Channel Structure and Conflict Management among Multinational Corporations (MNCs) in Ghana

Article excerpt

[Abstract]

The research seeks to gain qualitative insights into channel structure and conflict management of leading multinational companies operating in Ghana. A case-study approach was adopted for this study. Data was gathered and analyzed qualitatively through interviews of managers of five multinational firms in Ghana. The companies were found to be practicing a three-level channel system, a combination of exclusive and intensive distribution strategies and a partial integration, thus limiting their control of the chain of distribution. The managements of the case companies have adopted some measures to mitigate the conflict-prone zones, which, in most cases, are not yielding the desired result of consolidating their channel operations. This research may have limited generalizability to all multinationals. The major contribution of this paper is that it helps in drawing out key issues of channel structure and conflict management in a developing economy context.

[Keywords] multinational; Ghana; channel; structure; distribution and conflict

Introduction

Scholars in marketing and management postulate that the field of marketing channels research is currently in a state of evolution with little agreement as to how to frame issues and what the appropriate modes of enquiry are (Gundlach, et al., 2006; Kotler & Keller, 2009). They further intimate that the evolving nature of this research domain presents both opportunities and challenges for further scholarship in the area. On one hand, it gives researchers the freedom to explore the area for better alternatives. On the other hand, the differing alternatives in terms of perspectives and methods has made it more difficult to achieve a consensus and thus to accumulate findings that yield robust generalization concerning this important phenomenon (Mahmoud, et al, 2010). Despite these multiple perspectives and approaches, some scholars indicate that research appears to converge with some agreement in findings and explanations about what issues in marketing channels warrant further inquiry (Gundlach, et al., 2006).

Marketing practitioners and academics have focused on aspects of marketing, such as product, price, and promotion to the detriment of channel management (Kotier & Armstrong, 2006). Choosing the right distribution channel to move products or services to the end user is a long-term strategic decision and varies according to the product, service, and market (Coughlan, et al., 2006). When choosing a distribution strategy, a marketer must determine what value a channel member adds to the firm's products and/or service. A vital determinant of the structure of marketing channels is the type of middlemen (Luk, 1997) that operate it. Bowersox, et al. (1980) hold that marketing channels are structured according to the availability and willingness of channel institutions to perform the marketing functions necessary to satisfy the target market's desire for channel service.

No matter how well channels are designed and managed, there will be some conflict because the interests of independent business entities do not always coincide (Kotier, 2004; Gundlach, et al., 2006; Mahmoud, et al., 2010). Several types of conflicts have been identified and dealt with in the extant literature, and these include vertical, horizontal, and multi-channel conflicts. It is important to observe that distribution management research has focused on developed economy context (Gundlach, et al., 2006) and rapidly industrializing and emerging economies like the BRIC (Luk, 1997), but there is a stark paucity of distribution management studies related to African emerging country contexts. As MNCs try to reach emerging economies with their products and services, it, therefore, serves as a confirmation that the developing contexts are theoretically and managerially relevant to both marketing scholars and practitioners. As the marketing channels research space evolves (Gundlach, et al. …