Consider companies A and B. If A sells a commodity product to B, and the cost of this product makes up a significant portion of B's cost of goods sold (COGS). B is therefore strongly incentivized to be highly informed about A's costs and any alternatives to buying from A. This information can contribute to B having buyer power avoiding the need to "send itself flowers. Do you agree / disagree with the statement above. Why?

Question

Braxton Pratt

Business

11 March, 14:23

Consider companies A and B. If A sells a commodity product to B, and the cost of this product makes up a significant portion of B's cost of goods sold (COGS). B is therefore strongly incentivized to be highly informed about A's costs and any alternatives to buying from A. This information can contribute to B having buyer power avoiding the need to "send itself flowers. Do you agree / disagree with the statement above. Why?

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Answers (2)

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Marcus Duncan · Answer 1

Agree

Explanation:

The price of the commodity determined by B depends on the buying power and price from A. That is, the cost of goods for B will be determined by the purchasing conditions for A. In order for the situation to be a win-win situation between A and B, B is right to be in a position to know the cost of the price from A and any alternatives of buying from A.

Clinton · Answer 2

Answer: I strongly agree with the statement.

Explanation: Buyer power also called Buyer Bargaining Power refers to the pressure consumers can exert on businesses to get satisfaction by receiving higher quality products, better customer services and lower prices.

I AGREE that by B being informed of other alternatives, it reduces the hold of A on B. B can easily threaten A to give him satisfaction or he will move to its competitors.