Suppliers and Customers

Bargaining Power of Suppliers

Suppliers are an important factor in the Porters analysis, as your company is dependent of quality of the products and services of your suppliers. You should consider the following questions in order to analyse, how suppliers affect your sector and your company (Anwander 2002):

  • What pressure can the supplier put on you? (e.g. in terms of your dependence on the product)
  • Can they find new customers and if so, how fast?
  • How is the dependence-relation with your for suppliers?

Bargaining Power of Customers

Lastly, analyse your customers. The following issues should be considered:

  • How important is your product or service to your customers?
  • Are you dependent on specific customer (groups)?
  • What is the fraction of revenue that you gain by several customers (groups)?
  • How high is the likelihood that your customers will buy substitute products?
  • How much information do customers have access to, regarding substitutes?
  • Which trends do you expect as far as the needs of your customers are concerned?
  • How important is your brand for your customers?
  • What is the level of demand with regards to quality?