If the buyer has to choice but to pay these prices, the resultant increase in total production cost will either need to be absorbed by the company itself or passed on to the consumer. But if the cost to B of disagreeing on A's terms are greater than the cost of agreeing on A's terms, while the cost to A of disagreeing on B's terms is less than the cost of agreeing on B's terms, then A's bargaining power is greater than that of B.
Taking commerce as an example, buyers will always want to negotiate to the lowest prices possible, while sellers will always seek to sell at the highest prices possible.
Mitigating Supplier Power If supplier power becomes too strong in the market, companies will try to find ways to reduce this power.
Example[ edit ] Here is an example in layman's terms of one party displaying large amounts of bargaining power over the other: Stephanie is applying for a job at Company, Inc.
Awareness within the diamond producing countries to be more involved in the process and to take ownership of this resource.
Buying power[ edit ] Buying power is a specific type of bargaining power relating to a purchaser and a supplier. The results will not always be straightforward.