Bargaining power of suppliers
Bargaining Power of Suppliers
The suppliers bargaining power in the force model generally reflects the massive pressure
exerted by the suppliers in the Migros organization through adoption of tactics such as reducing
the products quality, or reducing the availability of the product in the market. It is pertinent to
note that when the suppliers possess high bargaining power, it adversely affects the Migros
organization. More importantly, high supplier bargaining power rises the industry competition
thus lowering potential profits and benefits for the Migros. Weak supplier bargaining power
makes the industry more profitable as well as high growth potentiality. However, Migros should
enhance its position against the high supplier bargaining power through decreasing dependency
on few suppliers since it will escalate the price sensitivity………..argues that developing strong
long-term relationship with different suppliers improves the Migros supply chain efficiency and
lowers the bargaining power of suppliers. Similarly, product diversification and redesign greatly
help the organization reduce supplier’s power.
Bargaining Power of Buyers
The buyers’ bargaining power comprises of the pressure that buyers exert on the Migros
organization to get quality products within brackets of affordable encompassed by excellent
customer services. In broader context, this buyers’ force influences Migros potential to achieve
the business objectives. Without a doubt, buyers’ strong bargaining power reduces organization
profitability as well as making the product highly competitive whereas weak buyer power surge
the growth opportunity and profitability for Migros firm.
Reveals that high market
knowledge, and consumers’ price sensitivity enhances power of customer bargaining.
Nevertheless, some factors like lowering buyer concentration, lower market knowledge, high
purchasing and switching costs of customized products in relatively small volumes have
inferenced to reduce the buyers bargaining power.