Abstract: Taking automobile industry as an example, this paper discusses the main reasons for the channel conflicts between suppliers and dealers, as well as the continued deterioration of their relationships. A theoretical model is developed to integrate the relationships among suppliers’ goal, dealers’ goal, coercive strategy and dealers’ satisfaction. The empirical research results show that the main reason why automobile suppliers implement coercive strategies is that coercive strategies positively affect the realization of suppliers’ sales goals. While coercive strategies have significant negative impacts on both dealers’ economic performances and their satisfaction. Coercive strategy is the major cause of channel conflicts. This paper puts forward an approach to solving channel conflicts, namely, suppliers change their channel strategies from focusing on coercive strategies to focusing on non-coercive strategies, which makes it necessary for suppliers to reduce their pursuits of short-term benefits and maintain the common interests of both suppliers and dealers from long-term perspective.

Key words: channel conflict, coercive strategy, dealers’ satisfaction