Channel conflict

By:-Group 4Divya ShrutiGaurav AnandAshwarya YagnikSonam Kumari SharmaIndrabhanu Priyadarshi

Apple Introduction Apple Inc. Is an American multinational corporation Headquartered: Cupertino, California, United States of America Work: designs, develops and sells consumer electronics, computer software, online services and personal computers. CEO: Tim Cook Founders: Steve Jobs, Steve Wozniak and Ronald Wayne in 1st April 1976. Products: Macline of computers, theiPODmedia player, theiPhoneSmartphone, and theiPad tablet computer.

Distribution Channel 0 Level 1 Level

2 Level 3 Level

B2B Channel

B2C Channel

Conflict is generated when actions of any channel member come in the way of the system achieving its objectives.

Conflicts Result From

Each channel member wanting to pursue his own goals.Each wants to retain his independence.There are limited resources which all of them want to utilize in achieving their goals.Features of conflicts:Initially latent and does not affect the workingIs not normally possible to detect till it becomes disruptive

Vertical channel conflict

Horizontal channel conflict

Multiple channel conflict

Example:Online storesExample:Exclusive company outlet

Channel conflict at appleTom Santos president of Macadam Computer Inc. USA, the authorized reseller of Apple complained about Apple is not helping him procuring new products such as iBook CD/DVD rewritable, Mac OS update X10.0 etc and it leads to allegation by many Apple resellers.Mr. Santos also claimed for a faulty account & quality control system. Several other resellers such as Mac Tech, Oregon, joined Santos and charged a law suit against Apple accusing fraud, breach of contract &unfair practices. Apple is also being accused that it collected information about resellerscustomers and contacted them to offer heavy discounts on purchasing from an Apple store.Still By the end of March 2003, Apple had opened more than fifty stores all over the US, even as the total number of resellers who filed lawsuits against Apple went up.

Apple revised terms and conditionsApple signed yearly contracts with its resellers, making it mandatory for them to renew the contracts every year.The new contract bounded the resellers to provide their business and inventory reports and even their list of customers to Apple when ever requested.Some resellers who tried to make changes in the contract has been cancelled their dealerships of Apple Co.As per the new contract, Apple could allocate the available inventory to its physical stores, online stores, and other dealers before considering the resellers.The revised contract restricted them from using Apple's trademarks on promotional equipment.

The conflict gained momentumOn March 31, 2004, Apple resellers started a website(www.TellOnApple.org) which contained articles regarding their conflict with Apple.The site attracted by 2 million hits by the end of 2004.Apple held its shareholders meeting at its headquarters at Cupertino, California.Around ten resellers protested in front of the headquarters and carried placards.The resellers said that their aim was to inform the shareholders of Apple's predatory policies.On August 26, 2004, the Santa Clara Superior Court ruled that there was sufficient evidence against Apple.Till December 2004, around five lawsuits were filed against Apple by various resellers.

Consumers and dealers filed lawsuitA five-member group of consumers and dealers filed a class-action lawsuit accusing Apple of selling used products after refurbishing them.Some customers said they found names of other customers on some of the new Apple products they bought.They charged that Apple had deliberately reduced its warranty coverage.The resellers alleged that Apple charged them for the parts for machines under warranty.The damages and losses claimed by the three consumers in the lawsuit was nearly US$75,000.

Recent foxconn case accusing appleFoxconn makes Apple devices from the iPhone to the iPad.It has been accused for illegal overtime, improve safety protocols and not upgrade worker housing and other amenities.Apple & Foxconn are coming to an Agreement for increasing power of Chinese workers.The agreement could result in higher prices for consumers, though the impact will be limited .If Foxconn tries to increase prices, Amazon could go to other major contract manufacturers like Quanta, Wistron, Pegatron or Inventec.

ConclusionsResellers in other countries such as Australia, Canada, and Taiwan alleged that they were also hit by Apple's unfair treatment.The iPod now accounts for one- third of Apple's revenues and its 'halo effect' has contributed to a 35% increase in sales of the company's Macintosh computers .Now its questionable fact that whether Apple's retail strategy had contributed significantly to this revenue growth or not.Foxconn said it would reduce working hours to 49 hours per week including overtime.Foxconn said it was raising salaries by 16 to 25 percent.To compensate for the reduced hours, Foxconn will hire tens of thousands of additional workers.Apple CEO Tim Cook, has shown a willingness to tackle the global criticism head-on.

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