Fachhochschule Köln
(University of Applied Sciences Cologne)
Fakultät für Informations- und Kommunikationswissenschaften
Diplomarbeit / Diploma Thesis
Studiengang Informationswirtschaft: (Informations Science and Economy)

Developing a sales strategy in an international company, designed for a key account customer acting on a global level -

Transforming strategy models into practice for the example
of the “T-Mobile International” account in the Siemens
Mobile Network business unit

eingereicht von:
Daniel Weber

Mai 2006

Lock Flag

This work contains confidential and/or privileged information. Any unauthorised copying, disclosure or distribution of the material is strictly forbidden. This work is subject to copyright. All rights are reserved, whether the whole or parts of the material are concerned, specifically the rights of translation, reprinting, use of illustrations, recitations, broadcasting, reproduction on microfilm or any other storage media and in data banks. The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use.

Duplication of this publication or parts thereof is forbidden without written agreement permission by Siemens AG, without any time limitations. © 2006 by Siemens AG

Sperrvermerk

Die vorliegende Diplomarbeit enthält vertrauliche Informationen der Siemens AG. Veröffentlichungen oder Vervielfältigungen der Diplomarbeit – auch auszugsweise – sind ohne ausdrückliche Genehmigung der Siemens AG nicht gestattet.

Die Diplomarbeit ist den Korrektoren sowie den Mitarbeitern des Prüfungsausschusses zugänglich zu machen, die sich mit der Korrektur verpflichten, die genannten Geheimhaltungsbestimmungen einzuhalten.

Language of this thesis

This thesis has been written in partial fulfilment of the requirements for the degree of a German diploma. However, it was chosen to write this thesis in English. The basis for spelling is British English; some  quotes may be in non- British English, but are not especially marked.

Abstract

In the course of this paper, it is illustrated how key account management, with the key account customer as core element, affects the strategic management process by using it with focus on a single customer instead of applying it to a whole industry.

After describing the essentials of strategy, key account management and strategic management, these elements are merged and the different underlying analytical concepts are presented. The main analytical concept is based on Michael E. Porter′s competitive strategy and the five competitive forces. The focus lays on the adaptation of the strategic management process to the particularities of international key account management and thus to a single customer.

For the purpose of taking key account management to an international level,  different levels of internationalisation are described and applied to the concept of key account management. As a result of this description, the concept of expanding key account management to a global level – global account management – is presented.

Following the description and the merging of the models, the theoretical framework is applied to the practical case of the T-Mobile account at Siemens Mobile Networks. The practical case includes the analysis of the business relationship and leads to a final strategy.

Keywords:

Global account management
Key account management
Strategic management
Strategy
Transnational business

Table of Contents

Diploma Thesis ... I
Lock Flag ... II
Sperrvermerk ... II
Language of this thesis ... II
Abstract ... III
Acknowledgement ... IV
Table of Contents ... V
Abbreviations / Acronyms ... IX
List of Illustrations ... XI
List of tables ... XII

1 Introduction ... 1
1.1 Motivation of the study ... 1
1.2 Objectives ... 1

2 Theoretical Background ... 3
2.1 Explanation of terms ... 3
2.1.1 Strategy ... 3
2.1.1.1 The background of strategy ... 3
2.1.1.2 Strategy in Business Management ... 4
2.1.2 The Key Account ... 5
2.1.2.1 Differentiating the Key Account from the Key Account Team ... 5
2.1.2.2 A special kind of customer - The Key Account ... 6
2.1.2.3 Geographical distinctions of Key Accounts ... 7
2.1.3 Key Account Management ... 12
2.1.3.1 The origin of Key Account Management ... 12
2.1.3.2 Elements of Key Account Management ... 13
2.1.3.3 Elements of geographical distinctions in Key Account Management ... 17
2.1.3.4 Reasoning for Global Account Management ... 23
2.2 Strategy Development ... 24
2.2.1 The process of strategic management ... 24
2.2.1.1 Determining the Status Quo – Initializing the Strategic Management process ... 27
2.2.1.2 Market analysis ... 27
2.2.1.3 Company analysis ... 27
2.2.1.4 Strategic analysis ... 27
2.2.1.5 Vision and Mission ... 28
2.2.1.6 Strategy development ... 28
2.2.1.7 Strategy implementation ... 28
2.2.1.8 Strategy control and adjustment ... 29
2.2.2 The various approaches to strategy development ... 29
2.2.2.1 The market-based view ... 30
2.2.2.2 The resource-based view ... 31
2.2.2.3 The dynamic view ... 31
2.2.3 Levels of strategy ... 32
2.2.3.1 Corporate level ... 33
2.2.3.2 Business unit level ... 33
2.2.3.3 Functional level ... 33
2.2.3.4 Operational level ... 34
2.2.4 Porter′s three generic strategies ... 34
2.2.4.1 Cost leadership ... 35
2.2.4.2 Differentiation ... 35
2.2.4.3 Focus ... 35
2.3 Findings ... 36

3 Applying Global Account Management to the Process of Strategy Development ... 37
3.1 Adaptations to the strategic management process ... 37
3.1.1 Analysis of the business status quo ... 37
3.1.2 Environment / Market analysis ... 39
3.1.3 Company analysis ... 44
3.1.4 Strategic analysis ... 47
3.1.5 Vision and Mission ... 51
3.1.6 Strategy development ... 52
3.1.7 Strategy implementation ... 53
3.1.8 Strategy control and adjustment ... 53
3.2 Adapting the various approaches of strategic management ... 54
3.2.1 Adapting the different views of strategic management ... 54
3.2.1.1 The market-based view ... 54
3.2.1.2 The resource-based view ... 54
3.2.1.3 The dynamic view ... 55
3.2.2 Levels of strategy ... 55
3.2.2.1 Corporate level strategy ... 56
3.2.2.2 Business unit level strategy ... 56
3.2.2.3 Functional level and operational level strategy ... 56
3.2.3 Porter′s three generic strategies ... 57
3.3 Findings ... 58

4 Applying Theory to Reality – The Case of T-Mobile at Siemens Mobile Networks ... 59
4.1 The Status Quo of the businesses between Siemens and T-Mobile ... 59
4.1.1 The position of Siemens and T-Mobile in the industry value chain ... 59
4.1.2 The satisfaction level of T-Mobile with Siemens MN and performance discrepancies ... ......63
4.1.3 The current strategy of Siemens MN for the customer T-Mobile ... 63
4.2 Market and Customer analysis of the Key Account T-Mobile ... 63
4.2.1 The analysis of the competitive market forces for the mobile communication industry ... 64
4.2.1.1 Rivalry amongst the competitors ... 65
4.2.1.2 New entrants ... 66
4.2.1.3 Substitute products ... 67
4.2.1.4 Bargaining power of the supplier ... 68
4.2.1.5 Bargaining power of the customer ... 69
4.2.1.6 Complementors in the mobile communication industry ... 70
4.2.1.7 The global market for mobile communication equipment ... 71
4.2.1.8 The market paradigm in the mobile communication industry and possiblechanges ... 72
4.2.2 The position of T-Mobile in the mobile operator market ... 74
4.2.3 SWOT Analysis of T-Mobile ... 79
4.2.4 T-Mobile′s strategy ... 79
4.2.5 Possible business development scenarios of T-Mobile ... 80
4.2.6 The organisational structure of T-Mobile in relation to the purchasing process ... 81
4.3 Company analysis of Siemens ... 83
4.3.1 The interdependence between T-Mobile and Siemens ... 83
4.3.2 The organisational setup of the T-Mobile global account team at Siemens ... 84
4.3.3 Availability of Siemens products in the customers countries ... 85
4.3.4 SWOT Analysis for Siemens MN ... 86
4.3.5 The strategy of Siemens on different company levels ... 86
4.3.6 Alliances of Siemens and the global account team ... 87
4.3.7 The global frame and pricing agreement between Siemens and T-Mobile ... 87
4.4 Strategic analysis  ... 87
4.4.1 The geographical characteristics of T-Mobile ... 88
4.4.2 The market characteristics and competitive situation ... 89
4.4.2.1 The current and future addressable market split into regions ... 89
4.4.2.2 The share of wallet of the current addressable market ... 89
4.4.2.3 The suppliers footprint at T-Mobile and spending allocation by technology ... 90
4.4.2.4 Strategic match between T-Mobile and Siemens Mobile Networks ... 91
4.4.2.5 The relationship level between Siemens and T-Mobile ... 92
4.5 Vision and Mission of the Global Account Team ′T-Mobile′  ... 92
4.6 The global account team strategy for the customer T-Mobile ... 92

5 Prospects, Limitations and Conclusions of the Study ... 97
5.1 Prospects ... 97
5.2 Limitations ... 98
5.3 Conclusion ... 98

Annex ... i
A References ... i
B Appendix ... xi
a Tables ... xi
b Screenshots ... xiii
C Expert Interviews ... xv
 

1 INTRODUCTION

In a world with increasing competition through enhanced information flow and declining trade barriers, companies are merging and market shares are split by a shrinking number of large market players. Along with this development, new highly complex technologies and services evolved in the last two decades. As a result of this development, suppliers that had historically grown structures of separate business units experienced growing difficulties to deliver such complex products out of one hand to these ever-growing customers; the supplying companies were challenged to introduce new ways of selling. One approach to face these challenges was the development of key account management programs which are set up for especially important customers.

1.1 Motivation of the study

For more than ....

When starting to develop the sales strategy under the given circumstances of international key account management, it became clear that this topic had not been especially addressed, neither in practice at Siemens nor within the scientific world. However, within recent research, strategy in the context of key account management was already a topic, but it rather related to key account management as a strategic tool itself and how to set up the key account personnel strategically within the organisation. Then again, neither a specific process was described how to develop a strategy with relation to the sales process towards the customer nor did most of the literature refer to the implications of applying key account management to an international business. The thesis is thus addressing this shortcoming by developing a theoretical background that can serve as a solid foundation for a practical solution; the core purpose is to design a process which is optimised to develop a sales strategy under the umbrella of international key account management.

1.2 Objectives

The thesis has been structured into five parts.

Chapter 1 features the introduction of the thesis and illustrates the motivation of this work.

In order to impart a basic knowledge of the main concepts, Chapter 2 introduces the models and elements of strategy and key account management with its different peculiarities as well as the concept of strategic management to the reader. In this section the term key account and key account management are defined while special attention is given to the different levels of international business and how they affect key account management. Furthermore, the strategic management process is described and, additionally, aspects relevant to developing a strategy in a company.

In Chapter 3 the concept of key account management on an international level is applied to the process of strategic management in order to develop a sales strategy. The process is divided into its single elements which are then adapted to key account management. The main focus is put on the analytical part of the process and shows the particularities which are a result of this adaptation.

Chapter 4 deals with the application of the theoretical findings to a realistic case which results in the development of a strategy for the key account customer T-Mobile at Siemens Mobile Networks. The relation between Siemens and T-Mobile is comprehensively analysed. This is done on the basis of a data collection which was conducted during the parallel active work within the company and exists of internal documents and surveys as well as external sources. This was part of the practical application and is based on the findings of Chapter 4. The 4th Chapter shows to which degree the theoretical process of strategic management can be applied to key account management in a realistic situation and follows along the process until the definition of a strategy. The final and fifth chapter gives a summary of the findings and illustrates further possibilities in the field of research as well as for the practical implementation of the strategy.

2 THEORETICAL BACKGROUND

In the following chapter the theoretical basis of the thesis shall be given. This will include the explanation of key terms as well as the description of processes and models applied later on.

2.1 Explanation of terms

The following terms shall be defined as they are key concepts that are used throughout the document.

• Strategy
• Key Account
• Key Account Management

2.1.1 Strategy

As the concept of strategy is used, when defining key account and key account management (KAM), I shall be explaining this term first. While searching for a definition of the term strategy, various interpretations and concepts were found. Accordingly, this discussion could easily be the subject of an academic thesis by itself and “within both business and academic circles, it would be quite miraculous to identify two people who share the same definition of strategy.” (Markides, 1999; p. 6). Therefore, I shall give a synopsis of the term strategy on the background of economy.

2.1.1.1 The background of strategy

The word strategy is rooted in the Greece word ‘strategos’ and is initially related to the function of an army general; hence it is drawn from the art of warfare, where a central person was in charge of various troops on the field, whose deployment could make the difference between victory or defeat (cf.: Welge et al., 1999; p. 12). “[…] The systematic study of strategy in business and management is of relatively recent origin. The concept first gained currency in the area of military activity and was associated with the planning of wars, campaigns and battles […] It only began to be widely applied in business
and management after the publication of Chandler’s book [Chandler, A., 1962: Strategy and Structure Cambridge, MA; MIT Press] on strategy and structure in 1962.” (Mansfield, 2002; p. 6120).

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