When the Arizona grocery store chain, Smitty’s, told Associated Grocers (AG) to give them a bigger price discount or they would

Question

4 years ago

11

When the Arizona grocery store chain, Smitty’s, told Associated Grocers (AG) to give them a bigger price discount or they would

open their own warehouse and distribution center, AG listened because Smitty’s was a big customer. This is an example of the

Social Studies

1 answer:

bulgar [2K] · Answer 1 · 2021-12-24T00:03:11+03:00

Answer: The bargaining power of buyers.

Explanation: The bargaining power of buyers is one of the five forces in the Porter's Five Forces of Industrial Analysis Framework a business analysis model that provides information on the different levels of profitability of various industries. Buyers (in this case Smithy) can raise competition within an industry by forcing down prices, requesting discounts, bargaining for improved quality or more services from their suppliers (in this case, AG). In doing this, they are exercising the bargaining power of buyers which refers to the pressure that users of products and services can put on businesses to get them to provide higher quality products, better customer service, and/or lower prices/discounts among others.