Porter 2 - management of suppliers is important to maintain...

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2) The Bargaining Power of Suppliers The 2 nd force in Porter’s Competitive Force Model, the bargaining power of buyers discusses of supplier’s ability to put firms on pressure. Suppliers provide materials to the firm, thus suppliers can have certain powers over the firm. The amount of suppliers in a market affects the supplier’s bargaining power. If there are many suppliers in the market, the supplier’s bargaining power is low and vice versa. For example, if there are many firms supplying beef in a geographical area, the hold of each firms to control the price of beef they sell to McDonald would be more limited. However it may not always be possible to switch from one supplier to another always, thus if the switching cost between suppliers, are high, then the suppliers would have a higher bargaining power. McDonald has stores worldwide, therefore, good
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Unformatted text preview: management of suppliers is important to maintain its brand image and price level of the food it serves. It may not be cost efficient to fly beefs or poultries half the globe away. The usage of internet can help McDonald manage its supply chain more efficiently. Not only does it lowers administration cost between McDonald and its suppliers, it allows McDonald to track the performance of its suppliers relative to the performance of other potential suppliers. By doing such comparison, McDonald can then evaluate on keeping their current suppliers or changing suppliers to deliver better value for their customers and increasing profits for the company. Internet allows McDonald to use separate suppliers to supply different stores worldwide and yet still manages them efficiently in one location....
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This note was uploaded on 11/01/2010 for the course MANAGEMENT 333 taught by Professor Mark during the Spring '10 term at Taylor's.

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