Assignment
Resource: Achieving Supply Chain Integration, Ch. 6
Since the team has aligned purchasing and logistics, and stabilized disruptions in the supply chain for Small Molecule, the executive leaders are now interested in capitalizing upon those improvements. Small Molecule's new products will be launched in South America. The executives have asked the team to come in to explain the processes already taken. They want help creating a solid supply chain strategy for their South America launch considering how to leverage Porter's Five Forces.
Prepare a 4 slide visual presentation for the executives with speaker notes that explains how Porter's "Five Forces" are used to develop the supply chain strategy.
Determine how these Five Forces work together to evaluate growth potential and develop the overall strategy.
Cite references consistent with APA guidelines.
Just talk about the buyers power
Buyer Power
When the bargaining power of buyers is high, they can demand price concessions from firms in an industry. Often, when industries are characterized as "high competitive rivalry," buyers have more power relative to sellers. Buyers also have more absolute power when there are few buyers relative to sellers, or when buyers purchase large volumes. Generally, as buyer power decreases, firms can charge higher markups and improve their profitability. An example of weak buyer power is movie theater customers. When customers go to see a movie-assuming they haven't sneaked in a snack-they have no source of beverage or food other than from the movie theater concession stand. As a result, the movie theater can raise prices to an amount that a consumer would not typically pay.
Examples of industries with high buyer power are somewhat uncommon when the public sector is not the buyer. However, some examples of industries with concentrated buyer power can be found in agriculture. For example, 50 percent of all tobacco grown is purchased by three companies. Similar concentration of buyer power is found in the cocoa beans market, or in a coal mining town where the mine is the only buyer of labor.