The suppliers for companies in the market have relatively high bargaining power mainly due
to the fact that there are only a number of suppliers that the market demands from. Among
the pool of suppliers include major manufacturers such as Sony, Samsung, LG, Panasonic
and Toshiba. These suppliers provide the latest state-of-the-art technology and companies
like Best Buy must purchase from them in order to keep its inventory fresh and satisfy its
customers. There is no way around purchasing these products; for example, backward
integration is difficult and requires a lot of capital and technological expertise. This suggests
that suppliers have a substantial influence on the products that they manufacture and their
pricing. Furthermore, the high bargaining power of the suppliers is also due to the sheer
number of stores that they are in. Therefore, consumer electronics retailers must purchase
them to stay competitive in the industry.
On the other hand, there are several factors that lower the bargaining power of the suppliers.
While most of all the suppliers have their own online stores to drive sales, they rely almost
entirely upon retailers to bring in revenue. Suppliers want their products on the shelves for
people to see and test them. They also rely on the sales teams within retail stores to help
drive sales. Therefore, a company can partially mitigate the bargaining power of a supplier if
it is especially effective in bringing sales. Best Buy, as the industry leader, therefore has more
bargaining power than other retailers. Additionally, while there might not be intense
competition between buyers for any one brand, there is intense competition among the
suppliers. For example, the most recent Blu-ray and HD-DVD rivalry between Sony and
Toshiba caused less bargaining power for these suppliers.