DECA Hospitality and Tourism Cluster Practice Exam

What might trigger vertical conflict in a distribution channel?

1. A manufacturer sells products on its website.

2. Two similar businesses compete for the same market.

3. Distributors agree to charge the same price.

4. An organization sells additional franchises in the same city.

The correct answer is: A manufacturer sells products on its website.

Vertical conflict in a distribution channel occurs when there is a disagreement or discord among levels of the supply chain, typically between manufacturers, wholesalers, and retailers. In this scenario, the action of a manufacturer selling products directly on its own website can create tension between the manufacturer and its distributors or retailers. This is because the manufacturer bypasses these intermediaries, possibly leading to reduced sales and profits for the distributors who rely on selling the manufacturer's products. The direct selling may undercut their pricing or create competition for the same customers, fostering dissatisfaction and conflict. The other choices, while related to competition and market dynamics, don't specifically relate to the hierarchical relationships that define vertical conflict. Competing businesses or agreeing on prices typically reflect horizontal relationships rather than vertical ones, as they involve competitors within the same level of the distribution channel. Selling additional franchises in the same city may lead to issues, but it usually pertains to territory disputes rather than the direct conflict arising between different levels of traditional supply chains.