Suppose that Sam Supplier is with a small firm that is providing products and services to a large customer.  In this situation, Sam’s firm and the large customer are likely to have differences in their relative bargaining power.

Often, small firms are so anxious to win business, especially from large companies that they are likely to agree to provisions that can cause challenges for them. At times, the customers pressure the small firms to do more. In many cases though, the small firms pressure themselves to do so.

Whenever there is a difference in bargaining power, it is a good idea to talk about the small firm’s ability to meet the big customer’s needs. 

Think about what this scenario means for your business.  Specifically, consider questions like:

How could disparity of bargaining power arise for your business?

Are there certain signs that would lead you to think there is a disparity in bargaining power?

If the parties have disparity in bargaining power, what are some steps that you might take to deal with the issues?

What are some communication techniques that might help you identify and deal with disparity in the parties’ bargaining power?

Filed by Coleen Davis at 7:26 am under Business Acumen, Customers, Negotiations, Planning Tips, Solving Problems, Sourcing