Power is defined as the ability of one actor to control the other to achieve mutual goals. It is clear that two important factors are common to suppliers and buyers but have different implications. These include utility and scarcity (Chatziaslan et al., 2005). Power becomes asymmetrical in the following scenarios.
– When the buyer power is available lesser and the supplier power is high (Supplier dominance)
For instance, the example of Rolls Royce vs Airline customer is appropriate.
– When the supplier power is low and buyer power is high (buyer dominance)
For instance, supermarket vs milk processor could serve as a better scenario.
– When the supplier power and buyer power is lower (competitive as they are exposed to market tests)
For instance, 3d printer retailers vs consumers is a better example as the market is always unknown and it changes based on the demands at that point.
Symmetry is achieved when the buyer power and supplier power are high and the end result is collaboration. There is no need to work on risks as all the strategies and solutions are identified mutually. This interdependence is healthy and essential as it can enable them to excel on three aspects – strategic sourcing, governance and operational procurement. A good example is the association between football club and sponsors where both the ends work together to produce win-win relationships and profits at the end. This interdependence can help in branding for both the actors.
The relationship between buyer and supplier is influenced by various scenarios such as cooperation, conflict resolution, trust and commitment. Supplier satisfaction can be reward mediated or non-mediated or coercive mediated (Adler, 2001). Consequently, the purpose is to maximize the performance as much as possible to achieve buyer satisfaction. It is unknown where the buyers would hold power. The right option for buyers is to launch non adversarial partnership so as to enable sustainability in the business along with suppliers. This follows the concept of lean thinking where collaborative relationships can set the conditions based on which the relationship would last.
There are instances where surplus value is distributed across different ends. The instances are demonstrating the supply chain power. It is relevant to follow resource based approach where the trading party will analyse the target resources and estimate the ability (Handfield & Bechtel, 2002). If the ability is not satisfactory, it can enable the party to look for alternative sources. Power influences the risks and rewards that exist within supply chain. Isolating mechanisms evolve into picture when the buyers attempt to leverage as much of value from the suppliers.
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