In latent conflict, there's no outright conflict but there's a potential for several sources of conflict, such as interdependence, differences in goals and priorities, bureaucratic factors, incompatible performance criteria and competition for resources.
As organization differentiate, activities of different subunits are interdependent. Each subunit develops a desire for autonomy and begins to pursue goals and interests that it values over the goals of other subunits. Since the activities of the subunits are interdepedent, subunits' desire for autonomy leads to conflict between groups.
Differences in subunit orientation affect the way each division views the world and cause each subunit to pursue different goals that are often inconsistent or incompatible. The potential for conflict arises once their goals become incompatible. This is because the goals of one subunit may affect the ability of anothe to achieve its goals.
Latent conflict may also arise by the way which task relationships develop in organizations. Conflict can occur because of status inconsistencies between different groups in the organization's bureaucracy. One of the bureaucratic conflict occurs between staff and line functions. A line function is directly involved in the production of the organizaion's outputs while staff functions advise and support the line function such as personnel and accounting.
In most organizations, people in line functions view themselves as the critical organizational resource and people in staff functions as secondary players. Thus, they always uses its status a the producer of goods and services to justiry putting its interests ahead of the other function's interests. This results in conflict.
Sometimes goals incapability are not the souce of conflict. However, it is because of the way organization monitor, evaluate and rewards different subunits. The way an organization designs its structure to coordinate subunits can affect the potential for conflict as well.
Other than thses, conflict may arise because of the limited resouces as well. When resources are limited, choices aobut the allocation of them have to be made and the subunits will have to compete for their share. Divisions will have to fight to increase their share of funding because the more funds they can obtain, the faster they can grow.
Perceived conflict is the second stage of Pondy's model. Perceived conflict begins when subunits perceives that its goals are being thwarted by the actions of another group. Each group searches for the origin of the conflict and constructs a scenario that accounts for the problems that it's experiencing with other subunits. For example, the manufacturing function suddenly realize that the cause of many of its production problems is defective inputs. After some investigation, they found that the materials management always buys inputs from the lowest-cost sources of supply and makes no attempt to develop the kind of long-term relationships with suppliers that can raise the quality and reliability of inputs. So, the manufacturing will perceive the materials management as thwarting its goal and interests.
In felt conflict stage, subunits in conflict quickly develop an emotional response toward each other. Cooperation between subunits and organizational effectiveness will fall if conflict arises. The conflict arises as the different subunits in conflict battle and argue their points of views. The real problem may be relatively minor, but it will turn into a big conflict which become more and more difficult to manage if we didn't resolve it. It will quickly reach the fourth stage, which is the manifes conflict if the conflict is not resolved.
In the manifest conflict stage, one subunits gets back at another subunits by attempting to thwart its goals. Open aggression between people and groups is common. There are many stories and myths in organizations about board-room fights in which managers come to blows as they seek to promote their interests. Infighthing in the top-management team is very common as managers seek to promote their own careers at the expense of others. Once manifest conflict occur, organizaional effectiveness will suffer because the intefration and coordination between managers and subunits will break down. Managers have to avoid conflict from reaching this stage.
If the sources of the conflict was not resoved, it will cause conflict to occur again, but may be in another context. Every stage of conflict leaves a conflict aftermath which affects they way the parties percieve conflict and react to future conflict stages. The aftermath will promote good future working relationships if a conflict is resolved before it gets to the manifest-conflict stage. However, if the conflict wasn't resolved, the aftermath will be worse future working relationships.