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What Are Business Relations?

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  • Written By: Helen Akers
  • Edited By: Jessica Seminara
  • Last Modified Date: 22 September 2016
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Business relations occur whenever there is some sort of partnership formed between two business parties. These relationships can be between an employer and employee, a business and its customers, a business and its vendors, a company and its competitors, or a company and its shareholders. Some of these relationships are transactional in nature, but they are typically established and somewhat long-term.

One type of business relations is the relationship between an employer and its employees. This is a union that is usually initiated by the employer and the employee through the recruitment process. Each party then agrees to enter into an employment relationship where the employer provides a salary and benefits in exchange for labor. The employee acts as a representative of the employer and seeks to implement its goals and objectives.

Business relations may also be formed between companies and independent contractors. In this type of relationship, the contractor is not considered to be an employee of the company, but rather performs a service or function that the company needs. The main difference between this type of work relation and an employer-employee relationship is that the contractor is responsible for paying his own taxes, does not usually receive health and insurance benefits, and is free to accept other work projects from competitors.

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Another common type of business relations is the relationship between a business and its customers. In the consumer market, this relationship may be subject to volatility, as some consumers are not brand loyal and will switch their purchase behavior according to price or convenience. There are however some customers who become quite loyal to a particular brand, store, or company and will rarely deviate from their regular purchase habits. Direct marketing and mail-order companies capitalize on the concept of customer relationship building through regular communication, personalization, and reward systems.

Companies often establish business relations with each other. For example, retailers rely on direct store delivery vendors to stock and manage their inventory on certain food items, such as name brand bread, chips, and crackers. Vendor representatives partner with local store decision makers to maximize sales of the product in order to benefit both parties. Not only does the vendor supply the retailer with premium product that its consumers demand, but also performs all of the labor associated with stocking the retailer's shelves and display equipment devoted to the product line. In exchange, the retailer may agree to certain space allocations, promotional displays and the storing of excess inventory.

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