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Antecedents and Benefits of the Preferred Customer Status in a Buyer-Supplier Relationship: A Multiple Case Study at X and Four of its Key Suppliers

Vural, Melis (2015) Antecedents and Benefits of the Preferred Customer Status in a Buyer-Supplier Relationship: A Multiple Case Study at X and Four of its Key Suppliers.

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Abstract:The concept of the preferred customer status with key suppliers and the consequential competitive advantage for the buying firm have received an increasing amount of attention from academics in recent years. However, the current literature mainly takes a theoretical stance by referring to the social exchange theory (SET), resource-based view, social capital theory (SCT) and transaction cost economics (TCE). Based on the findings of a multiple case study at X, this study depicts the antecedents and benefits affiliated to the preferred customer status from a more practical view. Moreover, next to presenting practical confirmation of a large number of theoretical concepts, some novel and unexpected findings are also outlined. A commitment to innovation, joint relationship effort and the offer of business opportunities for the supplier were, among others, confirmed as drivers of a preferred customer status, while the study also showed that a firm’s reputation, supplier award, reduction of production mistakes, frequency of new developments and innovations, stable financial performance, operating in at least three countries, and strategic pricing, may be relevant motivations for suppliers to award a customer with a preferred customer status. With regard to the benefits of the preferred customer status, the achievement of seemingly impossible objectives, cost reduction initiatives and increased technological input by the suppliers were, among others, confirmed, while the offering of additional services, such as help in order scheduling, on-site analyses and audits, an exclusive cross-site development team, definition of a specific price level and payment terms extension were proposed as preferred customer status benefits. These also constitute elements which have been neglected in the scientific discourse. If additional similar case studies follow, the scientific groundwork of the preferred customer status could genuinely be reinforced and significant and actionable methods for obtaining future preferential treatment from key suppliers could be revealed for managers.
Item Type:Essay (Bachelor)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:International Business Administration BSc (50952)
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