(1)

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