As we said firms my encounter some quality and

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As we said, firms my encounter some quality and credibility problems which are caused by suppliers. Sometimes suppliers can exert their power by reducing the quality of their products or give buyers their products later. If these two situations happen, the firms as buyers may suffer decline of their sales, loss of their customers, and hurt of their brand images. In the end, their profits may be decreased. As a manager, there will be two main measures which can be taken to solve these kinds of problems. One measure is working on building and keeping good relationships with suppliers. The other measure is making some horizontal acquisitions, especially back acquisition.
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In order to reduce the power or influence of suppliers, having a good relationship with suppliers is necessary for one firm. This is an emotional approach which is helpful to firms. If one dealer has a good relationship with its suppliers, it can get high-quality products; also, it can get products quickly when their suppliers create one new product. As a result, it will be much helpful there can be little negative influence from suppliers on dealers. Also, it can help dealers gain some competitive advantages and build a good brand image. Making some horizontal acquisitions is a good measure to prevent the power of suppliers as well. Especially, some dealers can do some back acquisitions so that it expands its business into its supply chain. If one dealer firm can do it, it can be independent in some extent and do not rely on its suppliers. That means suppliers cannot influence on dealer again. But, this measure needs large quantity of capital, there are only a few forms can do this. So, it is not the first choice when dealers wan to solve problems caused by suppliers. Bargaining Power of Buyers From the The Five Force part, it have been pointed out that bargaining power of buyers can be a critical force which can influence on firm’s business in the motor vehicle industry. For this part, the biggest and most important is how to keep and attract buyers. As managers, there may be two main measures can be taken: build a good brand image and improve the quality of products. A good brand image can be much helpful for dealers to attract more customers. To improve the image, firms can do three things. The first on is making some successful commercials. This is the easiest way to make customers know about one company. The second one is to hold some popular activities, like donating, discount, and interviews with customers.
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This way let more people know the dealer firm and make more people be interested in the firm. Finally, dealers should pay much attention on improving their customer service. This is the most effective way to keep some loyal customers of the firm. If one dealer firm can keep and attract a large quantity of customers, it can gain a core competitive advantage in this industry.
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  • Fall '12
  • Pantel
  • Automobile, motor vehicle dealers, Motor Vehicle Dealers Industry

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Christopher Reinemann
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