Identifying potential market / for international best practices consul-  tancy needs of Frozen Seafood Processing Enterprises  (from Binh Thuin to Ca Mau) 

ABBREVIATION ISO International Organization for standardization HACCP Hazard Critical Control Point BRC British Retail Consortium Global GAP Global Good Agriculture Practice GMP Good Man

MBAVB3

NHAN THI THÚY H NG

“Identifying potential market / for international best practices

consul-tancy needs of Frozen Seafood Processing Enterprises

( from Bình Thu n to Ca Mau)

MASTER PROJECT MASTER IN BUSINESS ADMINISTRATION

(PART-TIME)

Tutor’s Name: Dr NGUY N C TRÍ

H Chí Minh City ( 2010 )

UNDERTAKINGS

By this letter, I would like to confirm that, the research project of identifying “the potential market for international best practices from Sea food processing Enterprises”, I ,have myself studied all aspects of research, applied the academic knowledge obtained from MBA program , collect relevant data, information ,and discussed with my tutor, I undertake that this is my own research ,all infor-mation, data and survey results are true and never announced in any other research project

Ho Chi Minh City, 24 December 2010

Nhan Thi Thúy H ng

Special thanks to all professors, lecturer, my classmate, board of coordinator for their support during

my learning time at the MBA program of the Solvay-HOU

Finally, I would like to express my profound gratitude to my beloved parent for their great love and endless sacrifice that are never forgotten through my life, to my husband, for all his encouragement and fully support through my challenge study time that I can not dream of achieving this successful-ness without him

TUTOR’S COMMENTS

Tutor

Dr NGUYEN DUC TRI

TABLES OF CONTENTS

Undertakings ii

Acknowledgment iii

Tutor’s comments iv

Abbreviation viii

List of tables and figures ix

Executives summary x

CHAPTER I – INTRODUCTION OF THE PROJECT 1

1.1 Introduction of the final project 1

1.2 Rational of study 2

1.3 Statement of the problem 3

1.4 Research objectives 3

1.5 Scope & limitation 4

1.6 Thesis structure 4

CHAPTER II – LITERATURE REVIEW 6

2.1 Concepts 6

a What is Management Consultancy (MC) 6

b Why are consultants used: Five generic purposes 7

c Consulting and Training 7

d What is Quality Management System (QMS) 8

e What is the objectives and benefit of implementing of QMS, Best Practices 9

f What is the Cost of quality –Quality is free 10

g What is the principles and building –blocks of Quality management system 12

h Business to Business Market 14

CHAPTER 3: METHODOLOGY 19

3.1 Theoretical framework development 19

3.1.1 The need 19

3.1.2 Problem definitions 19

3.1.3 Search for potential consultants 20

3.1.4 Consultancy firm selection 21

3.1.4.1Generate trust and good impression in the initial phase 22

3.1.4.2Price 23

3.1.4.3Previous relationship 23

3.1.4.4Consultancy firm profile 23

3.1.4.5Being Introduced by friends, authority 23

3.1.4.6The quality of proposal 24

3.1.5 The Reputation of Consultancy organization 25

3.2 Research design 26

3.3 Quantitative study 31

a.Sampling characteristic 31

b Data collection methods 31

c Data Analysis 33

CHAPTER 4: RESULT ANALYSIS 34

4.1 Sample Profile 34

4.2 Descriptive Analysis 34

a Current situation of implementing “Best Practice” of Sea food processing Enterprises ( Binh Thuan Provine to Ca Mau ) 34

b The benefit that the enterprises obtain for establishing the Best Practice 35

c Why they need the consultancy service 36

d How are the client get to known of the consultant firm 38

e Factors influencing the buying decision process 38

CHAPTER 5 - RECOMMENDATION AND CONCLUSION 43

A- A strategic Approach 43

1 Mission and Vision 43

2 Understand Environment factors affect the Sea food processing Enterprises 43

3 Competitor Analysis 44

4 Identify critical success factor 44

5 The client base 45

6 Consulting firm Image/ profile 46

7 Growth and expansion 46

7.1 Size of a consulting firm 46

7.2 Growth and problem of staffing 46

7.3 Net works and strategic alliances 47

B- The marketing in consulting 47

a What is to be marketed 47

b Marketing approach 49

2.1 General Marking 49

2.1.1 Regard the clients’ needs and requirements as the focal point of all marketing 49

2.1.2 Each client is unique 49

2.1.3 Aim at an equally high professional performance in marketing and in execution 49

2.1.4 Understanding the client purchasing process 49

2.2 Techniques for marketing the consulting firm 50

2.2.1 Working the referrals 50

2.2.2 Establish the efficient Consultancy firm website 50

2.2.3 Marketing during the entry phase 50

2.2.4 Marketing to existing clients 51

CONCLUSION 52

ABBREVIATION

ISO International Organization for standardization

HACCP Hazard Critical Control Point

BRC British Retail Consortium

Global GAP Global Good Agriculture Practice

GMP Good Manufactory Practice

B2B Business to Business

QMS Quality Management system

COQ Cost of quality

GDP Gross domestic product

MC Management Consultancy

VASEP Vietnam Association of Seafood Exporters and Producers

LIST OF TABLES AND FIGURES

Table 1: Cost items of non-conformance associated with internal and external failure 11

Table 2: Collection of Information 28

Table 3: Proportion of implementing “Best Practices” 36

Table 4: Proportion of Companies used External consultancy service 36

Table 5: Proportion of companies will use external consultants for their future best practices 37

Table 6: The reason to use external consultants (%) 38

Table 7: Marketing communication to cause the client awareness (%) 38

Table 8: Ranking of importance in selection of Consultancy firms 39

Table 9: Concept of Consultancy firms Reputation 41

Table 10: The consultants working behavior are expected under the client view 41

Table 11: other expectation from the consultants 42

-& -

Figure 1: A model of business buyer behavior 15

Figure 2: Main influencing on business buying behavior Philip Kotler 16

Figure 3 : consultancy firm Marketing communication model 20

Figure 4: Factors influencing the selection of Consultancy firms 21

Figure 5: Concepts of Consultancy firm Reputation 25

Figure 6: The research Process 27

Figure 7: International standards of management system 35

Figure 8: Proportion of companies used external consultancy service 36

Figure 9: proportion of companies will use external consultants for their future best practices 37 Figure 11: Ranking of importance in selecting Consultancy firms 39

EXECUTIVES SUMMARY

Management consultancy has been recognized increasingly in VN as a useful professional service that help managers to analyze and solve practical problems faced by their organizations, improve organization performance Vietnam Sea Food processing industry has been contributing to Vietnam economic growing for the last decade in relation to export revenue However, to meet the more and more strictly requirements from major importing countries, VN sea food companies orienting to ex-porting need to establish, implement the best practices that aimed to assure the food product quality and hygiene, environment protection and other regulatory demand from importing market

The study was carried out on sea food companies from Binh Thuan to Ca Mau, on 60 quality in charge managers using depth interview via phone and structured questionnaire as the instruments for data collection Questionnaire was designed to find out the current situation of applying best practices, their future plan of using professional consultancy service, the organizational buying be-havior in selecting the consultancy firms, why they use external consultants, and what are their ex-pectation toward consultants technical expertise, experience and consultant behavior in meeting cli-ents needs

The finding shows that the selection of consultancy firms is influenced by the reputation of tancy firms, the quality of their proposal to the clients that meet the organization need Their con-cept of reputation lies on the direct technical expertise, knowledge and experience in sea food pro-cessing, the value, achievement that the consultancy firms has brought to their previous clients Fur-thermore, besides the technical expertise, the clients expectation toward the consultant behavior dur-ing the assignment project are willing to share knowledge and experience, the applying of efficiency methodology and procedures to help the client organization meeting their purpose

consul-Implication of the study may be used as references for the formulation of marketing strategy and the basis for future researches in the organizational buying behavior with regard to Best Practice con-sultancy services

CHAPTER I – INTRODUCTION OF THE PROJECT

Vietnam’s Seafood industry has grown tremendously in the past few years and have greatly contributed to the national socio-economic development The seafood industry is expected to contribute about 30-35 percent of the total GDP of agricultural-forestry-fishery products, with an annual growth rate of 8-10 percent by 2020 when the sector will export 6.5 million

tones of seafood to earn US$8-9 billion and generate jobs for 5 million workers

Vietnam targets to produce around 3.2 million-3.5 million tons of raw seafood, for export processing of 1.5 million tons-1.7 million tons in 2015

Although engaging in seafood export market later than many countries in the world, Vietnam’s seafood export has grown quickly thanks to suitable selection of market segments and application of advanced quality management systems

For example in 2009 and 2010, Vietnam has been one of 5 largest frozen shrimp export countries to Japan It is forecasted that in 2010, Vietnam’s total seafood export value would reach more than US$4.5 billion

Currently, Vietnam exports seafood to 164 countries and territories in which EU , US, and Japan are 3 major markets with such main products as shrimp, pangasius, squid, marine fish and frozen clam

According to the Ministry of Agriculture and Rural Development, with the sustainable development target of seafood processing and export industries by 2015, Vietnam strives to maintain its export growth rate from 8 - 10% per year, its export value would reach more than US$6.5 billion By 2020, Vietnam’s seafood processing and export industries would have strong brand and reputation in the market with export value at US$ 8 billion

The ministry also warned that importers would tighten protection measures through trade and technical barriers, in additional to these trade obstacle , the other issues like difficulties in obtaining raw materials and low productivity in manufacturing process hinder export

capacities Further more, Market regulations will focus on not only food safety but also environmental protection, social responsibility and protection of resources Vietnamese businesses, therefore, need to review management, speed up modernization and quality control systems in order to raise competitiveness

(Source: VASEP.COM.VN)

1.2 Rational of study

The application of safety & quality management in sea food processing by using basic existing international standard, guideline and codes of practice (such as HACCP, GAP/GMP, ISO 9000/01) to facilitate trading among exporting and importing countries generate possible need from seafood enterprises to get external consultancy services and

training to establish and implement “ Best practice “ as mentioned above

In addition to these, Environment protection awareness and social responsibility has emerged

a new trend for enterprises that wish to be in compliance with export countries

To meet with changing external environment factors as social economic, import market regulation, the implementation of safety and quality management system in chain value from material sources to manufacturing, distribution to customers are essential factors for sea food enterprises in exporting orientation

These imposed strictly food safety and hygiene requirement, environment protection, sustainable development and social responsibility from the import countries are opening opportunities for management consultancy and training in these area

A question is raised to the local seafood processing enterprises: What are real benefit that enterprise gain in implementing the best practices? How have they planned to meet with these requirements from importing countries to keep in the business or expand their markets? Do they achieve the goals by themselves or resort to the assistance from external consultancy services?

It is hope that this study is providing the insight into the benefit the enterprises obtained from implementing Best practices, how they achieve their goal? The needs for using external

Professional consultancy services from seafood enterprises to implement the best Practices and identify factors that influence the decision of selecting the consultancy organizations

An market research is launched that include qualitative and quantitative methods to gather the necessary information for conclusion and recommendation

The information is helpful in building marketing strategy for Best Practice consultancy organization for the seafood processing segmentation

1.3 Statement of the problem

It is common agreement on the benefit and importance of implementing best practices by the seafood processing firms in term of reduction of cost of production, productivity, performance improvement, customers satisfaction, expand market However, there are several best practices that need to be applied by the manufacturers depend on their own need, their

own resources, local regulation, importing markets regulation and new trend Therefore, it is

necessary to identify in which specific international standard that the enterprise plan to implement in the future? Do they plan to use external consultancies firms to help them to achieve the organization objectives? Or they are able to do this themselves? And factors that influence the organizational buying behavior: what are factors to be considered in purchasing consultancy service?

3 Why do the enterprises need the assistance from the external consultancy service?

4 Determine the future plan of implementing the best practices from seafood processing enterprises?

5 Determine factors that influence the decision of selecting the consultancy firm?

6 What are the client’s perceptions for Consultancy service company and consultants reputation?

1.5 Scope & limitation

Given the limited of resources, time and geography issue, the research only focuses on the Seafood processing enterprises from Binh Thuan to Ca Mau with the small sample size that emphasis on qualitative survey by telephone interview

There is no existing best practices consultancy association in VN, there is no available database on this field that consequently caused limitation in studying overview of VN management consultancy business

1.6. Thesis structure

This study report is presented in five chapters as follow:

Chapter 1 - Introduction provides a brief introduction to Vietnam Sea food industry, the

research problem, core objectives, scope of the study and structure of the research report

Chapter 2 – Literature Review This chapter presents the literature review , providing some

concept, definition and model of organizational purchasing behavior, management consultancy overview and specifically Best practices of safety and quality management principles, based on the literature review, a theoretical framework is developed This framework offer the investigate the buying behavior in purchasing consultancy services

Chapter 3 - Research Methodology introduces the methodology applied in the study, it

includes the theoretical framework development, the research design used to describe the characteristic of variables of interest This chapter is covers the general approach and

construct measurement of the study, the source of primary and secondary information to be used, data collection method including the design of questionnaire and sampling method

Chapter 4 - Data Analysis and Findings presents the description of the sample and response

rate of the survey, results of descriptive study

Chapter 5 – Recommendation and Conclusion summarizes and discusses the key findings

of the research, then suggests recommendations of marketing mix for “best practices” consultancy service

CHAPTER II – LITERATURE REVIEW

This chapter presents the literature review of some relevant concept, definitions and model that through which the theoretical framework was developed to answer the above research questions

2.1 Concepts

a What is Management Consultancy (MC)

¬ Milan Kubr (2003) defines that “Management consulting is an independent professional advisory service assisting Managers and organizations to achieve organizational purposes and objectives by solving management and business problems, identifying and seizing new opportunities, enhancing learning and implementing change Larry Greiner and Robert Metzger (1983) claims that management consulting is an advisory service contracted for and provided to organization by specially trained and qualified persons who assist , in an objective and independent manner ,the client organization to identify management problems, analyze such problems , recommend solutions to these problems and help , when requested, in the implementation of solutions

¬ Consulting is a temporary service Clients turn to consultants for help to be provided over a period of time, in areas where they lack technical expertise or where additional professional support is temporarily required This may even be areas where the required skills are available in the organization but managers or staff specialists can not be released for a major problem or project Consultants can not only provide the expertise required, and give undivided, 100 percent attention to the problem at hand, but will leave the organization once the job is complete Even if the relationship is excellent and extends over a long periods, the client always retain the right to discontinue it

b Why are consultants used: Five generic purposes:

Milan Kubr (2003) has noted that Consulting purposes can be looked at from several angles and described in various ways Let us look first at five broad, or generic, purposes pursued by clients in using consultants, irrespective of the field of intervention and the specific intervention method used:

- Achieving organizational purposes and objectives;

- Solving management and business problems

- Identifying and seizing new opportunities

- Providing information

- Providing specialist resources ;

- Establishing business contacts and linkages;

- Providing expert opinion

- Doing diagnostic work,

- Developing action proposals,

- Develop systems and methods

- Planning and managing organizational changes

- Training and developing management and staff

- Counseling and coaching

c Consulting and Training

- There have, however, been sign of real progress in bridging the gap between consulting, and training and development, in the field of management

- Knowledge transfer and learning are among the main purposes of modern consulting In choosing working methods and collaborating with the client, the consultant aims to pass

on personal know-how and experience At the same time, the consultant learns from the client

- Consultants often view training (both informal and formal ) as their key intervention tool and use it extensively

- Some consulting firms have established management development and training centers as special client service, which can be used in conjunction with consulting assignment or separately

d What is Quality Management System (QMS)

Milan Kubr (2003) has commented that a successful business relies on making profitable sales

to its consumers, it will retain its existing customers and new customers only if it knows their requirements and delivers products an services that conform to them This can be done by (1) ensuring that design process results in outputs that meet customer requirements and that can

be produced cost –effectively; (2) minimizing inefficiencies such as waste and rework; and (3) ensuring that all activities are directed at satisfying customers ‘needs

Quality management system is one area of management consultancy The term “quality” has suffered over the years by being used to describe attributes such as beauty, goodness, expensiveness, freshness, and even luxury So, a car may be described as a “quality car” when, in reality, it is an expensive or luxurious car Management consultants should be aware

of the modern concept of quality, which is defined as total conformance to requirements These requirements include the total customer requirement, not just a product or service specification To manage quality, management and employees should:

• Recognize the existence of both external and internal customers

• Fully understand and agree on their customers’ needs and expectations

• Delivery what was agreed ,without any exception

• Be efficient as well as effective in meeting agreed customer requirements

• Continuously seek to improve performance in meeting customer expectations concept

of quality

Thus, the most important objective of quality management is to fully satisfy agreed customer requirements at the lowest overall cost to the organization But the best companies are those that aim even higher-to delight and excite their customers Total quality management system

is a solid overall approach to improving product and service quality, the way of doing things, and the quality of business and operational system

e What is the objectives and benefit of implementing of QMS, Best Practices

Milan Kubr( 2003 ) has mentioned that the objectives and benefits of QMS fall into two major categories-revenue enhancement and cost reduction Significantly improved product performance-features, reliability, conformance, durability, serviceability or perceived quality –should result in increased demand A reduction in total product cycle time improves availability and the ability to provide a tailored customer service Such benefits translate into increased market share and usually increased revenues Improved quality control reduces material cost, direct and indirect labor costs and working capital Again, reduction in total product cycle time reduces inventory stock holding costs

Thus, the use of Best practices substantially improves financial and other key broad-based organizational outcomes For example, financial investment in adopting QMS is primarily an investment in education and training for employees and management QMS requires employees to be powered to make decisions regarding process and product quality –to be their own troubleshooters Therefore, successful QMS implementation results in:

• Meeting customers’ requirements and ensuring their satisfaction; increasing market share, revenue and return on assets; reducing internal costs, providing higher employee satisfaction; understanding better the competition; and developing an effective competitive strategy

• Achieving a top –quality performance in all business and operational areas, not just in product or service quality, through critical and continuous examination of all processes

to remove non-productive activities and waste

• Involvement of everyone in continuous improvement, not just people directly involved

in the quality function; greater focus work processes and improvements; identification and solution of problems at lower levels by people close to the work who are empowered to deal with the problems

• Less fire-fighting and rework, and more data-based efforts to eliminate the root causes

of the problems; more up-front effort to clarify requirement and prevent defects and errors

• More open and frequent communication horizontally among people who view and treat each other as customers and suppliers, better interdepartmental cooperation

• Intolerance of, and action taken on, defects and errors that have previously been ignored

• All the above consideration and benefits could be used by consultants in promoting the quality management approach

f What is the Cost of quality –Quality is free

Manager are likely to ask (or at least think) first, how costly a quality improvement Conversely, they start thinking about losses, caused by poor quality only when it is too late For management consultants, it is important to be well prepared to illustrate the cost of losses due to poor quality and the cost of preventing such losses The balance is always positive, but you have to prove it

The cost of quality includes two components: the cost of attaining quality and the cost of poor quality The first component includes cost that add value to the business, while the second includes cost that add no value to the business The activities that generate costs in the first category are planned which means that these cost can be controlled The costs of the second category are often due to deficiencies in the way work is carried out in the company, and represent a real loss to the company Technically, COQ consists of the cost of conformance and of non-conformance Note that for a small investment in prevention, failure and appraisal costs can be considerately reduced

Table 1: Cost items of non-conformance associated with internal and external failure

Cost items of internal failure Cost items of external failure

- In warranty repair – correcting defects

after delivering products

- After sales support : Solving problem

when product is in use

- Product Recall – repairing, handling and

investigating recalled products

- Scrap- Lost Material, machine time and

- Lost efficiency – effective capacity

diverted to corrective action

- Customer complaints

- Liability insurance

- Administration –meeting and paper work

associated with failure

- Excess inventory ,because of error and

poor materials control procedures

- Obsolete stock –storage ,overheads,

scraps as a result of marketing , sales ,

engineering and purchasing errors

- Overtime-extra hours because of poor

planning or control

- Excess capacity –the extra capacity

required to rework or replace failure

- Accidents

- Lost opportunities- customers lost because product is late to market previous non-conformance delivery, poor communication

The cost of non –conformance are the total costs incurred as a result of things not being one right the first time They include cost associated with scrap, wastage, repair and rework, handling of customer complaints, losing market These costs are usually very large and can reach 25 % or more of turnover in manufacturing and service Unfortunately the level of these cost and the places where they occur are often unknown to most managers The great majority

of cost (more than 80 per cent in many companies) are associated with failure, either internal (“not doing things right the first time”) or external see above box

The cost of conformance are the total costs incurred in ensuring that things are done right the first time These include planned inspections and tests, and quality-related education and training These cost are typically associated with designing procedure, defining the processes and process control and can be classified into two groups: the cost of prevention and the cost

of appraisal

The consultants should explain to clients the major reasons for the need to have data on the cost of poor quality, other than the general one of reducing costs by improving quality Saving

in quality costs would have a significant and positive impact on the bottom line results

It is of critical importance to advise the client to introduce a COQ system that will enable the financial consequences of quality problems to be quantified and area for quality improvement and cost reduction identified Also the COQ system should enable management to link quality improvement efforts to the bottom line by reducing costs or increasing revenue It would also show clear link between quality improvement efforts and tangible results in term of cost reduction, higher sales and profits, and improved productivity Such a system would provide customers with solid evidence of what the company is doing to ensure high quality in order to differentiate it from the competition and increase customer satisfaction

g What is the principles and building –blocks of Quality management system:

While the quality management system design and process will be different in different companies and circumstances, there are some common basic principles and building –blocks

of the system

Principles

Principle 1: Focus on customer satisfaction and delight

This principle drives the entire quality management process Every department and work unit has customers, whether internal or external Manager and employees have to be customer –focused to meet or exceed customer expectations, creating not only customer satisfaction and loyalty, but delighting them Emphasis should be placed on improving the practices of frontline personnel, delivery mechanisms and logistics, customer focus and processing of customer requests Measurement of customer satisfaction through surveys, focus groups, benchmarking and market analysis provides the best evaluation of quality management results

Principle 2: Quality improvement requires the strong commitment of top management

The leadership must be committed to TQM and be the driving force behind it It must create a vision that will take the organization from its current position to where it wants to be Top management must clearly specify which actions will improve quality, they can not delegate this responsibility To demonstrate commitment, involvement and leadership, management must establish and communicate clear corporate values, principles and objectives relevant to quality; channel resources towards these objectives; invest time in learning about quality issues; and monitor the progress of any initiatives

Principles 3: Quality is a strategic issue

Quality should be part of the company‘s goals and strategies and integrated in the way the organization conducts business, including product and process design, planning and budgeting Quality must be also a part of the corporate mission Therefore, Quality management system requires, integrated planning systems that coordinate strategic quality planning with other strategies for products and services Logistics, distribution, customer service, manufacturing and sourcing It also entails streamlining design processes integrating engineering system Forming cross –functional teams, and integrating quality design techniques into process design

Principle 4: Employee are key to consistent quality

Employees are natural sources of ideas for ways to improve quality and customer service The best companies incorporate quality and customer service into performance appraisal and reward systems They encourage full participation and involvement, employee empowerment, recognition, reward and motivation to instill a dedication to quality at every level Quality management also requires a highly skilled, knowledgeable workforce, well trained in its tools and methods the process usually begins with awareness training for top managers, followed

by training of mid-level managers and finally of non-managers Continuing education and training are integral components of any Quality Management process

Principle 5: Quality standards and measurement must be customer-driven

Explicit quality standards for performance are essential The company’s definition of product and service quality should include the criteria that customers use when they perceive value A customer’s product preference is determine by the perceived quality / price ratio of one product in relation to other competing products cost of quality is also a useful measure of performance Measurement is essential to ensure that planned improvements are implemented

Principle 6: Many programmers and techniques can be used to improve quality

Quality control and improvement must occur continuously in day -to day operations process simplification is a low cost, low technology way to increase quality and effectiveness, through focused operations, smooth and continuous material and paperwork, management –by-eye, synchronization with customers and suppliers, and other techniques More sophisticated techniques could also be used, such as statistical quality control, quality circles, suggestion systems, automation, computer-based design and manufacturing, product design improvement and benchmarking

Principle 7: All company activities have potential for improving product quality, therefore,

teamwork is vital

h Business to Business Market

Business to business markets are when the buyer buy on behalf of their business or organization They maybe buy tons of chemicals, new computer system, office paper or

service like maintenance and repair, management consultancy Those organization include industrial companies, such as: car manufacturing, wholesalers, retail store and so on These market are different with consumers markets in many ways They are forge close relationship with their suppliers by developing strategic alliances and partnership sourcing This basically means that today buyer and supplier s work much closer together than in the past

Figure 1: A model of business buyer behavior

(Source: Frances Brassinton & Stephen petite (2002) The model suggest four questions about business buyer behavior: What buying decisions do business buyer make? Who participate in the buying process? What are the strongest influences on buyers? How do business buyers make their buying decisions?

What buying Decisions do business buyer make?

The business buyers faces a whole set of decisions in making a purchase The number of decisions depend on the type of buying situation There are 3 main types of buying situation

At one extreme is the straight rebuy, which is a fairly routine decision, at the new task which may call for through research In the middle is the modified rebuy, which requires some research

Who participates in Business Buying process?

The decision making unit of a buying organization is called its buying centre ,defined as all the individuals and units that participate in the business decision making process

There maybe more than one person involved in the decision to buy or not to buy Compared to consumers, organizational buyer tend to have at least one extra member in decision making

The environmentMarketing

stimuli

Other stimuli Product

Price

Place

Promotion

Economic Technological Political Cultural Competitive

The buying organization

(organizational influences )

The buying center

( Interpersonal and individual influences)

Buying decision process

Buyer responses Product or service choice

Supplier choice Order quantities Delivery term and time Service Terms Payments

unit Kurb (2003) has noted that the individual or groups of persons in the client organization who initiate the bringing in of the consultant, discuss the job with him or her, collaborate in the course of the assignment, receive reports and recommend to higher management whether

or not to accept them and so on Often a number of managers supervisor, staff members, worker and liaison officers will be directly involved in the assignment at its various stages, or affected by the conclusion reached Here the consultant-client relationship is personalized and

will be influenced by psychological and other factors

What are the main influences on Business Buyers?

Business buyer are subject to many influences when they make their buying decisions Some marketers assume that the strongest influences are economic They think buyers will favour the supplier that offers the lowest price or the best product or the most service They concentrate on offering strong economic benefits to buyers However, business buyers actually respond to both economic and personal factors

When suppier’s offers are very similar, business buyers have little basis for strictly rational choice Because they can meet organizational goals with any supplier, buyers can allow personal factors to play a larger role in their decisions However, when competing products differ greatly, business buyers are more accountable for their choice and tend to pay more attention to economic factors

Figure 2: Main influencing on business buying behavior Philip Kotler ( 1996)

Interpersonal

Authority Status Persuasiveness

Individual

Age Education Job position Personality Risk Attitudes

Buyers

Organizational

What are the hidden influences that affect professional buyer? In organizational markets buyers are influenced directly and indirectly by four categories of factors : the business environment, the organizational structure, interpersonal relationships, and individual buyer characteristics

¬ The business environment includes the uncontrollable external factors such as economic, politics, technology, social issue and ethics As economic uncertainty rises , business buyers cut back on their expenditure or When regulatory requirement change

in the case of importing countries , organization need to meet these enquiries The business marketer must watch these factors, determine how they will affect the buyer, and try to turn these challenges into opportunities

¬ The buyer’ decision is also influenced by an organization’s culture and structure of committees and decision Brassington (2002) has noted that each buying organization has its own objectives, policies, procedures, structure and systems, which must be understood by the business marketer Questions such as these arise; how many people are involved in the buying decision? Who are they? What are their evaluative criteria? what are the company’s policies and limits on its buyers

¬ Then there are interpersonal factors within the decision making unit These involve authority, status, role and group dynamic Do not forget that there are many have the power to say “No“, but few have the power to say “yes” when making a buying decision Philip Kotler ( 1999)mentions that the buying centre usually includes many participants who influence each other The business marketer often find it difficult to determine what kinds of interpersonal factors and group dynamics enter into the buying process As one writer notes: “Managers do not wear tags that say “decision maker” or

“unimportant person” The powerful are often invisible, at least to vendor representative

In the management consultancy service , the consultant need to determine : who hold the real power for making decisions related to the assignment ( at all stage ), who has the main interest in the success or failure of the assignment, who should be kept informed and who direct collaboration within consultancy process (Kubr 2003)

¬ The characteristic of the buyers affect the ultimate buying behavior Buyers vary according to the stage in their careers, their age, their ambition, ego and ability Some are risk averse and some are risk seekers Some will buy an innovative idea; other will run away from it

In summary: The business marketer needs to know the following: Who are the main

participants? In what decisions do they exercise influence? What is their relative degree of influence? And what evaluation criteria does each decision participant use? The business marketer also needs to understand the primary environmental, interpersonal and individual influences on the buying process As pointed out by David Maister “the single most important talent in selling professional services is the ability to understand the purchasing process ( not the sales process ) from the client’s perspective The better a professional can learn to think like a client, the easier it will be to do and say the correct things to get hired Thus, it is important to keep in mind that both technical and behavioral or psychological, criteria will be applied by clients in selecting consultants

CHAPTER 3: METHODOLOGY

The exploratory information from qualitative study and literature review provides the foundation for the development of theoretical framework that giving insight the consultancy process and the factors influencing the selecting of consultants The purchasing process in organization has followed the below steps

3.1.1 The need

Clearly, the start of the process has to be the realization that there is a need Change in business environment trigger the need The requirement for manufacturing process to be certified with the best practices from importing countries has stimulate the need to get the help from external consultancy services in areas where they lack technical expertise or where

additional professional manpower is temporarily required

3.1.2 Problem definitions

First, the reason for which the consultant was brought in need to be well defined A manager who want to call for a consultant‘s help should not merely recognize a need for such help, but define the problem as he or she sees it , as precisely as possible In many organization, top management would not even consider using consultants unless presented with a clear description of the problem and the purpose of the consultancy

3.1.3 Search for potential consultants

Figure 3: consultancy firm Marketing communication model

To understand how the consultancy firm reach their clients, literature review, phone interview with expert, respondents has been conducted There are some common marketing communication tool that the consultancy firms implement :

Contacting potential clients without being solicited by them – cold calling - is one of the ways

of marketing consulting services A cold call can arouse the interest of the client , who may decide to keep the consultant ‘s name in mind for the future Only rarely would a cold contact lead immediately to an assignment

If the consultant contacts a client about whom has a certain amount of information , and can show that he knows about that client’s problems and intentions and has something relevant to offer , the chances are better that such an initiative will produce an assignment This can also happen if the consultant is introduced by another client for whom he has worked in the past

In most cases, it will be the client who makes the first contact This implies that he or she is aware of problems and need for independent advice in his or her organization and has

decided to bring in a management consultant In addition, the clients must have a reason for turning to a particular consultant:

- He or she has heard about the consultant’s professional reputation

- A business friend who was satisfied with the consultant ‘s services recommended him or her (very frequent )

- The client found the consultant in advertisement on industrial magazine

- The client found the consultant on website

- The client has been contacted by the consultant previously

- The client is returning to a consultant whose work was fully satisfactory in the past ( repeat business can be very important )

3.1.4 Consultancy firm selection

The exploratory qualitative study, and literature survey has confirms that for the independent variable of service purchasing decision ,there are 6 factors / independent variables that are good predictor of purchasing decision These are illustrated below:

Figure 4: Factors influencing the selection of Consultancy firms

3.1.4.1 Generate trust and good impression in the initial phase

In the initial phase, when no contract is finalized yet and several consultants are contacted and invited to present proposal ,but only one of them is selected for the assignment

In the first meeting, client to negotiate a specific assignment, the consultant is marketing his or her services and it is not certain that a contract will be conducted The first meeting should therefore be regarded as an opportunity to gain the client‘s confidence and make the favorable impression The foundation of successful assignments are laid at this very early stage by establishing mutual trust and empathy, agreeing on the “rules of the game”, and starting the assignment with shared optimism and a vision of what can be achieved

Furthermore, the importance of the consultant’s behavior and performance during the first meeting with the client can not be overemphasized In meeting, a client to negotiate a specific assignment, the consultant is marketing his or her services and it is not certain that a contract will be concluded The first meeting should therefore be regarded as an opportunity to gain the client’s confidence and make a favorable impression The consultant should make sure that she or he will meet the decision –maker The person who is not only technically interested

in the assignment but also able to authorize it and will make sure that the required resources will be available If a top executive (managing director or senior administrator) of an important organization agrees to meet the consultant, the consulting firm should send a representative who is at an equally high level

The question of who should go to the first meeting with the client may present a problem if a consulting organization uses one group of consultants (partner or other senior) for negotiating assignments, and another group (including both senior and junior staff) for executive them Some clients know about this pattern of organizing professional services and

do not object to it Many clients, however, do not like it They emphasize, rightly, that a productive consultant –client relationship starts with the first meeting and preliminary surveys and that it is at this moment that they decide whether they wish to work, not only with the consulting organization, but with the particular people Also, many resent an approach whereby the best people represent the consulting firm at the beginning in order to impress clients, but execution is in the hand of lower caliber staff

3.1.4.2 Price

The client should feel that the fee is commensurate with the real value contributed to the client’s business by the consultant’s intervention Client do not expect to get an excellent professional service for a low price, but they do not want to be overcharged Client s want to pay for value received not for cost incurred in delivering a service while they may be prepared

to pay more than the cost if the value is high , they will resent paying a high price for a service

of low value, irrespective of its real cost It is essential to understand the difference between cost and value Value is not a mere reflection of cost It is, above all, the client’s perception of what has been added to the business thanks to the consultant’s intervention and it is quite subjective

3.1.4.3 Previous relationship

It is rational that the client is likely to repeat purchasing the service with previous consultancy firm that provided an excellent service and add high value to the client organization In addition of this, the relationship of collaboration, trust , confident that earned before made the client are certain with the future service

3.1.4.4 Consultancy firm profile

To select the right consultant for the organization problem is one of the criteria to be concerned by clients

In case of new consultant, It is likely that the client will search for information of the consultant’s professional reputation before inviting them to join the assignment See below concept of reputation from consultancy organization

3.1.4.5 Being Introduced by friends, authority

Word of mouth is one of the oldest and more efficient ways in which a professional firm become known to new clients Business people and managers are used to sharing information about professionals such as lawyers, accountants, engineers and management consultants They exchange both favorable and unfavorable information, so only a firm that has rendered

good service to a client can hope to have another useful referral A manager looking for a consultant will often ask business friends for advice before turning to any other source of information

It is frequent that a business friend who was satisfied with the consultant‘s services recommended him or her to other Word of Mouth is a powerful marketing tool especially in professional service provider Another approach is that the enterprise can get the support, recommendation from function authorities or industrial association under which the enterprise activities belongs to or under control

Many clients buy service without having any direct knowledge of the professional firm, because of the firm‘s image in business circles, or because a business friend or acquaintance has used the firm’s services previously and has been satisfied

Being excellent performance in serving clients is all that is necessary to get good referrals and the clients can speak about the value that the consultant service added to their organization with other business colleagues and others who may be asked for a good consultant’s name by their own business contacts

3.1.4.6 The quality of proposal to clients

As a rule, the assignment proposed will be described in a document presented to the client for approval and decision It may be given different names: survey report, project document Project plan and the like A proposal submitted to the client is an important selling document

It is not enough for the consultant to have a clear vision of how to execute the assignment: he

or she must be able to describe this vision on paper in a way that will make it clear to other people This may include individual who have not met the consultant, and will be forming their opinion solely on the basis of the written proposal The proposal should be of high technical quality and business-like in its presentation Writing “winning” proposals is an art that no consultant can afford to ignore In most cases, the proposal to client will include the four sections:

- Technical aspects: describes the consultant’s preliminary assessment of the problem , the purpose to be pursued, the approach to be taken and the work program to be followed

- Staffing

- Consultant background : describes the experience and competence of the consulting organization as it relates to the needs of the particular client

- Financial and other terms

3.3.5 The Reputation of Consultancy organization :

The consultancy organization image plays an important role “in developing “relationships with client and marketing the firm’s services It can not be ignored in developing strategy In professional services the client‘s perception of what you are is as important as what you really are You may be the best of consultants but if the clients perceive you differently (or if you have no image) they have no reason to turn to you Therefore every firm need to be aware

Having  significant clients Having  direct profession and experience in the 

area  of consultancy 

Having  relationship with certification bodies

Having  added significant values to the clients 

Having  ability to provide the comprehensive  solution  ( providing diversify services for a 

complex  problem ) Having  cooperation with  industrial experts 

Dep variable

"reputation  of quality  management  service  provider"

To understand the concept of professional reputation, an image from management consultancy firm, expert opinion, qualitative interview, literature review have been conducted and as a results, 8 concepts have been concluded as follows:

1 The experience and competence of the consulting organization as it relates to need of clients and similar work done and references to former clients, the consultant need demonstrate the theoretical knowledge and practical expertise in the area of consultancy

2 The records of served clients (List of customers) are one of marketing tool aimed at introducing the professional service organization achievement in the past

3 It would be a competitive advantage that the consultancy organization is able to deliver a wide range of multidisciplinary expertise required for complex business problems, by employing a sufficient number of well trained professional

4 Some clients may feel confident with the consultancy firm who has a good relationship with certification bodies It will assure that the consultancy firm is familiar with audit methodology, audit policy from the certification body, it will giving more persuasive evident the client will have more chance to be certified

5 It is also a good point to be considered as competitive edge for consultancy firm that employed or cooperate with consultants who have been worked for well known certification bodies previously These consultants have been perceived by clients as well trained in “Best Practices” theories and practical experience gained by the nature of their job

6 Cooperate with Industrial Experts who are well known in sea food processing, food safety

& hygiene, laboratory testing would be an add value in marketing communication to clients

The secondary data on behaviors of business buyer in Vietnam with regard to Best Practices management consultancy service are not available The method to be used in this study is basically primary research employing a combination of qualitative and quantitative approaches

The study is conducted in according with the flow chart as shown in figure

Figure 6: The research Process

Quantitative research Customer survey

The starting point of any research process is the identification of the research problem and research objectives The next step is to establish plans of how the objectives are met and how information is to be obtained Both qualitative and quantitative method were used Depth interview was intended for exploratory purpose and literature review which provided for qualitative information in order to build the theoretical framework The theoretical framework was then used to construct the questionnaire for descriptive purpose

In quantitative research, there are a number of measurement and scaling techniques To identify the need for management consultancy and in – house training in the area of implementing of best practices from the sea food enterprises, to measure buyer behavior (B2B market) in selecting the consultancy service providers

The next step in the process is the questionnaire construction These was based on theoretical framework

Information to be obtained should be determined prior to the building of questionnaire Table

2 show how information is collected

Table 2: Collection of Information

Price Quality in charge person Whether price has an impact

on organization buying decision

Consultancy firm reputation Quality in charge person Whether consultancy firm

profile determines consumer

‘s preference The quality of consultancy

firm proposal being presented

to clients

Quality in charge person Whether the proposal has an

impact on organization buying decision

Business friend , authority Quality in charge person The power of word of mouth