business selling the product. The company which buys
the product in this stage of life cycle should try to establish
long-term and stable relationship with the supplier
[2]. The growth stage is characterised by rapid sales
growth of the product. At this moment other competitive
companies, called copycats, start to produce the
product. In this situation the buyer has more possibilities
of choosing a supplier. This is the stage where the
buyer starts to dominate. But the company which entered
the market as the fi rst one has established much
better supply network, more effi cient production system
and it is able to keep the price at the similar level. It still
results in maintaining very high profi ts from product
sales. In the maturity stage the market is characterised
by buyer dominance. The sales of the product is stable.
The market saturation for the product is high. Therefore
the sellers must reduce the price and standarise cooperation
procedures with the buyers. In order to increase
their market share the suppliers diversify the range of
available products and increase their competitiveness.
The most basic way to gain competitive advantage by
sellers is the price. The decline stage is characterised by
decrease of the product sales in the market. It is caused
by customers’ tastes and changes of expectations, technological
changes and constant technical development.
The decline of sales brings on withdrawal from cooperation
with suppliers. And the suppliers in order to “get
rid of” ready-made products considerably reduce their
price. The company starts to withdraw the product from
the market, reduces the network and distribution channels.
The way we perceive the purchasing strategies results
not only from the general situation in the market.
The purchasing strategy depends as well on the balance
of power in the market it is in. The bargaining power of
the company allows it to wait and adapt to requirements
and conditions of the cooperation. As we make the bargaining
power bigger we can achieve better and more
competitive conditions of cooperation and they will increase
profi tability of the company. The bargaining
power refers to both a seller (supplier) and a buyer (recipient,
customer). The sellers bargaining power increases
when the supplier market is cornered by few
companies. The limited number of suppliers reduces the
competition among them and it gives them greater bargaining
power. The suppliers bargaining power can be
strengthened when the supplier market is more concentrated
than the buyers market. The bargaining power
also increases when the supplier is a key or strategic
partner (important for the buyer’s activity) and their industrial
goods are crucial for the buyer’s production
process. The more the production and production costs
of buyer’s fi nished goods depend on one industrial
good, the greater bargaining power of the supplier is. In
this kind of situation the buyer has not, or has very limited,
possibilities of purchasing goods from other suppliers.
There is very similar situation when the buyer is
not attractive enough for the seller or when the sellersupplier
has many others more serious or more prestigious and profi table buyers, then the buyers bargaining
power increases accordingly. In these circumstances
suppliers take advantage of their bargaining power and
the position in the market. They very often choose more
profi table buyers, who have greater share in the company
sales. The suppliers bargaining and negotiating
powers increase when the company does not have to
compete against other products in the market, for example,
there are available substitutes as a replacement for
the proper product. They are different in the way they
were manufactured, but have a similar role or use. The
suppliers also dominate the market in the situation when
there is forward vertical integration. The forward vertical
integration means establishing close relationship
between companies. It means that the buyer’s company
is joined to the supplier’s company which is the parent
business. Therefore this process is called vertical integration
towards the buyers. In this case the buyer becomes
“dependent” upon the dominant supplier. We can
also speak of the merger through forward vertical integration
in the situation where there is an acquisition of
a company (forward vertical acquisition). The diagram
in the Figure 3 presents forward vertical integration- towards
the fi nal buyer. In this case the supplier (indirect
production) included assembly into the main activity,
which is an extra operation for the company. The forward
vertical integration lets the business gain access to
new distribution channels, which were not available before.
The suppliers are also able to strengthen their bargaining
power if they decide to skip over the buyers and
try to sell the products directly on the fi nal market. But
this situation more concerns consumer goods, whi