Abstract
Firms have tried to motivate their customers by using good brand names. The article discusses different strategies that are critical in the running of business establishments. Each strategy has pros and cons. This paper aims at reconciling factors between manufacturers and retailers by investigating the causes of conflicts.
Summary
The article examines conflicts between retailers and manufacturer, where the former appears to be winning and tries to propose strategies for reconciliation. It explores the root of a conflict, which it claims is in the fact that retailers have a much more flexible business models than suppliers, which allows them more autonomy. The writers propose that the relationship could be rebuilt if both work harder towards sharing information and resources. For example, consumer data, which can be easily collected by retailers, should be shared with manufacturers who may be in a better position to act on them to achieve improved business outcomes.
Another model suggested is the private label strategy, whereby a manufacturer brands items for specific retailers. On the other hand, the working capital model can be applied in a situation where suppliers take into account the rate at which retailers pay them, and come up with approaches that they can use to assist them without jeopardising their financial positions.
Analysis
It is evident that forward integration, backward integration and horizontal integration strategies, which are related to the contents of chapter six (6), have been highlighted in the journal article. The authors of the article mentioned forward integration when firms are interested in controlling their direct channels of product distribution. I think that the scholars’ use of the strategy is good in this context.
The article has used the example of Costco to illustrate the application of the approach. The firm uses it to achieve faster selling cycles. Backward integration is exemplified by business situations that encompass the purchase of suppliers. The strategy is useful because it helps firms improve efficiency and cost savings. For example, in the article, it is evident that Loblaw utilises backward integration. Horizontal integration is an approach that is used by companies to create and acquire production units that are competitive. In the article, it is clear Wal-Mart utilises the strategy to a market monopoly due to product variations about price points and qualities.
In my opinion, the article was good because it was clear enough to provide readers with many examples and facts in the modern business world. The example of Tesco is a demonstration of how effective information sharing can be beneficial to a company since it helps align retailers with the needs of their clients. However, in as much as this model may be seen as advantageous, it has its shortcomings because it may not necessarily be good for both of them.
Communication may bring customers so close to manufacturers that they may decide to branch out and do away with retailers who act as intermediaries. Nevertheless, some strategies proposed in the article are bad. Some strategies, for example, may lead to reduced motivation of retailers to pursue vertical integration if they feel that their suppliers are acting in their best interests. Another bad thing about the article is that it did not provide practical solutions that may be associated with manufacturers and retailers.
In conclusion, based on the contents of chapter six (6), mergers and partnership approaches have been proposed in the article. Company mergers have two important merits. First, company mergers can help firms to address the threat of multinationals strategically. Second, mergers enable business establishments to improve their levels of investment in research and development. Company partnerships enable partners to manage their business activities through the equal sharing of responsibilities. In addition, partnerships are important in achieving the required capital from business partners.