice evaluate the role of marketing operations within an organization.
Gronroos (1990) states: “Marketing is to establish, maintain, and enhance relationships with customers and other partners, at a profit, so that the objectives of the parties involved are met. This is achieved by a mutual exchange and fulfillment of promises†(p. 138). McKenna (1991) has supposed an even more strategic view by placing the customers first and changing the role of marketing from influencing the customer (selling by telling) to real connection with the customer i.e. communication and sharing of knowledge.
Organizational performance can be enhanced when the internal suppliers of the organization or the firm are oriented towards satisfying the internal customer needs (Achrol and Kotler 1999). In a situation when the needs of internal customers are explained like the ability to assist the organization in satisfying the external customer needs it is then when you can call the organization to have become more market oriented. Several researchers have found out that in order to build up a market orientated organization, it is necessary to focus on internal suppliers that serve the internal customers, who would ultimately serve other internal customers and most importantly the external customers Hauser, Simester and Wernerfelt (1996) and others (e.g., Conduit and Mavondo 2000; Gronroos 1990). Moreover Hauser, Simester and Wernerfelt have reported that to have an internal customer focus is very important to force a market orientation profound within an organization.
Internal customer orientation is to be used to drive a market orientation profound within an organization needs the employees to find out how to spotlight on both the requirements of the external customer and to recognize other employees to be internal customers (Mohr-Jackson 1991).
It is found out by Heilmann (1994) that the internal customer focus is significant since internal customer objectives can possibly be in alignment with the firm objectives that would comprise of providing better customer value to the customers that are external. Aligning the objectives of internal customers with the firm objectives can take place by implementing a reward system and a performance evaluation system to maintain the reward structure that contains the evaluation of the effectiveness of definite outcomes by internal customers (Conduit and Mavondo 2000; Hauser, Simester and Wernerfelt 1996).
Using relevant examples from organizations of your own choice appraise the processes that an organization uses to develop its markets
One method that can be brought in action for creation and sustaining market oriented behaviors all through the organization is a performance management system. According to several researches quite a lot of evidence is available that demonstrates the performance evaluations that are behavior-based are consistent with better customer service (Anderson and Oliver 1987; George 1990). By tying organizational rewards to specified employee behaviors a performance management system is formed.
Identification of the specified behaviors concerned in focusing the suppliers that are internal instead of on the objective criterion like the amount of units produced would create an apparent customer oriented focal point within the organization (George 1990). A system like this provides the employees with incentives to get involved in behaviors that are helpful for enhancing the quality of the product and service.
Though there happen to be various ways to build up a performance management system, one option to attain the equilibrium among changing employee attitudes and later shifting employee behavior is to devise a method which is like the balanced scorecard projected by Kaplan and Norton (1992). As observed by Kaplan and Norton there is a persistent failure to balance the tension among strategy and execution. This is in reality disappointing so the enhanced matching of actions to strategy was the unique reason Kaplan and Norton popularized balanced scorecards in the 1990s.
This balanced scorecard is basically a management intervention system which gives a presentation of both operational measures and financial measures to the top management in order to get a rapid complete view of the company. As many of the activities take place at department levels so all measures are decomposed to the so called local levels (Kaplan and Norton 1992). These local level metrics let top management to stay side by side of key internal procedures that affect in general corporate objectives. A major advantage of this procedure is that even the lowest level management in an organization has clear targets and goals to be achieved. These goals constantly help in contributing towards the overall mission of the company. Moreover weak performance is simple to identify. Performance targets and behaviors settled for employees visibly communicate the attitudes and expectations of top management.
Even though a complete restoration of the performance management system of the company may be a perfect but it does not necessarily relate to the point that a new performance management system be devised former to initiating a market orientation program. A present performance management system can be modified to contain metrics that evaluate employees gathering, distribution and openness to suitable market intelligence. Moreover these measures would in addition require supplying to each employee in general performance evaluation.
Example
Cardinal Fastener is a small manufacturing company which operates in construction of OEMÂ equipment such as stadiums, domes, oil rigs and drilling cranes. The company was already well reputed for quality and the one focusing on the customers. The new president of the firm figured out the first phase to implement a market orientation is education of the work force by explaining to them the concept of external and internal customers. The next step taken by him was the physical line up of the employees across the plant to demonstrate them their very own internal suppliers and customers by giving employees an incredibly personal logic of the dyadic relationships which they were involved in. The workers when knew their own internal suppliers and customers then the type and nature of the market information that they were supposed to gather was briefed in addition to the reward structure. The reward was given on weekly basis in terms of cash for solving problems and to have an error-free timely delivery. These objectives were associated to the definite performance of every job by the internal customer- supplier (internal) network all through the organization. By following this procedure every employee exactly was aware of the way his/her behavior had an effect on his/her internal customers and how it produced satisfaction of external customers.
The next phase of the procedure for Cardinal was altering the behavior of the employees. Top management plays a vigorous role in supporting the market orientation inside Cardinal Fastener. An ongoing practice of market information sharing is observed. Top management performs distribution of market information by giving both customer and competitor the information company wide.
Every problem in the company was taken to be an opportunity. Problems that emerged were considered to be either a procedure not being followed or absence of a procedure to be followed. As a result of driving the organization deeply into market orientation tremendous growth in the company was observed in terms of competitively improved delivery time, better quality products, very high worker satisfaction, lower costs and superior profits.
Hauser, Simester and Wernerfelt (1996) proposed structure of implementation associates to the satisfaction of customers that are internal to the organization’s ability to satisfy external customers.
