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Professor, in porter five forces we have bargaining power of supplier so I want to confirm that it can be us to our customer like if bargaining power of supplier is high so we will be in power so we can demand whatever price?
Or does it mean to our suppliers only like you have mentioned in notes? Like bargaining power of supplier is high so it means that we can not change supplier and have to pay whatever they demand.
A company has suppliers and customers and when applying Porter’s 5 Forces you generally have to stay with that company and look at the forces on it. Once you begin arguing that we are a supplier to our customers the analysis and terminology becomes confused.
The situation might not be symmetrical. For example, we might have only one customermso their bargaining power with us is high….probably. This could be a misreading if at the same time we were their only supplier for a certain component. Alternatively if we were one of their many possible supploers they would indeed have high bargaining power.
Right professor.
So professor, If we think of our supplier so having high bargaining power of our supplier will mean more competition or less competition for our industry?
Like if we are a car manufacturer and there are 4 more competitor, in total we are 5 car manufacturer. There is only one supplier of raw material for car manufacturing. It means that in our car industry bargaining power of supplier is high but I am unable to understand how it will define competition in industry?If we are one of 5 car manufacturers and we all share one supplier of material, then that supplier can exercise high bargaining power (assuming we do not collude with our competitors).
Industry competitiveness is a separate matter. Here we are competing with 4 others. How competitive they are depends on their size, ambition, efficiency etc.
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