Organizational Conflict

We can always find brokers in our daily life. When you buy something as a consumer, you may negotiate with a broker to reduce the price and costs. When you are an employer, the broker you employed needs to guarantee your interests. However, these two aspects are always in a conflict. So it is rather difficult for a broker to handle the relationship between the two and solve the conflict. 

In a simple model, the board of directors will hire brokers, and those professional brokers should be responsible for the interests of the board of directors and guarantee the smooth operation of the subsidiary enterprises. And this is a simple model of entrusted agents. As a good professional broker, one needs to consider the demand of the market so as to develop the enterprise. An enterprise can ensure its development and interests only through meeting the market demand, that is to say, meeting the demand of consumers. For consumers, saving the cost, choosing high cost performance and satisfying their desire are the basic appeal, which, sometimes, may go against the demand of the board of directors. So the work of brokers contributes greatly to the success of an enterprise. 

A recent example impressed me most. Luo Yonghao, a former English teacher in China, began to engage in the business of mobile phones. He released the first mobile phone t1 in May this year and achieved a big success. He mentioned such a conflict in the launch event of his mobile phones. He believed that an aesthetically outstanding mobile phone should not change desktop wallpaper, and that placing the photos of his wife and kid on the desktop was an aesthetic mistake. Meanwhile, he also held that mobile phones with 800w pixel were more mature in imaging technology than those with 1300w pixel. However, forced by the market demand, the mobile phones launched this time adopted 1300w pixel and their desktop wallpaper was also changeable. He expressed that once his enterprise grew big enough, he would be loyal to his own idea, because he believed that the aesthetical standard and user experience of the public should be guided by the elite. I quite agree with this idea, and believe this is one of the marvelous measures of a broker. We have been consistently guided by Apple since its birth. In contrast, HTC and Samsung have never surpassed the position of Apple even though they directly target for the market. An enterprise can be called successful if it is able to satisfy the needs of its users, but it can be called great only when it is able to guide the consumers. 

Let’s see another example in my daily life. I have a good friend in Nanjing and his family runs a snacks factory. When he was a child, the factory had an accident and caught fire, but their insurance company didn’t want to shoulder the responsibility. Judging from the characteristics of China’s insurance, there is inducement and soil for insurance companies to infringe the rights and interests of insurance consumers. For instance, insurance products are very complex, the insurance market has information asymmetry, and the status of the two sides are not equal. Relative to the insurance company, insurance consumers are at a weak position. At this time, a professional broker should act on behalf of the spirit of contract, and solve problems in accordance with the contract. They shouldn’t seek profits by taking advantage of consumers’ weakness. Such behaviors will only bring negative effects to the insurance industry, and do harm to the reputation and development of the enterprise or even the whole industry in the long run.