CHAPTER 6

MARKET AND BARGAINING

POWER
6.1 Market Forces in Food Industry
6.2 Marketing Agreement and
Law/Regulation
6.3 The Bargaining Power of
Associations/Cooperatives
6.1 FIVE FORCES IMPACTING WHOLE FOODS
MARKET’S BUSINESS ARE AS FOLLOWS
Competitive rivalry or competition (strong force)
Bargaining power of buyers or customers (strong force)
Bargaining power of suppliers (moderate force)
Threat of substitutes or substitution (strong force)
Threat of new entrants or new entry (strong force)
6.2 HOW IT CAN AFFECT AGREEMENT??
Anti-competitive agreements

(a) sharing of price information (which could fall within the conduct deemed
to have the object of significantly preventing, restrict or distorting competition
as exchange of current price information may facilitate price fixing and thus
would be deemed to be significantly anti-competitive);
(b) sharing of non-price information such as standards and new technologies
(the significant effect of which would normally be assessed on a case to case
basis);
(c) restrictions on advertising imposed on competitors;
(d) a standardization agreement that limits the ability of enterprises to set
new standards or to sell new products or serves as a barrier to new entrants.
EXAMPLE
Some people believe that the realities of the marketplace are sometimes more
complex than this or similar theories of competition would suggest. For example,
oligopolistic firms may achieve economies of scale that would elude smaller
firms.
Again, very large firms, whether is monopolies or oligopolies, may achieve
levels of sophistication
Food industry need to follow any agreement that government have done.
Government control price of product. So, Food industry cannot monopoly the price
in market. So, this is how agreement can affect market force in industry.
HOW IT AFFECT IN LAW OR REGULATION
The Competition Act, 2010 and the prohibitions
The Malaysian Competition Act 2010 (“Act”) has come into force since 1 January
2012. What does the competition law mean to most companies and businesses in
Malaysia?
The Act prohibits:
(a) anti-competitive agreement which means agreement (a horizontal or vertical
agreement) which has the object or effect of significantly preventing, restricting or
distorting competition in any market for goods or services in Malaysia[1]; and
(b) any conduct by enterprises which amount to an abuse of a dominant position in any
market for goods or services in Malaysia.[2]
Customs Regulations and Contact Information
Malaysia follows the Harmonized Tariff System (HTS) for the classification of goods.
Any queries regarding classification of import and export goods should be made to the
particular customs station of which the goods are to be imported.
For more information, please see the Royal Malaysian Customs website.

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http://ap.fftc.agnet.org/ap_db.php?id=566
6.3 HOW IT AFFECT IN BARGAINING POWER OF
ASSOCIATION?
BARGAINING POWER OF SUPPLIERS
When suppliers have bargaining power, they can apply pressure on a company by
charging higher prices, adjusting the quality of the product or controlling availability
and delivery timelines. Within the five forces framework, there is an understanding
that when suppliers have this bargaining power, they can affect the competitive
environment and directly influence profitability for the company.
EXAMPLE: FAST FOOD INDUSTRY
Suppliers play a key role in the value chain of the fast food
industry. Chain restaurants rely on suppliers for food items,
packaging, napkins, as well as items like plates and
spoons.
The same suppliers may be serving competing chains in an
industry. This means that the power of these suppliers
needs to be assessed by any company looking to enter the
industry.
A strong supplier may be able to effect profitability, quality
of products and force companies to raise prices.
THE BARGAINING POWER OF CUSTOMERS
It affected performance to a moderate extent. This is due to the many
products in the market, making customers focus on cheap products.
The challenge is to lower their prices by this force so as to maintain
these customers.
Customers in the market are so powerful to an extent of pushing a
firm to lower the price of a product. The bargaining power of
suppliers affected performance to a great extent.
EXAMPLE : As more dairy industries enter in the market, the milk suppliers
target the best buyer of their milk. In this case, they indirectly require company
to buy milk at a given low price. Describes that suppliers in the market
determines the price and quantities that a firm is going to buy a product.