Amoco, one of the nation’s largest oil companies, has been forcing a number of its independent service stations to convert from full-service stations offering repair service to convenience stores or “gas only” stations. Thus the highly profitable repair part of the business will no longer be available to those station owners forced to convert. The franchised independent dealers have little choice but to give in to Amoco because the oil company typically owns the station’s land and buildings and offers leases of only three years or less. This arrangement appears to vest all of the power with the producer and virtually none with the dealers. Discuss this situation in light of the bases of power and the possible long-term effects on channel relationship.
Amoco, one of the nation’s largest oil companies, has been forcing a number of its independent service stations to convert from full-service stations offering repair service to convenience stores or “gas only” stations. Thus the highly profitable repair part of the business will no longer be available to those station owners forced to convert. The franchised independent dealers have little choice but to give in to Amoco because the oil company typically owns the station’s land and buildings and offers leases of only three years or less. This arrangement appears to vest all of the power with the producer and virtually none with the dealers.
Discuss this situation in light of the bases of power and the possible long-term effects on channel relationship.
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