The document discusses the bargaining power of suppliers. It notes that suppliers have strong bargaining power when they are the sole source of an input vital to a company's products or services. In this situation, suppliers can demand premium prices or restrict access to goods. However, suppliers have weak bargaining power when there are many potential suppliers of an input and buyers can demand low costs. The trend of global outsourcing has generally reduced supplier bargaining power by giving companies access to a global network of potential suppliers.
The document discusses the bargaining power of suppliers. It notes that suppliers have strong bargaining power when they are the sole source of an input vital to a company's products or services. In this situation, suppliers can demand premium prices or restrict access to goods. However, suppliers have weak bargaining power when there are many potential suppliers of an input and buyers can demand low costs. The trend of global outsourcing has generally reduced supplier bargaining power by giving companies access to a global network of potential suppliers.
The document discusses the bargaining power of suppliers. It notes that suppliers have strong bargaining power when they are the sole source of an input vital to a company's products or services. In this situation, suppliers can demand premium prices or restrict access to goods. However, suppliers have weak bargaining power when there are many potential suppliers of an input and buyers can demand low costs. The trend of global outsourcing has generally reduced supplier bargaining power by giving companies access to a global network of potential suppliers.
bargaining
power
of
suppliers?
Bargaining
power
of
suppliers
If
one
or
a
few
suppliers
A
suppliers
bargaining
A
suppliers
bargaining
control
a
valuable
good
posiGon
is
especially
strong
posiGon
is
especially
weak
necessary
for
the
products
or
when:
when:
services
provided
by
the
rm,
The
supplier
is
the
sole
There
are
many
suppliers
the
supplier
will
have
source
of
input
for
a
parGcular
input
considerable
power.
The
input
is
vital
to
the
Buyers
can
demand
low
organizaGon
cost
(e.g.
large
contract
volume)
E.g.
G.D.
Searle
that
Such
a
supplier
is
likely
to
manufactured
NutraSweet
E.g.
Dell
computers,
Boeing
command
a
premium
price
or
(more
than
500
suppliers)
even
limit
access
to
the
goods.
29 30
Few
large
Global
outsourcing
suppliers
in
the
industry
for
an
The
development
of
a
global
important
input
Threats
(from
global
network
of
suppliers
to
keep
outsourcing):
Reduce
job
prices
down
and
quality
good
opportuniGes
in
home
country
[higher]
[lower]
Bargaining
Suppliers
can
Global
outsourcing:
the
Opportuni.es
(from
global
prots
for
power
of
drive
[up]
purchase
of
inputs
from
outsourcing):
New
business
companies
in
[down]
the
overseas
suppliers
or
the
that
industry
suppliers
input
price
model:
brokers
producGon
of
inputs
abroad
to
(intermediaries)
to
help
global
lower
producGon
costs
and
companies
locate
suitable
improve
quality
or
design
overseas
suppliers
(e.g.
Li
&
Fung
)
[cheap]
[expensive]
inputs
The trend of global outsourcing implies that the bargaining power of How
to
deal
with
supplier is _____ powerful
suppliers?
31 A. great B. small
32