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Q1 in bpp kit.
Sir this question’s answer part a for bargaining power of customers it says NESTA’s customers have strong baragining power but then the factors mentioned below it seem more to be explaining the bargaining power of suppliers especially the last one.” NESTA’s customers have strong bargaining power. This is due to a number of factors: ? ? ? ? There is a low profit margin on the products which provide an incentive for buyers seeking lower purchasing costs. NESTA sells unbranded commodity goods and so it would be easy for the buyer to switch to an alternative supplier. The switching costs are therefore low. Standard, undifferentiated products can be easily provided by other suppliers. Buyers can therefore choose which supplier to use and can play the companies off against each other in order to obtain the best terms of supply. Buyers are likely to be very price sensitive and so will invest a lot into trying to ensure the best terms of supply.
Am I wrongly interpreting it?
Nesta is a supplier to its customers and the answer is looking at the situation form the point of view of Nesta’s customers. The buyers of Nesta’s products have a low profit margin themselves and so they will be keen to obtain low prices and good terms from their own suppliers, of which Nesta is one.
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