How seller-suppler partnerships can create competitive pressures. In more and more industries, sellers are forging strategic partnerships with select suppliers in efforts to reduce inventory andlogistics costs, speed the availability of next-generation components, enhance the quality of the parts and components being supplied and reduce defect rates, and squeeze out important cost savings forboth themselves and their suppliers.
Dell Computer has used strategic partnering with key suppliers as a major element in its strategy to be the world´s lowest-cost supplier of branded PCs, servers,and workstations. Because Dell has managed is supply chain relationships in ways that contribute to a low-cost, high-quality competitive edge in components supply, it has put enormous pressure on itsPC rivals to try to imitate its supply chain management practice.
Whether seller-buyer relations represent aweak or strong competitive force depends on whether some or many buyers have sufficient bargaining leverage to obtain price concessions and other favorable terms and conditions of sale, and the exentand competitive importance of seller-buyer strategic partnership in the industry.
How Buyer Bargaining Power Can Create Competitive Pressures. As with suppliers. The leverage that certain types ofbuyers have in negotiating favorable terms can range from weak to strong. Individual consumers, for example, rarely have much bargaining power in negotiating price concessions or other favorable terms withsellers; the primary exceptions involve situations in which price haggling is customary, such as the purchase of new and used motor vehicles, homes, and certain big-ticket items like luxury watches,jewelry, and pleasure boats. For most consumer goods and services, individual buyers have no bargaining leverage-their option is to pay the seller´s posted price or take their business elsewhere….