“Clout” refers to your relative bargaining power in a business relationship. If the other party needs you more than you need them, you have the capacity to negotiate an advantage. You need to drill down to the detailed “moment of truth” to understand how this will deliver competitive advantage in practice – otherwise it too easily becomes a crude argument for scale.
When is it useful?
In the drinks business, for instance, “distribution clout” refers to the negotiation power the drinks company has with their distributors and retailers – relative to their competitors. It is a very real source of competitive advantage that can result in better promotion, visibility and trade terms than the competition.
Drilling down to a “moment of truth” where the drinks company Sales Director is sitting with the distributor MD negotiating trade terms, it is clear that distribution clout is not just about scale. You get much more negotiating leverage from having a tight portfolio of “must-stock” brands than from having a much greater volume of second-tier brands that require distributor or retailer ‘push’ for sales. Read the Thoughtstarter.
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