Bargaining power of supplier Essay

Bargaining spot of supplier is also cognise as the amount of control your suppliers have over the harm of goods you get dictates whether this area is an opportunity or threat. This is driven by the number of suppliers of to each one essential gossip uniqueness of their product or service relative size and strength of the supplier, and hail of switching from one supplier to some former(a). In this case, Minbaochong Sdn Bhd is the supplier of octonary cardinal, the largest chain of twenty-four hour foodstuff stores in Malaysia. MinBao marker is one of the most popular brands of start in Malaysia which supposed(p) to give Minbaochong Sdn Bhd a blotto bargaining power. However the tremendous skid made by Kelvin Tan, the sales manager of Minbaochong Sdn Bhd, closed a deal with octonary Eleven by offering them a charge concession and al let looseing them to offer a 400 gram loaf of MinBao bread for RM3.00 instead of its recommended retail price of RM3.20. This strategy ca uses sales of MinBao bread in supermarkets and other outlets declined significantly and resulted octad Eleven is now accounted for one-third of Minbaochongs sales. Further, the company already burdened by debt acquired in its recent tailspin off was on the edge of bankruptcy lower the bargaining power of Minbaochong Sdn Bhd. The bargaining power is now with Eight Eleven as Eight Eleven controlling one-third of Minbaochongs sales and even Minbaochong Sdn Bhd end the contract and stop supplying bread to Eight Eleven, it does not arrogate much to Eight Eleven because they have its own house brand or there is greater presence of substitute inputs for Eight Eleven means the result to which it is possible to switch to another supplier for an input or a close substitute, thus it results the bargaining power of suppliers, Minbaochong Sdn Bhd puzzle lower.Competitive contestThe enduringness of rivalry among competitors in an industry refers to the extent to which firms within an indu stry put pressure on one another and limit each others profit potential. Competitive rivalry affects the private-enterprise(a) environment and influences the ability of existing firms to achieve profitability. utmost intensity of rivalry means competitors are aggressively targeting each others markets and aggressively pricing products. This represents potential be to all competitors within theindustry. High intensity of competitive rivalry can make an industry more(prenominal) competitive and decrease profit potential for the existing firms. On the other hand, low intensity of competitive rivalry makes an industry less competitive and increases profit potential for the existing firms. In this case, the competitive rivalry is low because competitors have unequal size. Eight Eleven was the largest chain of twenty-four hour grocery stores scattered all over Malaysia. By having numerous branches of grocery store leads to the great advantages against other competitors. Besides that, Eight eleven had a strong strategy that preventing them to receive any threats from rival. Every Day poor Price Although the product selling by Eight Eleven is overleap of differentiation and Eight Eleven have high fixed cost due to numerous branches in Malaysia, but Eight Eleven is well known among the market and able to offer a lower price compare to other grocery stores due to large number of stocks held by Eight Eleven. This will eventually enhance the brand loyalty of Eight Elevens customer as customer switching costs are high. Hence the competitive rivalry is low due to Eight Eleven is the main driver of the grocery stores and had established a strong market base in Malaysia.