Publication Type

Journal Article

Version

submittedVersion

Publication Date

11-1996

Abstract

Manufacturers and retailers traditionally have seen each other as adversaries, but the benefits generated by trusting relationships between such old foes as Procter & Gamble Company and Wal-Mart Stores show that fear and intimidation may not be the most effective way for manufacturers and retailers to deal with each other after all. Studies of manufacturer-retailer relationships in a variety of industries reveal that exploiting power has three major drawbacks. it can come back to haunt a company if the balance of power changes; victims will ultimately seek ways to resist such exploitation; and working as partners allows retailers and manufacturers to provide customers with greater value than they can when they try to exploit each other.To build a trusting relationship with their weaker partners, powerful companies can build systems that strive both to compensate their partners fairly for their contributions and to resolve differences in a manner that their partners perceive as fair. These systems ensure that there is two-way communication, that all channel partners are dealt with equitably, and that partners can appeal channel policies and decisions. In addition, they provide partners with a coherent rationale for policies and ensure that partners are treated with respect.Moving a relationship from the power game to the trust game is difficult, requiring a change in culture, management systems, and attitudes. But the success of organizations such as Marks & Spencer, Kraft, and E.J. Ekornes all testify to the benefits of making the effort. In rapidly changing environments, success will go to those who learn to make the leap of faith.

Keywords

Trust, Business planning, Retail industry, Manufactures, Partnership, Industrial organization, Business research, Chain stores, Strategic planning

Discipline

Marketing | Organizational Behavior and Theory

Research Areas

Marketing

Publication

Harvard Business Review

Volume

74

Issue

6

First Page

92

Last Page

106

ISSN

0017-8012

Publisher

Harvard Business Review

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