PORTER’S 5 FORCES - SUPPLIER POWER Flashcards
What is the power of suppliers
The ability of a business’s suppliers to influence an organisation, determined by the number of providers of the goods or services required in the production process.
For example:
A dairy farmer wouldn’t have much influence/ power over a large supermarket chain like Tescos. As there are hundreds of dairy farmers across the UK that Tescos can pick from. As Foxconn is one of the only manufacturers of the microchips that go in Iphones and other Apple products, Apple isn’t going to have much power over Foxconn if they decide to put their prices up
What is the strategy for supplier power
Marketing - Diversify product range
Finance - Increase gearing (borrowing) to reduce need to buy on credit
Operations - Build relationships with new suppliers/ increase amount of buffer stocks
