4 bargaining power of buyers bargaining power of

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4. Bargaining power of buyers Bargaining power of buyers can have a positive or negative effect on the industry environment. Buyers are powerful when they purchase a large portion of industry’s total output, product sales accounts for significant seller annual revenue, low switching cost to other industry product, and when industry products are undifferentiated. The bargaining power of buyers is low in this industry, as customers are attracted by the low prices. As long as Dollarama is able to maintain its merchandise at a low price it will keep its loyal clientele. If Dollarama increases its prices compared to its competitors, it will then certainly see a decrease in sales, as its customers will leave for its competitors, such as "We are - the relationship you can count on" - Chiu & Weisserman, LLP
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Chiu & Weisserman LLP Dollar tree. With the recent recession, Dollarama was able to expand its customer base, as more people were decreasing their purchase of higher margin products for lower margin products, in order to save money. 5. Bargaining power of suppliers Bargaining power of supplier can also affect an industry just as the buyers can. Suppliers are powerful when there are few large companies and more concentrated than the industry to which they sell. When there are no substitutes, supplier’s goods are critical to buyer’s success. High switching costs due to effectiveness of supplier’s products,and threat of forward integration are factors to consider. At this time it is difficult to assess the bargaining power of the suppliers as all products that arrive from China, and the lack of information for the agreement that Dollarama has with its supplier(s). For example, if it was known that one of Dollarama’s important suppliers’ agreements has ended, then we can assume that the power of that supplier can be high, as it can freely negotiate with one of Dollarama’s competitors, and threaten to drive up Dollarama’s merchandise prices. But at this moment, it is difficult to analyse the bargaining power of suppliers with the available information. Even though new competitors are entering the market every day, we believe that Dollarama would not be likely to be threatened by the new force. This is so, because not only do we observe an increase in store counts, its share price has also been increasing since its IPO date two years ago. Thus, with the increase number of stores, Dollarama can offer an easier access to its clientele to its various products. However, we have to bear in mind that with the increasing competitiveness, it would be more difficult for Dollarama to adjust its price upward since most of its customers are marginal buyers. "We are - the relationship you can count on" - Chiu & Weisserman, LLP
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Chiu & Weisserman LLP PART TWO "We are - the relationship you can count on" - Chiu & Weisserman, LLP
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Chiu & Weisserman LLP The Company " Dollarama Inc., through its subsidiaries, owns and operates a chain of dollar stores in Canada. Its dollar stores offer a range of private label and branded products, including everyday consumer products, general merchandise, and seasonal items. As of January 29, 2012, the company
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