IMPORTANT NOTE: The questions must be address in its full context. These questions are an opportunity to go outside the box to demonstrate your analytical, integrative, problem- solving and critical thinking skills using the knowledge acquired in your readings. As a result, it is very important to pay close attention to the questions and be able to conduct your discussions in the context of your question.  – Please keep this in mind when you complete this assignment.You must expand your ideas further. Analysis must be deep and very instructive. ANSWER THE FOLLOWING QUESTION. This question should be answered in at least 300 words. Quality of content and use of course and outside-of-course resources to support your position or analysis. The answers should not be in the form of essay, just straight to the point- Work must be original and cite your sources.Please be sure to answer the question completely but specifically in well-written complete sentences. Use the link to help you answer these questions, and conduct your own researchInclude references
Chapter 10 – Value-Chain StrategyWhy do some large, financially strong manufacturers choose not to own their dealers but instead establish contractual relationships with them?lecture.docxChapter 10 – Value-Chain Strategy
In chapter ten, we will explore the role of value-chain strategy and discuss
several channel strategy issues. Next, we will examine the process of selecting
the type of channel determining the intensity of distribution, and choosing the
channel configuration of organizations. We will then demonstrate distribution
through international channels.
Strategic Role of Value Chain
A good distribution network creates a strong competitive advantage for an
organization. The value-chain design may be a critical part of how companies
compete in the harsh environment characterizing many markets coming out of
recession. Importantly, companies can drive competitive differentiation and
advantage through the design of value chains which outmaneuver their
Distribution Functions
The channel of distribution is a network of value-chain organizations
performing functions that connect goods and services with end users. The
distribution channel consists of interdependent and interrelated institutions
and agencies, functioning as a system or network, cooperating in their efforts
to produce and distribute a product to end users.
When first selecting a channel of distribution for a new product, the pricing
strategy and desired positioning of the product may influence the choice of the
channel. Once the channel-of-distribution design is complete and
responsibilities for performing the various marketing functions are assigned,
these decisions establish guidelines for pricing, advertising, and personal selling
Channel of Distribution Strategy
The decisions that are necessary in developing a channel of distribution
strategy include (1) determining the type of channel arrangement, (2) deciding
the intensity of distribution, and (3) selecting the channel configuration (see
Exhibit 10.3 (page 292).
It is obvious to say that management may seek to achieve several objectives
through channel of distribution strategy. While the primary objective is
gaining access to end-user buyers, other related objectives may also be
important. These include providing promotional and personal selling support,
offering customer service, obtaining market information, and gaining favorable
revenue/cost performance; continuing reading on pages 290-302.
The major types of channels are conventional channels and vertical marketing
systems. The conventional channel of distribution is a group of vertically
linked independent organizations, each trying to look out for itself, with
limited concern for the total performance of the channel. The second type of
distribution channel is the vertical marketing system. A primary feature of
vertical marketing systems is the management of the distribution channel by
one organization. Three types of vertical marketing systems may be used:
ownership, contractual, and administered.
Choosing the right distribution intensity depends on management’s targeting
and positioning strategies and product and market characteristics. The
characteristics of the product and the market target to be served often suggest
particular distribution intensity. The distribution intensity should correspond
to the marketing strategy selected.
Managing the Channel
Channel management activities include choosing how to assist and support
intermediaries, developing operating policies, providing incentives, selecting
promotional programs, and evaluating channel results. These activities
consume much of management’s time, since once established the channel
design may be difficult to modify.
Performing the leadership role may lead to conflicts arising from differences in
the objectives and priorities of channel members. Conflicts with retailers
created by the channel strategy changes are illustrative. The organization with
the most power may make decisions that are not considered favorable by other
channel members. Highly collaborative relationships among channel members
call for a considerable degree of commitment and trust between the partners.
Distribution channels available in international markets are not totally
different from the channels in a country like the United States. Studying the
distribution patterns in the nation of interest is important in obtaining
guidelines for distribution strategy. Importantly, market structures may be
significantly different in global markets. Some of the most attractive prospects
are in emerging markets, where local market conditions are substantially
different from those in developed countries.

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