Strategic Collaboration in Turbulent Markets for PSFs

Professional service firms (PSFs) face unique challenges in maintaining effective collaborations with both suppliers and consumers, especially in turbulent markets characterized by high competition and rapid change. To address these issues, PSFs must prioritize strategic partnerships that focus on long-term value creation over short-term gains. This involves sharing critical knowledge with suppliers to ensure they can meet evolving service demands, while also committing to building strong relationships without pressuring them for immediate results. Simultaneously, PSFs need to invest time in understanding consumer needs and adapting services accordingly, which is particularly crucial for B2B providers dealing with complex business issues. By fostering trust and loyalty through meaningful engagement, PSFs can enhance their competitive edge and achieve sustainable success in volatile environments.

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Marketing Management
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Executive Summary
The purpose of the report is to critically analyze the risks and benefits associated with the
collaboration of Professional Service Firms (PSFs) with business partners. The chief business
partners of PSFs are consumers and suppliers. Along with the above mentioned analysis, this
report also contains managerial implications that can help the managers of the global PSF
organizations to establish an efficient collaboration with their consumer and suppliers.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................4
Benefits of collaboration with suppliers and customer for the PSF............................................4
Benefits of collaboration with the suppliers............................................................................4
Benefits of collaborating with Consumers..............................................................................5
Risks associated with such collaboration under conditions of intense competition and turbulent
environment.................................................................................................................................7
Negative effects of Competitive intensity on the collaboration between PSFs and the
suppliers and consumers..........................................................................................................7
Negative effects of environmental turbulence on the collaboration between PSFs and the
suppliers...................................................................................................................................8
Negative effects of environmental turbulence on the collaboration between PSFs and the
consumers..............................................................................................................................10
Conclusion.....................................................................................................................................11
Reference list.................................................................................................................................13

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Introduction
The full form of PSF is Professional Service Firm. Professional service firms can be
defined as those organizations which sell knowledge or expertise that are not tangible, physical
products. PSFs involve firms that operate in a range of sectors like financial, engineering and
management consulting providers. The business of these firms is characterized by providing
intensive knowledge and customized services that are interactively designed and delivered by the
PSFs. Considering the fact that PSFs have a different type of business strategy, these firms have
different requirement and often faces different types of challenges. Several Professional service
firms are now operating in a confounding and uncertain environment where the competition is
much stronger. In order to cope up this highly competitive and turbulent environment, the
professional service organizations are collaborating with external parties that include consumers
and suppliers. This collaboration is crucial for the PSFs in order to provide high quality service
to the consumers and thus strengthen and maintain their competitiveness in the global market.
It is really crucial for PSFs to successfully collaborate with their business partner due to
their dependency on the business partners for successfully developing and delivering services.
Along with that, this collaboration is also important for the high-contact and customized
characteristics of the services offered by PSFs. Some of the mention worthy examples of
business to business (B2B) PSFs that have successfully gained market value by leveraging the
knowledge and resources of their business partners are Accenture, IBM and Deloitte (Heirati et
al., 2016). While a good amount of information is available about B2B marketing of PSFs
associated with their collaboration with business partners, very limited amount of information is
available when it comes to collaboration of PSFs with their suppliers and consumers under

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various environmental conditions. In this report, detailed discussion about the benefits and risks
of PSFs while executing collaboration with consumers and suppliers have been discussed. Apart
from this, this report also contains the managerial implications of the PSFs in order to establish a
successful collaboration with their consumers and suppliers.
Discussion
Benefits of collaboration with suppliers and customer for the PSF
In order to enhance the quality of the services provided and hence the overall revenue, the PSFs
engage with independent partners like suppliers and consumers in order to jointly develop and
deliver professional services. Some of the benefits of the above mentioned collaborations with
suppliers and consumers are discussed below
Benefits of collaboration with the suppliers
The collaboration of the PSFs with the suppliers for new products or service development
ranges from simple consultation about various ideas to full responsibility of the suppliers for
designing the system, components, services and processes. One of the major benefits of this
collaboration is that this collaboration enables a supplier and a PSF to integrate and combine
their capabilities and resources so that the final service delivered to the consumer can be highly
satisfactory. The collaboration between PSFs and suppliers allows the former to develop high
quality services and enhance the resource synergy across the firms by importing best practices
from the suppliers and complementing the PSFs own resource with that of the suppliers.
Suppliers play a major role in providing complementary services to the PSFs.
Complimentary services can be considered as a major requirement for development of superior
services by the PSFs since several PSFS do not poses the required processes and resources that

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are required to provide effective services to the consumers (Sarrami-Foroushani et al., 2014).
Thus it can be clearly understood that collaboration between the PSFs and the suppliers is highly
advantageous since it can be considered as the origin of the knowledge and complementary
resources that not only enhance the flexibility and efficiency of PSFs but also ensure customer
satisfaction by providing superior services.
Another major advantage of the above mentioned collaboration is that usage of the
expertise and knowledge of the suppliers in order to complement the internal capabilities can
effectively reduce the concept to consumer cycle costs, time and quality issues along with
improving the overall design effort (Heirati et al., 2016). Hence in can be concluded from the
above discussion that collaboration with the suppliers can be highly beneficial for the PSFs since
it not only enhances the capacity of the PSFs to assess greater level of diverse resources but also
enhances their capabilities to meet the needs of the consumers effectively as well as drive a
service performance.
Benefits of collaborating with Consumers
According to researchers, PSFs must collaborate with consumers to effectively
understand specific needs of the consumers and create services that can efficiently fulfill the
requirements (Halinen & Jaakkola, 2012). With the help of effective collaboration with the
consumers, both the PSFs and consumers can work together to develop customized services and
products. According to recent studies associated with service marketing, consumers are not just
passive service receivers but they play a major role in creation and deliverance of services.
Therefore, it can be clearly understood that PSFs should facilitate consumer collaboration to
encourage the consumers to take active role in the developing the services.

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Another benefit of collaboration of PSFs with the consumers is that effective
collaboration can make a firm work more diligently by using its own sources of knowledge in
order to address the requirements of the consumers. While PSFs have the urge to collaborate
with their consumers in order to enhance their quality of services, consumers are also found to be
interested in active collaboration. The main reason behind this is the desire of consumer to gain
more control over the attributes and performance of the Professional Service Firms. Thus it can
be clearly understood that collaboration of PSFs with the consumers is not only beneficial for
PSFs but it also represents a mechanism that allows consumers to customize the attributes and
configurations of the service by interacting with PSFs (Sarrami-Foroushani et al., 2014). Thus
consumer collaboration can be seen as a key mechanism to satisfy the consumers along with
developing services that can efficiently solve various service related issues of the consumers.
Another added advantage of PSF-Consumer collaboration is a formation of strong and
positive relationship between consumers and the service firms. Building strong relationship not
only helps the PSFs to enhance the consumer loyalty and the brand equity, it also proves to be
beneficial for the consumers since a positive relationship with the PSFs allows them to access
PSFs’ help whenever required. In the highly competitive market of today, when the numbers of
competitors are increasing each day, it has become more difficult for the consumers to decide
which Professional Service Firm they want a service from. Thus building closer relationship with
the consumers helps the PSFs to retain their consumers and prevent them from switching to
another service firm. Thus it can be clearly understood that one of the chief target of PSFs is to
develop trust in the minds of the consumers. This trust in turn, helps the service firms to gain
confidential knowledge from the consumer that provide guidance to the PSFs to address its
unmet requirements.

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Considering the fact that the consumers are the best source of information when it comes
to customer requirements, PSF-Consumer collaboration not only ensures detailed and specific
knowledge about the consumer’s requirements but also act as a crucial source of new and
innovative ideas. Apart from these two benefits, the collaboration between PSFs and consumers
helps in minimizing design errors along with ensuring a service solution’s functionality and
attributes to effectively meet the requirements of the consumers. Finally it can be concluded that
an effective collaboration between the consumers and the PFS enhances the capability of the
later to identify consumer requirements, minimize design errors and customize service attributes
which in turn enhances the quality of services provided by the PSFs.
Risks associated with such collaboration under conditions of intense competition and
turbulent environment
It has been found that, though collaboration with the suppliers and stakeholders has
several advantages for the PSFs, a good number of risks have been encountered due to this
collaboration under the condition of turbulent environment and intense competition (Huovinen,
Haugbølle & Oostra, 2017). In this report, several negative effects of establishing collaboration
with the suppliers and consumers on competitive intensity and environmental turbulence have
been discussed bellow.
Negative effects of Competitive intensity on the collaboration between PSFs and the
suppliers and consumers
According to contingency theory, environmental factors like competitive intensity can
turn the bright side of PSFs’ collaboration with the consumers and suppliers into a dark side.
Considering the fact that the degree of competition in the market has increased hugely,
consumers are developing the tendency to switch services by comparing which professional

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service firms are providing them with superior services at equal amount of price. Hence it is very
crucial for PSFs to gain competitive knowledge and develop resources to provide superior
services to the consumer. However, PSFs face difficulties to gain access to the necessary
recourses that are required to develop and successfully commercialize imitation. Besides that,
successfully developing a innovation also requires a high financial background. Thus, in order to
reduce the cost of innovation while availing the advantages of marketing knowledge, several
PSFs have developed the tendency of imitating their competitors. The collaboration of PSFs and
Suppliers has enhanced the risk of imitation.
This risk of imitation is more in service contexts since there are no patent rights and
barriers that can prevent imitation of new offerings to the consumers. Considering the fact that a
single supplier can work with several PSFs, the system of collaborating with the suppliers acts as
transfer mechanism of knowledge. Thus, collaborating with a supplier helps PSFs to gain
complementary knowledge without internal cost development. Besides that, during the
collaboration, suppliers develop overlapping knowledge which in turn enhances their ability to
provide effective services to the consumers. Thus there is a high risk that suppliers may turn
to competitors after they have gathered enough knowledge to start their own business. However
no potential risks are found in establishing collaboration with the consumers. Moreover,
collaboration with the consumers helps the PSFs to develop competitive knowledge and thus
cope up with the increasing competition in the market.
Negative effects of environmental turbulence on the collaboration between PSFs and the
suppliers
Environmental turbulence can be defined as the frequency and degree of technological
changes in the business environment of the PSFs. The major sources of these changes are

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instability and speed of changes in the requirements of the consumers along with highly variable
market changes. The origin of technological changes is instability and rapid changes in market
technology due to technological innovations. These rapidly changing technologies often make
the PSFs less competitive in the market by cannibalizing their services. Thus it can be
understood that in order to gain market advantages in the turbulent environments, PSFs needs to
modify their services in order to address changing preferences of the consumers. It has been
found that, in order to cope up with the highly turbulent environment, the managers of
Professional Service Firms often favor quick results (Heirati et al., 2016). However, several PSFs
are there which are more oriented towards the long term view by implementing investment
strategies along with financial assets. They also invest their time to establish effective
collaboration with their business partners. However studies have found that a majority of PSFs
seeks quick results from the collaboration with the suppliers which in turn enhance the
environmental turbulence.
There are three major reasons behind the tendency of service firms to seek quick results.
The first reason behind this I the lack of patients to allow the collaboration to flourish. As a
result PSFs have the tendency to treat the interfirm collaboration merely like a one-off business
transaction. Secondly, due to constant pressure that originates from high environmental
turbulence, PSFs often are not being able to wait for a prolonged amount of time waiting for their
collaboration with the suppliers to reach the optimum level. Thirdly, due to increasing
environmental turbulence, PSFs are becoming doubtful about the abilities of the suppliers to fill
the gap caused by the environmental turbulence. Managements of PSFs are not sure that
suppliers will be able to handle the changes in technologies and core knowledge that is needed to
meet the requirements of the consumers. Several cases are there where service firms have

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terminated their collaboration with their existing suppliers and switched to a new supplier who
posses appropriate technological competencies. This opportunistic behavior of PSFs are
imposing negative impact on the commitment of the suppliers along with their intention of
sharing crucial information and effort to stand by the PSFs in achieving the target of effectively
satisfy the consumers.
From the above discussion it can be clearly understood that environmental turbulence is
making the relation between the consumers and the PSFs too short turn to develop a positive
relationship between them. Due to the development of short term relationship, both the PSFs and
the Suppliers are developing tendencies to exploit each other. The suppliers are not paying less
attention to the outcome of the service and the satisfaction of the consumers. This in turn is
imposing negative impact o the business of both the PSFs and suppliers as they are not able to
satisfy the consumers.
Negative effects of environmental turbulence on the collaboration between PSFs and the
consumers
In spite of the fact that collaboration with the consumers helps the PSFs to gain
complementary knowledge and understand the changes in the market, one of the negative impact
of consumer collaboration is that is highly time consuming. Due to high environmental
turbulence, PSFs often found it difficulties to invest time for proper interaction, exchange of
crucial information and effecting learning about the requirements of the consumers. Often it is
seen that, in order to save their time, PSFs uses unproven solution processes and technologies in
order to develop faster services. These services are often found to be of low quality and are not
able to meet the requirements of the suppliers.

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This lack of perfection and time investment also imposes a negative impact on the
relationship between the consumers and PSFs. Consumers are getting de-motivated to
collaborate with the PSFs and hence are getting less interested to share valuable information and
dialogues that provides appropriate instruction about their collaboration requirements (Sarrami-
Foroushani et al., 2014). This in turn is negatively affecting the business of the PSFs since they
are not able to gain complimentary and confidential knowledge from the consumers. Lack of
knowledge is lowering the efficiency of the PSFs to create products that are highly satisfactory
and all these are resulting in consumer attrition. Furthermore, the fact that consumers want quick
changes but themselves remain confused about how to adapt this changes, may affect the
business of PSFs in a negative way in a market of environmental turbulence. Under such
conditions, it is collaboration with the consumers may confuse the PSFs and hence can diminish
their quality of services.
Conclusion
Considering the facts that PSFs are suffering from a lot of issues associated with their
collaboration with the suppliers and the consumers, several managerial implication that can
effectively eradicate the issues are being discussed in the report. Two crucial implications for the
managers can be suggested in order to implement an effective collaboration between PSFs and
business partners. Firstly, in order to cope up highly turbulent market, PSF should put more
emphasis to establish a better PSF-supplier relationship. Necessary Knowledge should be shared
with the suppliers so that suppliers can provide a better service. Along with that PSF managers
should stop putting pressure on the suppliers to produce quick result in order to satisfy their own
consumers. Managers are advised to leverage mechanisms like commitment promotion through
economic and rational tools.

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Secondly, managers are advised to establish a strong collaboration with the consumers in
order to cope with highly turbulent and competitive market. Although the pressure from
environmental turbulence may force the managers of PSFs to use the practices from previous
projects to save time, developing service without updated knowledge and practices can make the
service obsolete and less effective. Thus in order to gain competitive advantages in the market,
PSFs should invest their time to effectively collaborate with the consumer and gather
complementary knowledge for understanding the latest requirements of the consumers. In spite
of the fact that all the managers of business firms are advised to maintain a strong collaboration
with their consumers, this factor is highly crucial for B2B professional service providers. The
complex issues of business consumers should be handled effectively in order to build their trust
on the organization. This will not only ensure consumer loyalty but will also help the PSFs to
gain advantages in the turbulent and highly competitive market.

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Reference list
Halinen, A., & Jaakkola, E. (2012). Marketing in professional services firms: turning expertise
into customer perceived value. Handbook of Research on Entrepreneurship in
Professional Services, 219. Retrieved from https://books.google.co.in/books?
hl=en&lr=&id=SIHOPPWxCkEC&oi=fnd&pg=PA219&dq=Halinen,+A.,+
%26+Jaakkola,+E.+(2012).+Marketing+in+professional+services+firms:
+turning+expertise+into+customer+perceived+value&ots=Az7npm1QY4&sig=NofzIYN
PiTvhbSjrTos7KX9quJw#v=onepage&q&f=false
Heirati, N., O'Cass, A., Schoefer, K., & Siahtiri, V. (2016). Do professional service firms benefit
from customer and supplier collaborations in competitive, turbulent
environments?. Industrial Marketing Management, 55, 50-58. Retrieved from
https://www.researchgate.net/profile/Aron_OCass/publication/284189960_Do_profession
al_service_firms_benefit_from_customer_and_supplier_collaborations_in_competitive_t
urbulent_environments/links/57329d9f08ae9ace8404825d.pdf
Huovinen, P., Haugbølle, K., & Oostra, M. (2017). Shaping client-driven business management
concepts for modern construction markets. WELCOME TO DELEGATES IRC 2017, 830.
Retrieved from
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831
Sarrami-Foroushani, P., Travaglia, J., Debono, D., & Braithwaite, J. (2014). Key concepts in
consumer and community engagement: a scoping meta-review. BMC health services

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research, 14(1), 250. Retrieved from
https://bmchealthservres.biomedcentral.com/articles/10.1186/1472-6963-14-250