The supplier-dealer relationship in the motor car industry in the UK : factors affecting the power of each side and the strategies adopted by them
The research programme aimed to identify and investigate the tactics and strategies adopted by the car manufacturers to manage and control their dealers in the distribution channel in the UK market, and consequently deduce their effects on the manufacturer-dealer power relationships. A literature review outlining the main sources of power possessed and employed by the manufacturer combined with the information collected from initial interviews with a panel of channel players enabled to identify the main tactics of control adopted by the manufacturers over the dealers in the car industry. The dealer agreement, the training programmes, the dealer assessment procedures, the communications systems and manufacturer's general support appeared to represent the prime tactics of control possessed and employed by the car manufacturers. The first three elements were investigated separately and qualitatively analysed following a quantitative approach. They unveiled the nature of the dealers' operations controlled by the manufacturers and the techniques implemented by them to exert that control. The repressive and coercive nature of these tactics of control emphasised an imbalance of power favouring the manufacturers, and confirmed their dominant position in the marketing channel. The last two tactics of control mentioned above did not lead to any specific studies. Nevertheless, they were explored in Chapter 8 and referred to throughout the thesis. A field survey carried out with a large sample of car dealers established their perceptions to manufacturers' controls. The survey empirically confirmed that the car manufacturers highly control and influence certain business areas by setting-up some constraints, restrictions, limitations and targets to achieve, and consequently the leadership of the manufacturers was demonstrated and verified. The strategies implemented by the manufacturers, whose tactics are deduced from, enabling them to control their dealer network were analysed. The study highlighted the main strategic decisions made by the suppliers and showed how they affect the power balance between the channel participants favouring the suppliers. A lack of consistency in manufacturers' strategic approach was detected and appeared to be detrimental to dealers' welfare. In order to improve manufacturer-dealer relationships and to create a greater equilibrium between the two parties, the adoption of a partnership approach was highly recommended. As a result, the whole study of the car distribution channel enabled the researcher to conclude that a franchise arrangement tends to give a manufacturer more power over an intermediary than a non-franchise trading relationship.