Answer to Question #119284 in Marketing for mehenuz

Question

market power and bargaining power. sounds great but application is not easy as we think special for developing counties. What is the reason for this and how does one solve this.

Answer 1

Market power is the ability of a firm to raise and maintain price level that would prevail under competition. In the other hand, Bargaining power is the relevant power of parties to exert influence over each other, if both are on equal footing they will have an equal bargain influence. Nevertheless, attainment of the same is not as easy as it seems. Market power is affected with insufficient deterrence of anti competitive merges between rival who influence the fluctuation of pricing which may lead to inflation. Moreover, market power is also affected by insufficient deterrence of anti competitive coordinated conduct that puts suppliers in an opportunity to determine prices to their interest which affect market pricing. With regards to bargaining power, it goes hand in hand with supply power in a particular industry. Low supply power creates more attraction in industry hence increasing profit potential therefor decreasing bargaining power. In addition, high supply power creates less attractive industry which leads to decrease in profit potential and buyers rely more on supplier thus increases bargaining power.

Market power and bargaining power can be solved when diversifying and spreading purchases around the industry. This will aid to reduce chain disruption and reduce bargaining power. If industry doesn't have multiple suppliers, one can try to dominate market, thus leads to bulk procurement. This will be highly advantageous since as a sole supplier you wouldn't want to antagonize your potential buyers. Finally, market education familiarizes buyers on charges and trends in order to avoid being taken for a ride by suppliers.