Question

Decision Point: Differences in Supplier Choice

You explain that because business demand is more inelastic, demand for business goods is not strongly correlated with price. Therefore, business suppliers are often able to increase price without negatively affecting demand. Therefore, it is critically important that we address price during the contract negotiation.

The owners are still not convinced. You decide to add to your argument by discussing the differences in supplier choice. Which of the following arguments would strengthen your case?

Select an option from the choices below and click Submit.

Less supplier choice: Business buyers tend to have far fewer choices in suppliers than the ultimate consumers do.

More supplier choice: Business buyers tend to have more choice in suppliers than the ultimate consumers do.

Answer 1

Answer:

Less supplier choice should be selected in the above question.

Explanation:

Remember that the intention would be to have influence over the purchase price.

This is not possible as there are fewer distribution options available. The lesser the supplier selection, the greater the supplier's negotiating power and the weaker the manufacturer's leverage over the purchase price.

Whenever a large number of suppliers are accessible, the manufacturer's negotiating power will rise over that of the suppliers which could result in the price being held below the manufacturer's objective during the bargaining.