EXECUTIVE SUMMARYSONPAN PRODUCTS COMPANY (SPC) is the leading Japanese company specializing in providing automating solutions for financial, insurance and manufacturing applications. It also produces PCs, midrange computers, and peripherals for the Japanese market. Some of these are manufactured under license from world known companies like HP. SPC is well known in the Japanese market as a software producer of very high quality. Due to its wide range of hardware, software, and networking solutions, it is also one of the largest system integrators in Japan. Due to economic downturn in the country during the last five years, SPC is under increasing pressure to cut down cost. Thus, it had to look for outsourcing its software development at lesser prices and India being known for the low cost labor, was in the consideration set for SPC. In, India Lakshmi software, a company with headquarters in Chennai was in a race to capture the software development market, they were mainly specialized in insurance and finance software developments. The company was successful in working with European (Particularly German) and US based companies. They were mainly successful as they had very successful managers who were specialized for the Germany and US markets. Japan was the most successful software market where the company had only limited success. Because of the importance of the Japanese market and its influence on the rest of the world, Lakshmi management had targeted Japan as an important objective. One of the companys largest Japanese customers was SONPAN PRODUCT COMPANY. The case here deals with the steps in the buying process and the various decisions involved in the buying process in between the B2B firms. The relationship building is one of the prime objectives of the B2B firms, they try to maintain long term relationship so that both the firms in relationship are mutually benefitted by the long term relation. The case here also reveals the various functions of the company, how they are involved in the decision making process and how it is integrated. As SPC faced the economic downturn and was in the search of the Indian software company to outsource their software development programs, thus Lakshmi was the most suitable for them to deal with the problems of SPC. SPC was the main source of the business for the Lakshmi and thus due to their long term relationship, Lakshmi saved the costs of marketing and has a guaranteed loading factor form SPC. A loading factor is a profit percentage that Lakshmi is guaranteed. The other major advantage that Lakshmi derives from the relationship is that it gets to work on the state-of-art technology that will give it an edge when it goes to newer markets and other potential customers especially other Japanese companies. SPC is the largest

customer for the SBU that handles the account and is the biggest customer for Lakshmi in Japan, so the customer is important for both the company and SBU. Due to the deep relationship between both companies they passed on various benefits to each other. Lakshmi got the opportunity of the straight rebuy, where they only followed two steps of the buying process ie is need recognition and placing an order. In spite of the long term relationship, they asked for the proposals and took long time to decide upon the specifications they need to put to Lakshmi, sometime they need to negotiate between themselves for the delivery of the projects, after the proposals are decided the execution of the projects takes place and then they are evaluated according to the mentioned specifications. Thus it can be concluded that, it is very important for the B2B firm to maintain an long term relationship along with the proper execution of the projects.

QUESTIONS AND ANSWERS

Q1. Was SPC the right customer for Lakshmis growth plan in Japan? Ans: - : SPC was definitely the right choice in context to Lakshmis growth plans in Japan as well in context to its overall growth. The reasons which support the SPC the right customer for Lakshmis growth plan in Japan are:I. II. III. IV. V. VI. VII. Though Lakshmi was reasonably successful with European and US based companies, it had only limited success with Japanese companies Japan is the second largest software market in the world By selecting SPC, its main objective is to use SPCs story when selling to other Japanese companies SPC is well known as a software producer of high quality, so association with SPC is important for Lakshmi in this context. Word-of- mouth is a powerful tool in Japan Lakshmi can learn the state-of-the-art technology from SPC that will give it an edge when it approaches other companies SPCs data driven project management strengths are well known and Lakshmi can strengthen themselves with these technologies through the association.

Q2. Did IPT help or hamper Lakshmis growth within SPC? Ans:- The IPT (Indian Project Team)has played a major role in helping Lakshmi substantiate their growth within SPC. The following facts prove that IPT helped Lakshmis growth within SPC:a. It is the IPT of SPC that has outsourced more than 50 small sized projects to Lakshmi b. IPT has also helped Lakshmi by recommending and pressurizing KOS to outsource a large end-user project to Lakshmi though KOS was reluctant to do so c. IPT also helped Lakshmi in understanding business practices and cultures of Japanese companies. d. Though there was no consistency in the specifications and schedules provided by SPC, but IPT never failed to deliver updated information at every stage. e. Even when Lakshmi quoted US$600,000 for the project which eventually was too high for SPC, IPT recommended ways to reduce the quotation. f. During the project execution, IPT helped Lakshmi to make out the important pages for translation which came as a great help to Lakshmi.

Q3. From the customer relationship viewpoint what things should Lakshmi have done and at what points? Where did the major challenges occur? Ans: - To maintain the relationship Lakshmi should form collaborative relationship with SPC. Lakshmis present relationship with SPC is more of transactional type Lakshmi is too much dependent on the IPT for all their transaction and communication purposes. Lakshmi should try to involve them in direct communication with SPC.

The major challenges that occurred were: Language is the major issue in dealing with Japanese business. Japanese companies give very vague specifications and give deadlines that cannot be changed. Lakshmis productivity is expected to match SPCs productivity which means 40 to 60% more than Lakshmis base productivity.

Q4. In such a changing scenario, what should have been Lakshmis customer communication strategy? Ans:- In such a changing scenario, Lakshmi should be more careful with the customer communication. Lakshmi is a Indian company and SPC is a Japanese company thus they has to be careful in understanding the Japanese, though Lakshmi is a company which deals with the European and the US companies but the Japanese culture is totally different from the US and European culture, they may relax with the relaxation of the timing but the Japanese does not relax nor they negotiate with the execution of the projects. Thus it is very important for Lakshmi to have a strong communication else, which may create a great inconvenience for the company as a whole and may bring to a broken relationship.

Q5. What are the customers responsibilities in building and maintaining a relationship? Ans:- A relationship orientation must be embedded within the culture of the customer firm. There should be visibility in terms of information, knowledge and materials. Aspects upon which collaborative work to be done should be identified. Should participate with the supplier in making strategic decisions. There should be a proper integration of the communication with the firms and a long term relationship should be built so that both the companies can execute the projects in time and to the proper specifications so that each may built up strong belief to be successful in the future projects.

Q6. Was Lakshmi justified in its costing strategy for the project? What assumptions did it start with and what was in the customers mind? Ans: Lakshmi was justified in its costing strategy, as they included all the cost which they would have incurred during the execution of the project. The cost included on-site Japanese costs, idle time cost of engineers, offshore translational costs, infrastructure costs and software development costs. The customer refused to pay onsite Japanese costs and translational costs and expected Lakshmi to use KOSs productivity figures.