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ManagingConflicttoIncreaseChannelCoordination Chapter7 Contents ASSESSINGTHEDEGREEANDNATUREOFCHANNELCONFLICTTHECONSEQUENCESOFCONFLICTMAJORSOURCESOFCONFLICTINMARKETINGCHANNELSCLASHOFMARKETDOMAINSFUELINGCONFLICTCONFLICTRESOLUTIONSSTRATEGIES HOWDRIVECONFLICTANDSHAPECHANNELPERFORMANCE Review What sthechannelpower Channelpoweristheabilitytoalteranotherorganization sbehavior It satool neithergoodnorbadThepowerofAisequaltothedependenceofB WhenisthedependenceofBonAhigh BderivesgreatutilityfromdealingwithAandcannotfindthatutilityeasilyinoneofA scompetitors RealalternativestoAarefewwhentherearefewcompetitorsorwhenBfacesveryhighswitchingcostsifitleavesA Review Whichsourcesdopowercomefrom RewardCoerciveExpertLegitimateReferent Review Whichcountermeasurescanthedependentpartytake Diversifying buildinginalternativessuppliesofthechannelmember sservices FormingacoalitiontobringpressureonthepowerfulmemberExitingthebusiness Review Canimbalancerelationshipsnotfunctionquitewell Imbalancerelationshipsareverycommonandcanfunctionquitewell Thekeyisrestraintonthepartofthestrongerparty Review Howtoframeaninfluenceattempt Firstly considerwhethertheinfluenceattemptispresentedasapositiveoranegative Secondly considerwhethertheinfluenceattemptispresentedascontingentframingornoncontingentframing Intheshortterm anegativeframing whatonewilllose oracontingentframing ifyoudothis thenyougetthat isusuallyinferiortoapostiveornoncontingentframing Inthelongrun performanceoutcomessubstantiallyoverridetheseeffects Review Translatingpower alatentability intoinfluenceinvolvescommunications Inchannels therearesixcommonwaystocommunicate Pleasepointoutwhichmethodswecanuseinpractice Promises legalisms andthreatsarethreefairlyobtrusivewaysoftranslatingpower Inwesterncultures theyoftenprovokeresentmentandconflict Ofthesethreeobtrusivemethods thestrategyofmakingpromises offeringrewardsfordesiredbehavior isquiteeffective onthewhole andisastapleofstrong long termrelationships Threeothercommoninfluencestrategiesaremakingrequestsfornostatedreason exchanginginformation failingtodrawaconclusionwhilediscussingtheotherparty sbusiness andmakingrecommendations theexplicitfromofexchanginginformation Theireffectivenessisheightenedbytheirunobtrusivenature LearningObjectives DistinguishcircumstanceswhereconflictisnotnegativeandisneutralorevenpositiveUnderstandhowtodiagnoseconflictintermsofissues frequency intensity andimportanceTracethenegativeeffectsofhighconflictonchannelperformanceSketchtheinherentsourcesofconflictinchannelrelationships LearningObjectives Separateconflictintothreemaincauses goals perceptions anddomainsUnderstandwhymultiplechannelshavebecomethenormanddescribewaystoaddresstheconflicttheycreateUnderstandwhymanysuppliersactuallylikegraymarketsTracethespiralofcoercionandreciprocationForecasttheimpactofadestructiveactandsuggesthowtoreduceit LearningObjectives DescribetheworkingsofinstitutionalizedmechanismsmanagementcanusetodampenconflictanddistinguishbetweenthosethatmanagementcandecreeandthosethatariseinarelationshipCategorizeconflictresolutionstylesanddescribetheireffectonhowwellachannelfunctions Sketchtheeffectofeconomicincentivesonconflict THEDEGREEANDNATUREOFCHANNELCONFLICT Thischapterexamineshowtorecognizethemanyformsofconflict includinglatentconflict perceivedconflict functionalconflict andoverconflict Thischapterpresentsmethodstohelpathirdpartydiscernthetruenatureandlevelofconflictinachannelrelationship Thischapteralsocoversthesequestions Whataretheeffectsofconflict longandshortterm onthefunctioningofthechannel itscoordination itsultimateperformance anditsfuture Howdoesconflictariseandhowcanitbemanaged Whatarethebeststrategiesforcontainingdestructive excessiveconflict andredirectingtheantagoniststoachievehigherlevelsofchannelcoordinationandperformance Whatischannelconflict Indistributionchannel conflictisnotnegative butmoreneutral Ratherthankeepingchannelmembersapartanddamagingtheirrelationship someconflictactuallystrengthensandimprovesachannel Channelconflictmeans Behaviorbyachannelmemberthatisinoppositiontoitschannelcounterpart Itisopponentcenteredanddirect inwhichthegoalorobjectsoughtiscontrolledbythecounterpart Incontrast competitionis Behaviorinwhichachannelmemberisworkingforagoalorobjectcontrolledbyathirdparty suchascustomers regulatorsorcompetitors Competingpartiesstruggleagainstobstaclesintheirenvironment Conflictingpartiesstruggleagainsteachother Conflict Conflictimpliesanincompatibilityatsomelevel LatentconflictExistatsuchalowlevelthatchannelmembersdonotfullysenseit Thisconflictisduetoconditionsthatsettheinterestsofthepartiesatodds Whenallpartiespursuetheirseparategoals strivetoretaintheirautonomy andcompeteforlimitedresources theinterestofchannelmemberscollide PerceivedconflictPerceivedconflictoccurswhenachannelmembersensesthatoppositionofsomesortexists oppositionofviewpoints ofperceptions ofsentiments ofinterests orofintentions Ifindividualmembersdonotexperienceaffectiveconflict theywouldnotdescribetheirdealingsasconflictual eventhoughtheyopposeeachother Ifindividualmembersexperiencedetrimentalemotions tension anxiety anger frustration hostility theydescribetheirchannelasconflictual ManifestconflictOften emotionsofoutrageandunfairnessreachapointthatmanagersrefuseeconomicallysensiblechoiceandhurttheirownorganizationsinordertopunishtheirchannelcounterparties Ifnotmanaged feltconflictcanescalatequicklyintomanifestconflict Betweentwoorganizations manifestconflictusuallyappearsasblockingeachother sinitiativesandwithdrawingsupport Intheworstcases onesidetirestosabotagetheotherortakerevenge MeasuringConflict Howshouldtheobservergoaboutdiagnosingthetruelevelofconflictthatanorganizationfacesinachannelrelationship Thebestwayistogatherfourkindsofinformation Steps CountinguptheissuesImportanceFrequencyofdisagreementIntensityofdispute Example Anassessmentofhowmuchconflictautomobiledealsexperienceintheirrelationshipwithcarmanufacturer Step1 countinguptheissuesWhatarethemajorissuesofrelevanceoftwopartiesintheirrelationshipchannelrelationships Forcardealers thereareinventories allocationanddeliveryofcars thesizeofthedealer sstaff advertising allowancesforpreparationofthecar andreimbursementforwarrantywork Step2 ImportanceHowimportantiseachissuetothedealer Thiscouldbedonejudgmentallyorcouldbedonebyaskingdealersdirectly Forexample letdealersindicatehowimportanteachissueistothedealership sprofitabilityonascaleof0toten veryunimportanttoveryimportant Howimportantisinventorytothedealership sprofitability Veryunimportant 0 1 2 3 4 5 6 7 8 9 10 veryimportant Step3 FrequencyofDisagreementHowoftendothetwopartiesdisagreeovereachparticularissue ThiscouldbedonejudgmentallyorbycollectingdataForexample dealersmaybeaskedtorecalldiscussionwiththemanufacturerovertheissueduringthelastyearandtoindicateonascaleof0toten nevertoalways howfrequentlythosediscussionsinvolveddisagreement Duringthelastyear howfrequentlydidthediscussionwiththemanufactureroverinventoryinvolvedisagreement never 0 1 2 3 4 5 6 7 8 9 10 always Step4 IntensityofDisputeHowintenselydothetwopartiesdifferoneachparticularissueOrhowfarapartarethetwopartiesintheirpositionsThiscouldbedonejudgmentallyorbycollectingdata Forexample dealersmayindicateonascaleofzerototen notveryintensetoveryintense howstronglytheydisagreeduringatypicaldiscussionoftheissue Howstronglydodealersdisagreeduringatypicaldiscussionofinventory Notveryintense 0 1 2 3 4 5 6 7 8 9 10 veryintense Indexofmanifestconflict Theseestimatescanbecomparedacrossdealerstoseewherethemostseriousconflictoccursandwhy Thereisnorealargumentoveranyissueif Theissueispetty lowimportance Thedifferentofopinionrarelyoccurs lowfrequency Thetwopartiesarenotveryfarapartontheissue lowintensity Ifanyoftheseelementsislow theissueisnotagenuinesourceofconflict Forexample ifanallowanceforpreppingacarisaminorissue itisofnorealimportthatdisagreementsoveritareintenseoffrequent THECONSEQUENCEOFCONFLICT Conflictisusuallythoughttobedysfunctional tohurtarelationship scoordinationandperformance Butthereareoccasionswhenoppositionactuallymakesarelationshipbetter FunctionalconflictOccurswhenchannelmembersrecognizeeachother scontributionandunderstandthateachparty ssuccessdependsontheother Functional useful conflict sleadsto CommunicatemorefrequentlyandeffectivelyEstablishoutletsforexpressingtheirgrievancesCriticallyreviewtheirpastactionsDeviseandimplementamoreequitablesplitofsystemresourcesDevelopamorebalanceddistributionofpowerintheirrelationshipDevelopstandardizedwaystodealwithfutureconflictandkeepitwithinbounds Whenisconflictfunctional Fromthedownstreamchannelmember sviewpoint functionalconflictisanaturaloutcomeofclosecooperationwithasupplier Andwhenchannelmembersarecommitted disputesservetoraiseperformanceintheshorttermanddonotdamagetheleveloftrustintherelationship Thefunctionalconflictisevenmorelikelyifthedownstreamchannelmemberhasconsiderableinfluenceoverthesupplier Arepeacefulchannelsbetterchannels Muchdependsonthereasonwhyconflictislow Often thetwosidesarenotoninagreement Theysimplyarenotindisagreement becausetheydonotcare Thelackofconflictdisguisesalackofengagement Thusconflictisquitelow andsoistheperformanceofthechannel Thesechannelsneedtoincreasetheiractivitylevelsandcommunicationlevels whichwillincreasewelcomedandnotavoidedconflict Sothechannelmembersneedtocareenoughtocommunicate tocooperateandinevitabletodiscovertheirpointsofopposition Butconflictescalateintosubstantialmanifestconflictaccompaniedbytensionandfrustration Ifnotkeepwithinbounds manifestconflictbecomesdamaging andultimatelydestructive AninfluentialchannelmemberisadisputatiousoneDisputatiouschannelmemberiswillingtogiveandtaketopushthechanneltooutperformitscompetition Howintenseconflictdamageschannelperformanceandcoordinate Giventhatsomechannelfrictionismundane shoulditbeacceptedasinevitable dismissedasnormal No becausehighchannelfrictioncreatescosts Thehighlevelsofmanifestconflictaffectanorganization ssatisfactioninamannerthatdamagesthechannel slong termabilitytofunctionasaclosepartnership Howhighlevelsofconflicterodechannelrelationship Whenthechannelmembersenseshighleveloftension frustration anddisagreementinachannelrelationship theirperceivedconflictwillincrease aswillfelt attractive conflictandmanifestconflict blockingbehaviors Thisfiguredoesnotsuggestthatconflictshouldbeminimizedonalloccasions butitdoessuggestthatconflictcarriescosts someofwhichtaketimetomaterialize Therefore conflictshouldbemanaged organizationsshouldchoosetoenteraconflictratherthandiscoveringthattheirinitiativesarenotworththeconsequencesoftheoppositiontheycreated MAJORSOURCESOFCONFLICTINMARKETINGCHANNELS Mostconflictisrootedindifferencesin Channelmembers goalsTheirperceptionsofrealityAndwhattheyconsidertobetheirdomains orareaswheretheyshouldoperatewithautonomy Themostcomplexofthesethreesourcesofconflictisthelastbecauseitisnowordinaryformanufacturerstogotomarketbysomanydifferentroutesthattheirchannelmembersareboundtocompeteforsomeofthesamebusiness Sourceofconflict competinggoals Eachchannelmemberhasasetofgoalsandobjectivesthatareverydifferentfromthoseofotherchannelmembers Thisbuilt indifferenceinwhatfirmsseektoachieveisfundamentaltoallbusiness Agencytheoryunderscorehowcompetinggoalsconflictinanyprincipal agentrelationship Theinherentdifferencesinwhattheyaretryingtoachieveandwhattheyvalueleadsprincipalstodevisewaystomonitorandmotivatetheiragents Example NikeandFootLocker Resellerscarryasupplier slineinordertomaximizetheirownprofits Achievinghighergrossmarginsperunit payingthesupplierlesswhilechargingthecustomermore IncreasingunitsalesDecreasinginventoryHoldingdownexpensesReceivinghigherallowancesfromthemanufacturer ThemanufacturerwishestomaximizeitsownprofitsandprefertoseetheresellerAcceptlowergrossmargins paythesuppliermorewhilechargingthecustomerless Holdmoreinventory avoidstockouts maximizeselection Spendmoretosupporttheproductline Andgetbywithoutallowances Frequentreasonsforconflictinamarketingchannelarelistedbehind Naturalsourcesofconflict inherentdifferenceinviewpointsofsuppliers Sourceofconflict Differingperceptionofreality Agreatdealoftension anxiety andfrustrationinachannelisduenotsomuchtoactualgoalclashesastotheplayer sperceptionsthattheirgoalsdiverge Differingperceptionsofrealityareimportantsourcesofconflictbecausetheyindicatethattherewillbedifferingbasesofactioninresponsetothesamesituation Perceptiondiffermarkedly including Theattributesoftheproduct serviceTheapplicationsitservesandforwhichsegmentsThecompetitionInadditiontothesebasictopics thechannelmemberalsodisagreeaboutmoresubjective judgment
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