344 - Use and Abuse of Power in Supply Chains Flashcards
Relationships are
Rarely symmetrical
Channel Captains
Channel leaders that may exert tremendous influence on the other firms in the chain
Personal Attributes
Expert Power
Referent Power
Expert Power
If the member maintains sole ownership of knowledge and expertise in the relevant content domain.
Referent Power
If other decision makers in the chain perceive its management as prestigious enough to publicly identify themselves with
Positional Attributes
Reward Power
Coercive Power
Legitimate Power
Reward Power
If its management can help other channel members achieve their goals
Coercive Power
It can threaten other channel members
Legitimate Power
Monopoly on producing or selling a popular product
A member is powerful if:
Other members depend on it for essentials It has control over financial resources It plays a central role in the chain It is not substitutable It has the ability to reduce uncertainty
Five areas of Power:
Pricing Control Inventory Control Operations Control Channel Structure Control Information Control
Pricing Control
Powerful member demand lower prices or quantity discounts from their suppliers.
A small supplier may possess unique knowledge and expertise.
Small companies can gain buying power by joining purchasing coalitions
Inventory Control and JIT
Suppliers have to deliver smaller orders more frequently.
Consignment inventory
Packaging size
Operations Control
Strong companies are demanding quality improvements from vendors.
Dictating the style of product appearance.
Channel conflict also occurs in marketing arrangements.
Channel Structure Control
Allocation of sales areas to their distributors
Sometime manufactures go so far as to try to limit competition by “monopolizing” their retailers.
