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EXAM1-QUESTIONS39-73

EXAM1-QUESTIONS39-73 - How do suppliers influence...

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1. How do suppliers influence organizations and how do organizations influence suppliers (i.e., 3 ways to establish and maintain a positive relationship with suppliers)? 1. Vertical integration: buy your supplier 2. Long term contracts in which you lock in the supply at a lower price 3. Reducing the number of suppliers. This allows you to give larger contracts to suppliers. 2. What is the law of the marketplace? Law of the marketplace: companies that cannot compete will be faced with either changing their product line or being eliminated 3. What are the five forces of competition and how does each influence the level of competition within an industry? 5 forces of competition from a top manager perspective Rivalry among organizations: competing for market share Threat of New Entrants Threat of Substitutes Power of Suppliers Power of Customers:diversify customer share 4. What are the barriers to entry into an industry? Government policy Capital requirements Brand identification/loyalty Cost disadvantages Distribution channels 5. What happens when a new entrant comes into the market/industry? Generally increase product supply, seek to gain market share, and often possess substantial resources. Effects are prices will be forced down and resource costs will be inflated. This will reduce profitability and increase competition. 6. What determines if a supplier is powerful? Customer?
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If the buyer has few other resources of supply or if the supplier has many other buyers. A powerful supplier can raise prices, reduce quality, and not deliver on time. A customer is determined powerful if they make large purchases or if they can easily find alternative places to buy. 7. How do powerful suppliers and customers influence organizations? Powerful suppliers can influence the organization by reducing an organization’s profits, particularly if the organization cannot pass on price increases to its customers. Powerful customers can drive the price down, force you to increase quality and service, which can cut into the bottom line, profitability. 8. How do substitutes affect an industry? Substitutes affect an industry by limiting an industry’s growth potential. Unless it improves the quality of its products or launches an effective, aggressive marketing campaign. Furthermore, the substitute could make the existing product obsolete. Substitutes can affect an organization’s profitability.
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