Blog
Power Relationships
22nd February 2009
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
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.