Hypotheses Development

Four hypotheses were developed for this research. Testing the hypotheses aims to answer the research question of the effect to supply chains of the formation of alternate structured/synergistic logistics networks and how great those effects would be.

This Thesis proposed to ascertain the level of perceived or actual power in a partnership. Based on activities linked to the strategic objectives of the firms involved, the work sought to understand the influence they exerted on their supply chain. Channel leadership is an important part of the value chain concept and enables a firm to hold a more powerful position. This power is useful in guiding strategic decisions, with the objective of controlling parts of the channel operations. This type of channel power can also be attributed to the size of the hub firm. A firm that is able to steer the partnership in areas of network connectivity and competitive positioning for value capture or creation is able to exert their perspective of business operations and directions on other partners. They are, therefore able to change the behaviour of the partners, forcing them to acquiesce to the new business structure. Questions relating to the elements (see Appendix 3) were asked of each actor in the chain to guide the research toward understanding the levels of power and leadership exercised, and to determine by whom, in each supply chain.

H₁: Higher levels of power asymmetries lead to higher levels of leadership by the dominant player amongst members of a supply chain network.

Relational commitment in the context of supply chains involves the depth of the sharing and exchange of tangible and intangible assets to create improved efficiencies and create value. In the bringing together of elements required for value creation, a harmonious connection of

interdependencies is required for success. Relationships bring together actors, activities and resources which form the business functions of a firm; it is the attempt to align these elements that brings improved efficiency. Elements associated with successful partnerships are numerous and vary depending on the type of relationship. This can be arm’s length or by vertical integration, but mainly these relationships can be described as attachments to a relationship that display dependence, reciprocity, trust, communication, investment and reputation. The research, by way of the questions utilising elements that support successful relationships, attempted to confirm the proposed

hypothesis that higher levels of relational commitment lead to higher levels of performance in supply chains.

H₂: Higher levels of relational commitment lead to higher levels of performance levels within a supply relationship network.

Strategic objectives form the basis of business direction and goals for a firm to pursue. From a contemporary supply chain perspective the business environment of a firm can be said to be

dynamic, requiring flexibility and connectivity. Current trends emphasise shorter product life cycles, mass customisation and increasing pressure from competitors. The need for a firm to quickly assess a market and change business direction requires an understanding of the objectives and goals of partners within a supply chain. Partnerships require open information sharing and a common view of what is to be accomplished in a partnership. It is the strength of the combined assets and an understanding of the strategic objectives of partners that enhances value creation and effectiveness within the partnership, creating a competitive advantage. Without this combined effort each party is acting alone with only the resources of their firm available to perform business. An alignment of firms with a shared strategic objective, clearly defined and measurable, outlining what each party will bring to the partnership will strengthen its position in the market place. This enhanced strength from combined resources allows a firm to develop a working relationship that effectively blocks or creates a barrier to entry for other actors within that sphere of business. Misalignment opens up an area of business opportunity for other actors who will exploit the weakness to create a business presence and therefore access to the markets and customers of an unsuccessful partnership. This research explored the hypothesis that misalignment of strategic objectives would have a negative effect on barriers of entry for other actors. Assessing the level of understanding and commitment by partners to value creation by way of their network connections and level of partnership structure, the research looked to answer the hypotheses.

H₃: A misaligned goal between members in a supply network has a negative effect on entry barriers allowing other supply networks to compete.

Value propositions, when defined and agreed between partners, create a stable footing for the partnership. They form part of the business contractual relationship and help guide the partnership in the way it conducts business between the firms and with external connections. By working towards the same goals and aspirations in a strategic sense, firms in a partnership are able to share knowledge and information that help build trust and collaboration. The communication flow that develops from this type of collaboration enables discussion to solve business issues that enable lowering of costs which bring benefits to the partnership. As more successes are created the flow-on effect to the combined firms becomes evident in a tangible, monetary way when linked back to the measurable and agreed upon, defined goals of the partnership at all levels of the business.

H₄: An agreed upon ,defined list of the value propositions available to members of supply networks has a positive effect on lowering costs and increasing value for the end customer.