You know, who are our suppliers?
Well, the biggest suppliers, are the suppliers of the chip and
the operating systems.
So this is Intel and Microsoft.
And if we are in a Windows based PC environment,
guess who has all the bargaining power?
Microsoft and, to a degree, Intel.
So if we're a PC manufacturer, those sellers
are gonna have more bargaining power, because they have near monopoly power.
It's always an option for us as a computer maker,
to use a different operating system or a different chip set, but
the marketplace will often times view that as an inferior product.
Microsoft Office and Intel chips are sort of viewed as the industry standard.
And so that means that those companies have a lot of bargaining power
in that supply chain.
What's another example?
We might think of groceries.
So if we think, as trends have changed over the last few years.
More and more consumers are interested in healthy,
organic, even locally sourced produce, fruits and vegetables, right?
So this is given rise to companies like Whole Foods.
Other fortune 500 retailers who really cater to that segment.
So if take Whole Foods for an example lets think of their supply chain.
They have to buy their organic spinach from somebody, right.
So if there are many,
many suppliers, then those suppliers are not gonna be concentrated and
they won't really have power over setting the price on Whole Foods is negotiating
with them on procuring that spinach to sell in their stores.
On the other hand, if there's one particular supplier that
supplies a lot of Whole Foods produce, so for example Earthbound Farms.
That's a big, large, organic produce producer.
And they might wield a little more power than the smaller localized organic
farms and that sort of thing, simply because, depending on the market,
they might be a little more concentrated and supply a greater percentage of
the produce that's on Whole Foods or some other store's shelves.
Again, all of these are ways in which sellers bargaining power might be impacted
and if sellers are not concentrated, if firms have many alternatives and
sellers are just sort of selling commodity products, or
sellers do not have the ability to do price discrimination.
Their bargaining power is gonna be lower.
Which is good for the industry.