Another potential to manage their resource efficiency and

Topics: BusinessManagement


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Last updated: May 23, 2019

Another Force is the Power of Supplier. This does not onlyrelate to actual materialistic suppliers, but in many cases, reflects on otherparts of the supply chain such as supporting services, financial resources andknow-how. According to Wilkinson (2013),strong suppliers negatively affect the industry by raising prices, evenlowering product quality and controlling product availability on top of that.Meanwhile weak suppliers make an industry less competitive and more profit can bemade. In the automotive industrythe companies are highly dependent on their suppliers.

BMW Group (2017) states on their homepage, that their suppliernetwork makes a major contribution to their success. They are working witharound 13,000 suppliers in 70 different countries.Being as independent BMW has to identify and analyse potentialsustainability risks throughout the supply chain in order to react properly.Since 2009 BMW Group works together with their suppliers to assess theirsustainability management. This highly reduces the risk of major problems withthe suppliers.

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On top of that, the BMW group collaborates with their suppliersto strengthen their potential to manage their resource efficiency and offering trainingcourses to their employees. This management strategy leads to a strong boundbetween BMW and their supplier and reduces the risk of the Supplier to misusetheir power by stopping to deliver parts for example and harm the industry.There is another problem with the suppliers, that can occur soon.

All these innovative technologies rising up for the automotive industry aregetting more and more difficult to replicate, therefore only a few suppliersremain. Those can demand horrendous prices for their products, and BMW Grouphas to manage this to remain in competition with the other big brands, such asMercedes and Audi. .1.1   Buyer PowerThe power of buyer is another force which shapes the competitivestructure of an industry. As Wilkinson (2013)said, the bargaining power of buyers in an industry has a massive impact on thecompetitive environment and profit making.

He further declared, that strong buyersforce the industry to better product quality, lower prices and improvedservices. All these components reflect costs for the seller, which lowers theprofit outcome.Meanwhile on the other hand, a weak buyer is satisfied withthe seller´s price and quality and has low claims. This results in a less competitiveindustry and increases the profit potential dramatically because lessexpenditures have to be made.Wilkinson (2013) worked out an overview as well how to spota High or Low Buyer Power:

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