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CS-163 Porters Five Forces - Part 03 Bargaining Power of Buyers v05

CS-163 Porters Five Forces - Part 03 Bargaining Power of Buyers
Case Study (CS-163) - Porter's Five Forces - Part 03 - Power of BuyersThe Bargaining Power of Buyers reflects their ability to put pressure on thesellers by either driving down the price or by driving up the cost-to-serve.Power increases when buyers are price sensitive and have low switchingcosts. These same factors tend to also reduce the buyer's own ProductDifferentiation, driving consolidation within the buyer's own industry. Background: The industrial buyers of bulk chemicals originally offereddownstream customers differentiated products as those buyers discovered newsolutions and opened up new markets. However, over time, industry practiceswere standardized and buyer products became increasingly commoditized. As thebuyer's industry consolidated, and the size of the buyers increased, the pressurethey could exert on the bulk chemical sellers also increased. The diversity in the value Buyershave for Bulk Chemicalsdecreases over time as theirown industries consolidated. Buyers who place very similarvalues on the upstream BulkChemicals tend to merge astheir their own downstreamProducts are commoditized. Assumes the number ofindividual contracts do notdecrease, but the Buyersbecome increasingly PriceSensitive. The Seller's Profit MaximizingPrice decreases as there is lessand less diversity in the Buyers'value for Bulk Chemicals. The Seller's Profit Magindecreases as the Buyer'sIndustry consolidates and thereare fewer, but larger, Buyers.DecreasingBuyer DiversityContractProposalsBuyer ValueManufacturing CostStarting PriceFurtherBuyerConsolidationDeclining Margins asBuyers in IndustryConsolidateSeller SetsProfit MaximizingPriceExcludeNo SaleContractsDataClean UpCalculate SellerMargin PercentageCluster Buyersby Sub-SegmentCalculate BuyerDiversityCount Numberof Buyer ClustersFewer Buyers asIndustry ConsolidatesJoin Number ofBuyer ClustersBuyerConsolidationOver Time CustomerDistributions CustomerDistributions Table Creator Loop End Line Chart(JFreeChart) Price War Row Filter Column Filter Math Formula DBSCAN Numeric Distances GroupBy Line Chart(JFreeChart) Column Appender Table Row ToVariable Loop Start Case Study (CS-163) - Porter's Five Forces - Part 03 - Power of BuyersThe Bargaining Power of Buyers reflects their ability to put pressure on thesellers by either driving down the price or by driving up the cost-to-serve.Power increases when buyers are price sensitive and have low switchingcosts. These same factors tend to also reduce the buyer's own ProductDifferentiation, driving consolidation within the buyer's own industry. Background: The industrial buyers of bulk chemicals originally offereddownstream customers differentiated products as those buyers discovered newsolutions and opened up new markets. However, over time, industry practiceswere standardized and buyer products became increasingly commoditized. As thebuyer's industry consolidated, and the size of the buyers increased, the pressurethey could exert on the bulk chemical sellers also increased. The diversity in the value Buyershave for Bulk Chemicalsdecreases over time as theirown industries consolidated. Buyers who place very similarvalues on the upstream BulkChemicals tend to merge astheir their own downstreamProducts are commoditized. Assumes the number ofindividual contracts do notdecrease, but the Buyersbecome increasingly PriceSensitive. The Seller's Profit MaximizingPrice decreases as there is lessand less diversity in the Buyers'value for Bulk Chemicals. The Seller's Profit Magindecreases as the Buyer'sIndustry consolidates and thereare fewer, but larger, Buyers.DecreasingBuyer DiversityContractProposalsBuyer ValueManufacturing CostStarting PriceFurtherBuyerConsolidationDeclining Margins asBuyers in IndustryConsolidateSeller SetsProfit MaximizingPriceExcludeNo SaleContractsDataClean UpCalculate SellerMargin PercentageCluster Buyersby Sub-SegmentCalculate BuyerDiversityCount Numberof Buyer ClustersFewer Buyers asIndustry ConsolidatesJoin Number ofBuyer ClustersBuyerConsolidationOver TimeCustomerDistributions CustomerDistributions Table Creator Loop End Line Chart(JFreeChart) Price War Row Filter Column Filter Math Formula DBSCAN Numeric Distances GroupBy Line Chart(JFreeChart) Column Appender Table Row ToVariable Loop Start

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Created by: Berlin
Created at: 2019-12-06
On NodePit since: 2021-02-05
Last update: 2024-04-18
Created with KNIME version: v4.3.0
Tags: Market Simulation

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