Conflicts Between the Middlemen and the Organization

Introduction

Over the past, conflicts between the middlemen and the organization over power have led to heavy losses in the company. Usually, middlemen have frequent face to face contact with majority of customers; hence they have control over them. They can easily divert the customers to other organizations incase of misunderstanding between them (organization and intermediaries). Managers all over the world have been frustrated by this factor (Poirier, 2004).

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The conflicts occur as the markets grow and strategies of business evolve. Organizations are trying as much as possible to reinstate the marketing strategies especially the supply chain so as to enable them be more efficient in provision of products and services to its customers.

This idea of improving the supply chain has disrupted initial channels thus resulting in internal and external conflicts. Online marketing through the internet by an organization has also bred conflicts despite the fact that the numbers of consumers are raised. The intermediaries do believe that once the internet is involved, they lose their jobs. It is more profitable to use internet since the manufacturers have direct control of pricing and product distribution. Also, they (manufacturers) are spared from setbacks faced by the intermediaries (Schwalbe, 2009).

One thing for sure is that conflict within an organization must be present to some degree. Trying to do away with it means reducing chances of business nourishment. In other words, presence of conflicts between intermediaries and the organization’s manager enhances business growth. Businesses realize the impact of their conflicts when middlemen and other partners start exiting. Also, when customers realize existence of such conflicts, they might opt for the organizations’ competitors

Findings

As from research, the interaction between the manufacturers and the middlemen in the distribution channel can have both positive and negative impact on the organization.

Positive attributes of the relationship

Positive attributes of this relationship involves improvement of lifestyles. The intermediaries benefits from employment opportunities from the manufacturers as they resell the finished products. They are in position to earn income which they use to improve their standards of living.

Efficient movement of goods

Middlemen ensure effective and efficient movement of goods from the manufacturers to the place of sale. They share the bulky goods produced by the manufacturers and stock them in their retail shops thus motivating the manufacturers to produce more and more goods and services. From this aspect, manufacturers have been in a position to make lumpsum profits due to increased demand from the consumers. Manufacturers have benefited from intermediaries since the presence of intermediaries has allowed them time to introduce new products to the markets. This has assisted them in attending consumers need, by introduction of new products and services and also, they have been in a position to achieve the organizations’ stipulated objectives (Storey, 2008).

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Consolidation of goods

In addition, their relationship has facilitated the consolidation of goods. Middlemen can purchase a variety of goods from various manufacturers thus bringing services near the customers. Additional services such as repairs and demonstrations are made available to customers through the intermediaries. This factor improves the marketability of various manufacturers’ goods thus becoming of great significance.

The manufacturing firms have also been in a position to produce goods and services that are in conformity with customers’ tastes and preferences, since the middlemen channels the customer’s opinions to the manufacturer and back to the customers. Many consumers of the manufactured goods have increased due to quality services produced as a result of the co-existence between the manufacturers and the middlemen. The existing ones are retained since a variety of goods are brought near their reach (Pride & Hughes, 2009).

Technology

Moreover, the levels of technology have been uplifted. New technologies have been embraced not only by the manufacturers but also the intermediaries. For example, the intermediaries can use the internet services to order the goods that they have run short of from the respective manufacturers. Also, use of mobile phones is another communication technology embraced by both parties.

Synergy

Synergy has also been enhanced by the relationship between manufacturers and intermediaries. Right from the word go two heads are better than one. Teamwork has been created thus accomplishment of the organizational goals has been made much easier. For example, environmental conservation has been largely addressed because of the involvement of the intermediaries in addressing it as a global issue. In addition, peaceful existence has been advocated for in the relationship between them.

Development of infrastructures

Additionally, development of infrastructures has been enhanced. For effective and efficient supply of goods, a good road network is mandatory. Road networks have been maintained and new ones put in place. This has been achieved due to the good relations between the retailers and the manufacturing firms. Such firms are motivated to fund the establishment of good road network since their major aim is to reach as many customers as possible. The ability of the company to establish the roads is not a waste but a necessity to them in attaining their objectives and goals. There is also enhancement of corporate responsibility where the community also benefits from the success of the company (Moyer & McGuigan, 2009).

Diverse markets

Diverse markets have developed as a result of the relation between the middlemen and the manufacturers. Usually, intermediaries are spread all over the country and also the world. When a firm entrusts these middlemen and allow them carry out business activities on their behalf, they have ability to nourish. Their products are recognized all over the country and also to the rest of the world because of the efforts put in place by the middlemen. On top of this, potential consumers who cannot access the use of new technology are reached through the use of middlemen. Middle men are very useful people who act as a means of communication as well as the distribution agents (Mankiw, 2008).

Negative attributes

The relationship between manufacturers and intermediaries can also have its negative attributes. Middlemen may have different goals and objectives from those of the manufacturing firms. Also, there may exist difference in channel policies and thus may lead to rise of conflicts. The manufacturing firm does not maximize profits since they are forced to sell their products at subsidized costs to the retailers. The middlemen may also exploit the consumers by hiking prices of goods, contrary to the recommended retail prices by the manufacturing firms. This will discourage most of the consumers, more especially during times of economic crisis. This means that the demand of manufactured goods goes down hence loss making by the firm becomes automatic (Monroe, 2000).

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In addition, the manufacturing firms are restricted in decision making. They are forced to make decisions that suit both parties. They become less flexible hence the quality of goods is compromised. In marketing, the firms rarely get frequent contact with consumers hence flexibility of product production becomes hard. Middlemen may channel customers’ opinions in a way that satisfies their selfish gains, thus becoming of great disadvantage to the firm itself. Had the manufacturers had direct contacts with the customers, flexible and more elaborate decisions could be arrived upon (Lasher, 2007).

The cost of operation in the manufacturing firm is high when middlemen are involved. Incentives should be given to the intermediaries to encourage them in the distribution channels. This will raise their morale in the production and the delivery of the services to the customers within a respective time. Also, goods and services are provided to them at relatively lower prices for them to resell at a profit. From this point, the cost of production may or may not be met by the firm. If the firm could have adopted the use of internet in marketing, it could have made maximum use of profits, enlarged its markets worldwide and also reduce costs of operations. This is a cost effective measure which can be utilized by the company and hence increasing the sales revenues of the company.

On the other hand, incase of conflicts, the intermediaries may decide to divert the organizations customers to competitors. This is very possible since, most often; they have frequent personal contact with consumers than the organization itself. They can blackmail the firm and encourage customers to consume goods that they portray as of quality from other firms. This will gradually lead to decline in performance of the firm and its end result will be a total collapse (Krugman & Wells, 2009).

The manufacturers should have control over the intermediaries’ distribution channels. This will ensure that the set standards of the distributions are met which will eventually boosts the image of the company through the distribution channels. They should be in a position to initiate brand equity of their products. Usually when strong brand equity is initiated, consumers are driven to manufacturer’s site while less strong brand equity drives customers to retailers. Manufacturing firms should also make objectives that are achievable by both parties and in so doing; they will be in a position to reduce fights between them and the intermediaries. Again, manufacturing firms should set up the retail prices of their products and make it public (Horne & Wachowicz, 2008).

Consumers should know the recommended prices of the goods they are purchasing. This on the other hand discourages the retailers from hiking the prices for selfish gains. In so doing, consumer exploitation is reduced. It is the duty of the firms to ensure that customers’ obligations are met and subsequently satisfied. This is a crucial role that should be played because it is the consumers who keep them in business. In addition, they are the ones to decide on the distribution opportunities, putting into consideration the marketing mix that will enable the firm attain its goals and objectives (Correia & Flynn, 2007).

Also, marketing strategies are arrived upon by the manufacturers and not by the intermediaries. The firms are the ones to give directions to the middlemen that guide them towards success of the company at large. On the other end, intermediaries channels control over the manufacturers involve ensuring that the manufacturers’ production of goods is consistent. A situation whereby there is shortage of certain product should be minimized for the sake of retaining customers.

It is the responsibility of the intermediaries’ distribution channel to address this situation to the manufacturers and ensure that it is implemented because this is what keeps them in business. They should also ensure that they are compensated fairly by the firms they are working under. They should air their grievances directly to the manufacturers, through their representatives, more especially when the firms makes policies that may appear oppressive to them (Brigham & Daves, 2010).

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Conclusion

As from the findings, it is clear that conflicts are part and parcel of any organization, and that it is essential, to some degree, for any business to grow. Proper marketing strategies should be established so as to reduce instances of conflicts. To add, the use of internet in the distribution channels should be taught to the intermediaries on its importance and its efficiency (Aaker,1993).

It is recommended that proper customer care principles such as provision of quality goods, customizing customer care services, building a vision and a mission, expecting and getting ready for conflicts and moreover executing the stipulated objectives should be addressed. To sum up, the relations between the manufacturers and the intermediaries is of great importance and of enormous benefits to the firm. Despite the existence of conflicts between them, possible resolutions should be made available. Such resolutions may involve defining the roles to be played by each party, making objectives that come in terms with each party’s satisfaction among others (Johnsons, 2008).

Since marketing online has always been a source of conflict between them, intermediaries channels should be made used to it, and once they are conversant with it, terms of reducing online conflicts such as not lowering prices below the resale value of the other party, partner promotion on the internet and encouraging the other party to use the organizations website in advertising goods and services, should be implemented. In so doing, the chances of conflicts are minimized and the manufacturers are encouraged to work in partnership with the intermediaries. Their partnership will increase the productivity of the company and increase the reach of the various consumers at their respective locations which the manufactures could not have accessed easily.

References

Aaker, D.A. (1993). Brand equity & advertising: advertising’s role in building strong Brands. New Jersey: Routledge.

Johnsons, M. (2008). Strategic marketing: planning and control Marketing. London: Cengage Learning.

Brigham, E. & Daves, P. (2010). Stategic Financial Management. New York: Cengage Learning.

Correia, C. & Flynn, D. (2007). Strategic Management. Pretoria: Juta and Company Ltd.

Horne, J. & Wachowicz, J. (2008). Fundamentals of Financial Management. New Jersey: Prentice Hall.

Krugman, P. & Wells, R. (2009). Macroeconomics. New York: Worth Publishers.

Lasher, W. (2007). Practical Financial Management. New York: Cengage Learning.

Mankiw, G. (2008). Principles of management. New York: Cengage Learning.

Mathis, L & Jackson. (2007). Human Resource Management. 12th ed. New York: Cengage Learning.

Moyer, C. & McGuigan, J. (2009). Contemporary Financial Management. NewYork: Cengage Learning.

Monroe, P. (2000). The pricing strategy audit: an in-company assessment to help create the best possible pricing strategy for your organization. New Jersey: Prentice Hall.

Saget, A. (2006). The event marketing handbook: beyond logistics & planning. New Jersey: Kaplan Publishing.

Schwalbe, K. (2009). Information Technology Project Management. 6th ed. New York: Cengage Learning.

Storey. (2008). The Routledge companion to strategic human resource management. Canada: Taylor & Francis.

Poirier, C. (2004). Using models to improve the supply chain. New York: CRC Press.

Petty, W.J. (2003). Small business management: an entrepreneurial emphasis. London: Thomson South-Western.

Pride, W. & Hughes, R. (2009). Business. 10th ed. New York: Cengage Learning.

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