A company can use power as a strategy to motivate intermediaries and the identified types of power available to the company includes coercive power, reward power, legitimate power, expert power and referent power ((Stojkovic, Kalinich and Klofas, Page 247 chapter 10 as cited by Rivera, July 26, 2006). Briefly description of each strategy In coercive power, the manufacturer, being in a dominant position can intimidate the intermediary to perform certain tasks which the intermediary could not otherwise do by threatening to terminate the relationship if the intermediary decline to do as directed.
As for reward power, the manufacturer promises to reward the intermediary if the intermediary meets set targets. As for legitimate power the manufacturer, due to contractual relations, will direct the instruct the intermediary, to perform certain functions without questioning. In expert power, the manufacturer is assumed to have all the information regarding the products and the intermediary will look to the manufacturer for the expertise information and believe whatever they are told.
As for referent power, the intermediary has pride in associating with the manufacturer and would do anything possible to maintain the relationship with that manufacturer. Advantages and disadvantages each strategy Coercive power, by threatening to severe the relations if the set targets are not achieved, the intermediary will worker harder to meet the targets. However if the targets are unrealistic, the intermediary can terminate the contract in favor of the competitive products but realistic in the business approach.
The advantage of reward power is that it will motivate the intermediary to employ more resources in order to meet the set targets. The disadvantage is that in the absence of the reward, the intermediary may relocate the resources. The advantage of Legitimate power is that the intermediary will carry out activities as instructed and the manufacturer will have a standardized system of marketing and distributing the products. The disadvantage is that the manufacturer will be responsible for the outcome of the instructions and the consequences therein.
Expert power, the advantage in this particular case is that the intermediary happily act as instructed since they believe in the ability and knowledge of the manufacturer. The disadvantage of this strategy is that if the company gives wrong instructions, the same will be carried out without verification and this can be disastrous. Referent power, the advantage of this strategy is that the intermediary takes pride in the products he is distributing. The disadvantage of this strategy is that the intermediary will do anything to retain the distributorship even if it is not in the long-term interest of both the company and Go Here.
