Power Relationships
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As always the Bottom Line provided some informative and engaging conversation when the second episode of the new series was aired yesterday afternoon on Radio 4 and later on in the evening on BBC News 24. As I said last week, the television version comes across really well and already ranks close to the summit of the output that News 24 manages to generate! I was particularly interested in a couple of comments from Andy Bond, Chief executive of Asda when quizzed about his relationships with suppliers.
Bond argued that
1/ Why would be use his influence and bargaining power in negotiations to drive suppliers out of business? The inevitable result would be empty shelves and long-term damage to goodwill with suppliers and consumers
2/ Although Asda is part of the Walmart empire, the conventional wisdom that Asda will always have the dominant hand in negotiations with suppliers is wrong - there are examples of where manufacturers are bigger than Asda - he mentioned Coca Cola as one example.
It is a good evaluation argument to bear in mind whenever we teach monopsony power in markets.
OU resources linked to this programme
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