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ManagingConflicttoIncreaseChannelCoordination,Chapter7,Contents,ASSESSINGTHEDEGREEANDNATUREOFCHANNELCONFLICTTHECONSEQUENCESOFCONFLICTMAJORSOURCESOFCONFLICTINMARKETINGCHANNELSCLASHOFMARKETDOMAINSFUELINGCONFLICTCONFLICTRESOLUTIONSSTRATEGIES:HOWDRIVECONFLICTANDSHAPECHANNELPERFORMANCE,Review,Whatsthechannelpower?Channelpoweristheabilitytoalteranotherorganizationsbehavior.Itsatool,neithergoodnorbadThepowerofAisequaltothedependenceofB.WhenisthedependenceofBonAhigh?BderivesgreatutilityfromdealingwithAandcannotfindthatutilityeasilyinoneofAscompetitors.RealalternativestoAarefewwhentherearefewcompetitorsorwhenBfacesveryhighswitchingcostsifitleavesA.,Review,Whichsourcesdopowercomefrom?RewardCoerciveExpertLegitimateReferent,Review,Whichcountermeasurescanthedependentpartytake?Diversifying(buildinginalternativessuppliesofthechannelmembersservices)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(failingtodrawaconclusionwhilediscussingtheotherpartysbusiness),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,manifestconflictusuallyappearsasblockingeachothersinitiativesandwithdrawingsupport.Intheworstcases,onesidetirestosabotagetheotherortakerevenge.,MeasuringConflict,Howshouldtheobservergoaboutdiagnosingthetruelevelofconflictthatanorganizationfacesinachannelrelationship?Thebestwayistogatherfourkindsofinformation.Steps:CountinguptheissuesImportanceFrequencyofdisagreementIntensityofdispute,Example,Anassessmentofhowmuchconflictautomobiledealsexperienceintheirrelationshipwithcarmanufacturer.Step1:countinguptheissuesWhatarethemajorissuesofrelevanceoftwopartiesintheirrelationshipchannelrelationships?Forcardealers,thereareinventories,allocationanddeliveryofcars,thesizeofthedealersstaff,advertising,allowancesforpreparationofthecar,andreimbursementforwarrantywork.,Step2:ImportanceHowimportantiseachissuetothedealer?Thiscouldbedonejudgmentallyorcouldbedonebyaskingdealersdirectly.Forexample,letdealersindicatehowimportanteachissueistothedealershipsprofitabilityonascaleof0toten(veryunimportanttoveryimportant)Howimportantisinventorytothedealershipsprofitability?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,tohurtarelationshipscoordinationandperformance.Butthereareoccasionswhenoppositionactuallymakesarelationshipbetter.FunctionalconflictOccurswhenchannelmembersrecognizeeachotherscontributionandunderstandthateachpartyssuccessdependsontheother.,Functional(useful)conflictsleadsto:CommunicatemorefrequentlyandeffectivelyEstablishoutletsforexpressingtheirgrievancesCriticallyreviewtheirpastactionsDeviseandimplementamoreequitablesplitofsystemresourcesDevelopamorebalanceddistributionofpowerintheirrelationshipDevelopstandardizedwaystodealwithfutureconflictandkeepitwithinbounds,Whenisconflictfunctional?Fromthedownstreamchannelmembersviewpoint,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.Thehighlevelsofmanifestconflictaffectanorganizationssatisfactioninamannerthatdamagesthechannelslong-termabilitytofunctionasaclosepartnership.,Howhighlevelsofconflicterodechannelrelationship,Whenthechannelmembersenseshighleveloftension,frustration,anddisagreementinachannelrelationship,theirperceivedconflictwillincrease,aswillfelt(attractive)conflictandmanifestconflict(blockingbehaviors).Thisfiguredoesnotsuggestthatconflictshouldbeminimizedonalloccasions,butitdoessuggestthatconflictcarriescosts,someofwhichtaketimetomaterialize.Therefore,conflictshouldbemanaged,organizationsshouldchoosetoenteraconflictratherthandiscoveringthattheirinitiativesarenotworththeconsequencesoftheoppositiontheycreated.,MAJORSOURCESOFCONFLICTINMARKETINGCHANNELS,Mostconflictisrootedindifferencesin:ChannelmembersgoalsTheirperceptionsofrealityAndwhattheyconsidertobetheirdomains,orareaswheretheyshouldoperatewithautonomy.Themostcomplexofthesethreesourcesofconflictisthelastbecauseitisnowordinaryformanufacturerstogotomarketbysomanydifferentroutesthattheirchannelmembersareboundtocompeteforsomeofthesamebusiness.,Sourceofconflict:competinggoals,Eachchannelmemberhasasetofgoalsandobjectivesthatareverydifferentfromthoseofotherchannelmembers.Thisbuilt-indifferenceinwhatfirmsseektoachieveisfundamentaltoallbusiness.Agencytheoryunderscorehowcompetinggoalsconflictinanyprincipal-agentrelationship.Theinherentdifferencesinwhattheyaretryingtoachieveandwhattheyvalueleadsprincipalstodevisewaystomonitorandmotivatetheiragents.,Example:NikeandFootLocker,Resellerscarryasupplierslineinordertomaximizetheirownprofits.Achievinghighergrossmarginsperunit(payingthesupplierlesswhilechargingthecustomermore)IncreasingunitsalesDecreasinginventoryHoldingdownexpensesReceivinghigherallowancesfromthemanufacturer,ThemanufacturerwishestomaximizeitsownprofitsandprefertoseetheresellerAcceptlowergrossmargins(paythesuppliermorewhilechargingthecustomerless)Holdmoreinventory(avoidstockouts,maximizeselection)Spendmoretosupporttheproductline.Andgetbywithoutallowances.Frequentreasonsforconflictinamarketingchannelarelistedbehind.,Naturalsourcesofconflict:inherentdifferenceinviewpointsofsuppliers,Sourceofconflict:Differingperceptionofreality,Agreatdealoftension,anxiety,andfrustrationinachannelisduenotsomuchtoactualgoalclashesastotheplayersperceptionsthattheirgoalsdiverge.Differingperceptionsofrealityareimportantsourcesofconflictbecausetheyindicatethattherewillbedifferingbasesofactioninresponsetothesamesituation.,Perceptiondiffermarkedly,including:Theattributesoftheproduct/serviceTheapplicationsitservesandforwhichsegmentsThecompetitionInadditiontothesebasictopics,thechannelmemberalsodisagreeaboutmoresubjective,judgmen

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