The Bargaining Power Of Buyers

1457 Words Dec 8th, 2015 6 Pages
3.3.4 – BARGAINING POWER OF BUYERS
The bargaining power of buyers is said to be high when they can lower prices, demand higher quality or service, and set industry competitors against each other all while affecting industry profitability. The bargaining power of buyers within General Electric depends on the specific business one is looking at. Generally, GE has valued its customers and have been consistent in offering its products at the market price. The bargaining power of buyers have found to be high especially in its Appliances division due to the low switching costs. In order to stay competitive, GE has to keep its prices at the market level to avoid pricing wars with other companies. However, GE must be smart to not price its products and services below the market level. In GE’s other business units, the buyer power is medium.

The bargaining of buyers is also high in the GE Aviation segment; it is high due there being only a small number of buyers in an industry where the top companies hold over 50% of the market share. The buyers have strong negotiating power because there are numerous external factors that affect the aviation industry. Some of these examples include dependence on military budgets, and the economic climate which can either cause an increase or decrease in demand for commercial aircrafts. Also, within the aviation industry, product development tends to be long with product quality, efficiency, and innovativeness are vital to success. In…
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