Strategic Approaches to Domination in Supply Chains

Abstract

Dominance in the supply chain has shifted throughout history. Dominance or power in supply chains concern the extent of influence one participant in the chain has over one or more participants. The recognition of such dominance in any industry has long been recognized. Raven and French (1958) were among the first to explore inter-firm power. They developed five different bases of power which can still be useful to perceive reasons why one supply chain participant may hold authority over another. Emerson (1962) defined power as the ability of one firm (the source) to influence the intentions and actions of another firm (the target). Whilst Butaney and Wortzel (1988) related power to supply chains by demonstrating that distributors have power in supply chains when industry sales are approximately equally distributed among manufacturers and the overall competition within the industry is strong. Since these early days it appears that all participants along the supply chain including their second and third tier suppliers within a network, can hold some extent of dominance over some or all participants within the supply chain. This chapter analyses the changing nature of such domination in supply chains and incorporates the supply chain management strategies that may encourage or inhibit domination of the dominant participants. There are various types of power that can be exercised in supply chains that impact on supply chain participants. These types will be delineated to show how some supply chain participants exert their power so successfully. Further power can extend to different parts of the supply chain. The main power centric types of supplier power, manufacturing power, and retail power will be explained. The fourth power centric regime is a recent addition to the domination in supply chain literature. It relates to distributor centric power which has recently evolved with the globalisation of supply chains. The main purpose of this chapter is to address the various sorts of power that the dominant supply chain participant exerts on its followers. The strategies that the dominant player uses to expand its regime as well as the various strategies that it puts in place to retain its existing power base is provided. In conclusion the changing nature of the dominating influences in supply chains and their associated networks is emphasised.