The buyer's bargaining power tends to be relatively higher than supplier's bargaining power in which of the following circumstances?
Answer(s): D
Buyer power gives customers/consumers (buyers) the ability to squeeze industry margins by pressuring firms (the suppliers) to reduce prices or increase the quality of services or products offered.There are four major factors to consider when determining the bargaining power of buyers:1. Number of buyers relative to suppliers: If the number of buyers is small relative to that of suppliers, the buyer's power will be stronger.2. Dependence of a buyer's purchase on a particular supplier: If a buyer is able to get similar products/services from other suppliers, buyers depend less on a particular supplier. Therefore, the power of the buyer would be greater.3. Switching costs: If there are not many alternative suppliers available, the cost of switching is high.Therefore, buyer power would be low.4. Backward Integration: If the buyer is able to integrate or merge suppliers, the buyer has greater bargaining power over the existing suppliers.When is Bargaining Power of Buyers High/Strong?There are fewer buyers relative to that of suppliersThe switching costs of the buyer are lowIf the buyer is able to backward integrateThe buyer purchases product in bulk (high volume)The buyer is able to get similar product/services from other suppliers The buyer purchases the majority of the seller's products Several substitutes are available on the marketProduct is not differentiated
CIPS study guide page 54-56What is the Bargaining Power of Buyers?
Which of the following is the most appropriate pricing arrangement in contracts where major inputs are commodities?
Answer(s): A
In contracts which have major commodity input, the price is determined by market forces with no individual supplier or buyer able to influence it significantly. Prices are much more variable even within long term contracts and seeking a fixed price would create financial risks for both the buyers and the suppliers. It is often intelligent to agree a contract price adjustment mechanism to allow for market price changes so both sides share risk.
Which of the following are common forms of collaborating approach in Thomas-Kilmann conflict resolution model? Select THREE that apply.
Answer(s): A,C,E
Collaborating is both assertive and cooperative. When collaborating, an individual attempts to work with the other person to find a solution that fully satisfies the concerns of both. It involves digging into an issue to identify the underlying concerns of the two individuals and to find an alternative that meets both sets of concerns. Collaborating between two persons might take the form of exploring a disagreement to learn from each other's insights, resolving some condition that would otherwise have them competing for resources, or confronting and trying to find a creative solution to an interpersonal problem.
Collaborative approach in negotiation not only can fully satisfies the concerns of both, but also ensure that neither party will seek to be opportunistic in later time during the life of the contract. Is this statement true?
Answer(s): B
Integrative, interest-based negotiation can facilitate constructive, positive relationship and establish contracts between parties on a foundation of goodwill. It is important to note it can only facilitate these positive outcomes, it does not guarantee that the other party will not seek to be opportunistic at a later time during the life of the contract. Previous knowledge of the behaviours of the other party regarding honouring contractual and other commitments will be useful here in predicting long- term outcomes, not ensuring that they will not leverage their advantages.
When prices of input materials increase, supply curve shifts to the left while demand remains stable. The shift of supply will tend to cause which of the following?
The case in the question is illustrated as below:The equilibrium price initially at P0 with quantityQ0, when supply curve shifts to the left, it will converge with demand curve at new equilibrium point with price P1 and quantity Q1. As you can see from the graph, P1 is greater than P0 and Q1 is smaller than Q0.
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