Another Force is the Power of Supplier. This does not only
relate to actual materialistic suppliers, but in many cases, reflects on other
parts of the supply chain such as supporting services, financial resources and
know-how. According to Wilkinson (2013),
strong suppliers negatively affect the industry by raising prices, even
lowering product quality and controlling product availability on top of that.
Meanwhile weak suppliers make an industry less competitive and more profit can be
In the automotive industry
the companies are highly dependent on their suppliers. BMW Group (2017) states on their homepage, that their supplier
network makes a major contribution to their success. They are working with
around 13,000 suppliers in 70 different countries.
Being as independent BMW has to identify and analyse potential
sustainability risks throughout the supply chain in order to react properly.
Since 2009 BMW Group works together with their suppliers to assess their
sustainability management. This highly reduces the risk of major problems with
the suppliers. On top of that, the BMW group collaborates with their suppliers
to strengthen their potential to manage their resource efficiency and offering training
courses to their employees. This management strategy leads to a strong bound
between BMW and their supplier and reduces the risk of the Supplier to misuse
their 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 are
getting more and more difficult to replicate, therefore only a few suppliers
remain. Those can demand horrendous prices for their products, and BMW Group
has to manage this to remain in competition with the other big brands, such as
Mercedes and Audi.
The power of buyer is another force which shapes the competitive
structure of an industry. As Wilkinson (2013)
said, the bargaining power of buyers in an industry has a massive impact on the
competitive environment and profit making. He further declared, that strong buyers
force the industry to better product quality, lower prices and improved
services. All these components reflect costs for the seller, which lowers the
Meanwhile on the other hand, a weak buyer is satisfied with
the seller´s price and quality and has low claims. This results in a less competitive
industry and increases the profit potential dramatically because less
expenditures have to be made.
Wilkinson (2013) worked out an overview as well how to spot
a High or Low Buyer Power: