The research is also of importance to such managers, in that it goes a long way in helping them understand the advantages and disadvantages associated with such collaborations, so they can opt for either engaging on them, or undertaking the purchases on their own.According to the article, firms will always form purchasing alliances or merge with others in order to secure lower prices for their commodities (Dana, 2012 p. These relationships are established on a formal and long-term basis, which allows such firms to negotiate continuously for lower prices for the commodities they purchase, courtesy of the buyers power they wield. Such collaborations include the Independent Grocers’ Association in the USA, which has effectively negotiated with large food manufacturers for lower prices of the commodities they purchase from them. Other examples of such collaborations include the cable television franchises and the pharmaceutical companies, which have established groupings that negotiate for lower prices. The case is the same for chain of supermarket in Europe, which collaborates with chain stores to increase their buyer power and thus negotiate for lower prices from the manufacturers or the suppliers that supplies them with commodities.In a setting where there is a single seller, buyer’s collaboration has the effects of leaving the buyers better off, as compared to the buyers who undertakes their purchases individually (Dana, 2012 p. While the suppliers can lower the prices of a given product for a buyer and increase, and maintain higher prices for other. Buyer Groups as Strategic Commitments.
Work CitedDana, James. Games and Economic Behavior: Buyer groups as strategic commitments. Department of Economics and College of Business Administration, Northeastern University, 2012. 470-485. Print.
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