The Assessment Centre method to the selection of Key Account Managers under aspects of the Transaction costs

Seminar Paper, 2008

32 Pages, Grade: 1,3


Table of Contents

1 Introduction

2 Transaction costs theory

3 Key Account Management
3.1 Term, importance, basic principle, and goals
3.2 Task spectrum and instruments of the Key Account Manager
3.3 Demarcation of the KAM from conventional sale

4 Assessment Centre
4.1 Term, history, and ranges of application
4.2 Characteristics and participants
4.3 Components of the AC

5 Assessment Centre to select Key Account Managers
5.1 Selected relevant TAC of the AC with the selection of KA-M
5.2 Some aspects of application of the AC to reduce TAC

6 Conclusion



ITM – Checklist

List of Abbreviations

illustration not visible in this excerpt

1 Introduction

One of the most important tasks in sales is the development of long-term and sustainable relationships to key customers (Key accounts). The relationship with KAs creates the success of enterprises and its sustainable ability to survive in competition on the market. The requirements at co-workers this challenge successfully to master is very high. For this reason special key qualifications are demanded from those co-workers, who are concerned with the structure and development of the relations with key customers. So therefore one of the most important tasks in the context of the concerned personnel work is the selection of suitable high-level personnel (Key Account Managers) which meets these requirements. To be able to select these KA-Ms enterprises use often the tool of the AC which is regarded in this assignment under aspects of the TAC.

This assignment answers the question how to design an AC to select KA-Ms by focus on their needed key qualifications to minimize TAC. To answer the question the assignment uses aspects of the TAC-theory, introduces the basics of KAM, and the AC-method by evaluation of selected scientific literature.

The assignment starts after this introduction with chapter 2 which gives an briefly overview about the TAC-theory and introduces it in its relation to the topic and from two helpful perspectives.

Chapter 3 provides an overview about KAM and focuses in the first part on the term, the importance of KAM, its basic principles, and its goals. The second part follows with focus to spectrum of the tasks of the KA-M and the necessary instruments, followed by part three which demarcates the KAM of the conventional sale.

Chapter 4 discusses the AC in the first part by introduction of the term, the history of the AC, and its ranges of application, followed by the second part, which covers the characteristics of an AC and its participants. Part three closes this chapter by a introduction of the AC-components.

Chapter 5 discusses the AC to select KA-Ms by a focus to selected relevant TAC of an AC at KA-M-selection and finishes with some aspects of application of AC to reduce TAC.

The assignment finishes with a conclusion, which gives an evaluation by the author and an outlook.

2 Transaction costs theory

The TAC theory is based on the research of Coase which was published in 1937. The subject of the Transaction cost theory is the question over a possible dependence of the choice of the organization form and co-ordination form on socio-economic exchange relations with focus on the arrangement of efficient mechanisms with the completion on economic exchange actions between individuals and organizations.[1] In that sense a transaction is the transmission of a property or service inclusive the achievement of the appropriate rights of disposal.[2]

In the context of transactions, costs are caused – named transaction costs – for preparation, agreement, required adjustment, and control of achievement relations.[3] Appendix 1, fig. 1 presents - with refer to Albach - different development forms[4] of transaction costs.

Williamson placed on the base of the work of Coase a partitioning of the TAC[5] - presented in Appendix 2, fig. 2 - in relation to his estimation: ex-ante and ex-post. He defines ex-ante transaction costs as costs for searching and information, for preparation of contracts, for its negotiation, and as costs for the security of agreements. As ex-post TAC Williamson concerns to costs for adjustments, cost for the tuning of details as well as to costs for controlling and monitoring, and for penetration of contracts. TAC are a measure for the efficiency of the evaluation of the degree of achieving a goal and for the optimization of the selected organization form. It is in its optimum, if transaction costs are in its minimum and dependent from interconnection between measured variables (environmental factors) and behaviours (human factors).[6] The measured variables depend on the uncertainty into a business relation and the benefit, which results from another than the originally planned use of the investment.[7] The more specific the investment is, the more limited is its use for another use, which leads to high TAC - in a case of omission of achievements - and on one hand to a close connection of the investor to the supplier, and on the other hand to high TAC for a supplier for searching alternative investors who are interested in his achievements.[8]

Uncertainties in the behaviour of the co-operation partners and the environmental factors are additional drivers of transaction costs, which are justified in limited rationality and the possibility of opportunistic behaviour of the transaction partners.[9] This is because of the fact that the admission and processing of information is subject to restrictions and the maximization of the benefit for one of the partners – to disadvantages of the counterpart (e.g. by holding back or distorting of information) - could lead to possible economical inefficiency, which leads to investments in extensive control and monitoring measures.[10]

On one hand reducing of TAC may be helpful to reduce costs, on the other hand TAC may be helpful to strengthen a partnership and the business relationship. If the finishing of a partnership is related to a high step-out barrier (e.g. finishing costs) by high transaction costs, maybe the partners work better and sustainable together, because they are bound together, and the losses of finishing the relationship would weaken each of the partner. To identify, to influence and to optimize TAC concerns to all activities of an enterprise and is a factor to success.

3 Key Account Management

In this assignment it is necessary to present the basics of KAM, which will have a deep impact to the search of KA-Ms and the concerned TAC.

3.1 Term, importance, basic principle, and goals

The term: In the past a lot of different terms were used which shall describe the relationship to the most important customers of enterprises. The term KAM describes a form of the organization of the sales to KAs as a form of organization where special positions are formed and the owner of the position is only concerned to the sales to KAs.[11] The KA-M uses special customer related methods of sales and marketing for realization and security of business possibilities with his KA to achieve strategic successes and advantages in competition.[12]

The importance: The structure of partnership business relations with the most important customers of the enterprise as well as the consistent adjustment of the offering enterprise on the needs of the customer are of fundamental importance for the success of the enterprise.[13] These customers - the KAs - have an enormous impact on the success of a company. A company has a strategic advantage, is more efficient than others, and have lower TAC in sales than its competitors, if the company is able to build up a long-term and trustful relationship to its most important customers.[14] For the offering company this can lead to high expenditures. For example it can mean to initiate special activities for customers, to employ or to educate special sales personal, and to adapt internal structures up to a change of the sales organization to multifunctional selling teams; an offering company cannot invest these measures in each relationship, so that the relationships and the resources which has to be equipped with these investments are carefully selected (e. g. personal resources, long-term relations, annual costs, life cycle costs).[15]

The basic principle: The support of multinational customers, the customized creation of attractive achievement bundles, and the optimization and co-ordination of the internal activities of the offering company on international and multi-hierarchical level in relation to the development of country- and product spreading thinking and customer related organizational structures are the basic principle of the KAM.[16]

The goals: It can be differentiated between strategic and derived goals of the KAM.

Strategic goals – which are also presented in Appendix III, Fig. 3 - are the development of customer proximity and customer connection by relationship management, the development mutual synergies and the decrease of the transaction costs.[17] To achieve these goals the main interest of the KA-M is by caring for customer proximity and connection for getting a deep knowledge of the value chain of the customer, its optimization, and to optimize the relationship between customer and offering company.[18] From the strategic goals further goals can be derived, like an increase of the quality of a customer relationship, support of the customer contact by regularly information and communication, minimization of the co-ordination expenditures between the customer and the company, and the minimization of the co-ordination expenditures inside the company.[19]

In the consequence all these goals lead to the fact that the KA-M an information -, co-ordination -, integration -, planning- and control function take over.[20]

3.2 Task spectrum and instruments of the Key Account Manager

To achieve the presented strategic and derived goals leads to the task spectrum of the KA-M. The task spectrum can be presented by the model of the phases of the KAM - shown in Appendix IV, fig. 4 - which consists of the phases: analysis, planning, execution, and control and it assign focal tasks to each of the phases.[21] Achieving the synergies and the decrease of the transaction costs are main goals of the phases of the process of sales. To achieve the strategic and derived goals – as explained in chapter 3.1 – the KA-M has to be able to use the instruments of the KAM, which are presented in Appendix III, fig. 3.

3.3 Demarcation of the KAM from conventional sale

The difference of the KAM compared to the conventional sale can be presented by three important points, which are: the development of a long-term relationship to the KA, the individual strategic consulting, and the competence in consulting instead of hard selling.[22] The long-term and sustainable relationship to the customer is the dominant goal of the KAM, instead of creation a fast turnover like in conventional sale. By the use of this strategy saves KAM a long-term success and an advantage compared to other competitors.

Individual strategic consulting is the second difference of KAM to conventional sale and points by the use of individual and strategic consulting instead of conventional sales arguments. With growth of the relationship intensity between KA and KA-M classical product advantages become a more background position; dominant position becomes the growth of a strategic partnership. Appendix V, fig. 5 presents the different working level of the KAM to design a long-term and sustainable partnership with the Key account.

Competence in consultation is the third point of the demarcation between KAM and conventional sale. It means that conventional sales techniques lose their importance and discounts lose their value as a sale argument. Instead of this the KA-M uses customised solutions which are able to solve the current business problems of the customer.

The demarcation of the conventional sale, the principles of KAM, the task spectrum, and the needed instruments to achieve the goals of the KAM show that the requirements to KA-Ms are very different of conventional salesmen and require special adapted measures to select the right people to fulfil the requirements.

4 Assessment Centre

One of the most important tasks of the personnel work is the selection of high-level personnel, since success of enterprises depends substantially on the employment, selection and the correct placement of assigned co-workers. The external and internal personnel work is an investment decision, which is connected with a high risk for all involved parties. Wrong decisions can lead to substantial effects and disadvantages (e.g. costs) for the concerned enterprises and co-workers. Because of these reasons the instrument of the AC became a high acceptance and is used for the selection of employees in many enterprises.[23]

4.1 Term, history, and ranges of application

The term AC describes several testing methods, which make a simultaneous and multilayered evaluation of candidates at the same time possible. The candidates are monitored by several trained observers. Different evaluation methods are used over a longer time period and lead by evaluation of single assignments, group discussions, and role-plays in typical job situations in final to information about the suitability of the candidates for certain tasks, about their current or future needs in job-situations and about their need for further development.[24]


[1] Cp. Zernott (2004), p. 48.

[2] Cp. Picot / Reichwald / Wiegand (1998), p. 41.

[3] Cp. Picot (1982), p. 270.

[4] Cp. Albach (1988), pp. 1160-1161.

[5] Cp. Williamson (1990), pp. 22-24.

[6] Cp. Gruner (1997), p. 46.

[7] Cp. Williamson (1989), p. 139.

[8] Cp. Williamson (1989), pp. 139-141.

[9] Cp. Zernott (2004), p. 51.

[10] Cp. Williamson (1981), p. 553.

[11] Cp. Sidow (2002), p. 11.

[12] Cp. Sidow (2002), p. 11.

[13] Cp. Lambe / Spekman (1997), pp. 61-62.

[14] Cp. Jensen (2004), p. 23.

[15] Cp. Day (2000), p. 25.

[16] Cp. Jensen (2004), p. 3.

[17] Cp. Kurz / Gut (2005), pp. 104-105.

[18] Cp. Storp (2003), p. 102.

[19] Cp. Kurz / Gut (2005), p. 104.

[20] Cp. Kurz / Gut (2005), p. 104.

[21] Cp. Homburg / Schäfer / Schneider (2002), p. 302.

[22] Cp. Fleig / Wallmeier (2007), p. 2.

[23] Cp. Hesse / Schrader (2002), p. 12.

[24] Cp. Brenner / Brenner / Giesen (1997), p. 145.

Excerpt out of 32 pages


The Assessment Centre method to the selection of Key Account Managers under aspects of the Transaction costs
The FOM University of Applied Sciences, Hamburg  (MBA / HR / Prof. Dr. Niehus)
Master of Business Administration (MBA)
Catalog Number
ISBN (eBook)
ISBN (Book)
File size
529 KB
You know what you are talking about. It is obvious that the application to empirical evidence is well done. You are integrating relevant literature. Well done. The setup is persuading, well structured! Result: A- (Dozentenkommentar)
Assessment, Centre, Account, Managers, Transaction, Master, Business, Administration
Quote paper
Dipl.-Kfm. (FH) Uwe Schindler (Author), 2008, The Assessment Centre method to the selection of Key Account Managers under aspects of the Transaction costs, Munich, GRIN Verlag,


  • No comments yet.
Read the ebook
Title: The Assessment Centre method to the selection of Key Account Managers under aspects of the Transaction costs

Upload papers

Your term paper / thesis:

- Publication as eBook and book
- High royalties for the sales
- Completely free - with ISBN
- It only takes five minutes
- Every paper finds readers

Publish now - it's free