In our research relating to the relationships between manufacturers and their channel partners, we found that the most significant cause of conflict was a failure to address “margin management” – basically a failure to ensure that the relationship made sound business sense to both parties. Manufacturers and the distributors, dealers, wholesalers, and the other channel partners through which they go to market are both business organizations. If the relationship isn’t contributing to their business success, it won’t get attention.
Best practice firms come to a shared understanding of key elements of the business models in place with their partners, and look for actions that create value all around. Negotiations between the two firms are a fact of life, but avoiding situations in which the outcome of a negotiation makes the relationship unattractive is a mandate. And, at the same time, firms with strong relationships look for alternatives to zero-sum negotiations, trying instead to find a way to make the relationship a win for both parties.
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Building Win-Win Relationships
Thursday, October 28, 2010 - Permalink
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