Bargaining power of supplier Essay

Bargaining power of supplier is also known as the amount of underwrite your suppliers relieve oneself everywhere the charge of goods you purchase dictates whether this area is an opportunity or threat. This is driven by the number of suppliers of each essential input uniqueness of their increase or service relative size and strength of the supplier, and cost of switching from one supplier to an otherwise. In this case, Minbaochong Sdn Bhd is the supplier of Eight xi, the largest chain of twenty-four minute grocery stores in Malaysia. MinBao brand is one of the most popular brands of bread in Malaysia which supposed to give Minbaochong Sdn Bhd a strong bargaining power. However the formidable mistake made by Kelvin Tan, the sales manager of Minbaochong Sdn Bhd, closed a deal with Eight Eleven by offering them a expenditure concession and allowing them to offer a 400 gram loaf of MinBao bread for RM3.00 instead of its recommended retail price of RM3.20. This strategy causes sa les of MinBao bread in supermarkets and other outlets declined significantly and resulted Eight Eleven is now accounted for triad of Minbaochongs sales. Further, the company already burdened by debt acquired in its recent spin 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 terminate the contract and stop supplying bread to Eight Eleven, it does not affect much to Eight Eleven because they have its own house brand or there is greater presence of substitute inputs for Eight Eleven means the extent to which it is possible to switch to other supplier for an input or a close substitute, thus it results the bargaining power of suppliers, Minbaochong Sdn Bhd become lower.Competitive oppositionThe intensity of rivalry among competitors in an patience refers to the extent to which firms within an industry put pressure on one another and limit each others profit potential. Competitive rivalry affects the competitive environment and influences the ability of breathing firms to achieve profitability. High intensity of rivalry means competitors are sharp targeting each others markets and aggressively pricing products. This represents potential costs to all competitors within theindustry. High intensity of competitive rivalry can make an industry more competitive and return 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 preventi ng them to receive any threats from rival. any Day Low Price Although the product selling by Eight Eleven is lack of differentiation and Eight Eleven have high stock-still 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 important driver of the grocery stores and had established a strong market base in Malaysia.