Bargaining power of suppliers
Although demand for Top Glove has increased, the step of growth is expected to vary by segment. A powerful supplier will raise price when it’s target industrial market is facing well. Rubber is one of the large suppliers for Top Glove which hold a significant amount of power while the demand for latex glove has increased. An assessment of supplier power takes the point of view of a downstream industry and examines the ability of that industry’s upstream input suppliers to negotiate prices that extract industry profits. If the suppliers of a commodity have enough leverage over the distribution system they can control the prices and profitability. This usually happens when the suppliers are large, relatively few in number, or in the same kind of agreement to limit supply to the market, or the products are in high demand or involve high switching costs. Rubber was one commodity that fulfilled all of these conditions hence the strong bargaining positions of their suppliers. Top glove worldwide industry is characterized by a coherence of small producers. In the older producing countries, like Malaysia and Thailand, substantial investments have already been made in the sector, and significant employment is supported. So these countries are such easy price takers. http://books.google.com.my/books?id=1aVtGc4NYq8C&pg=PA62&lpg=PA62&dq=bargaining+power+of+suppliers+and+rubber+industry&source=bl&ots=-S4zZQpJuQ&sig=WeuUYRyWSuvKEDQqCRVWrNmnYuk&hl=en&sa=X&ei=hB-GUvaoE4WCrAeItIH4Cw&ved=0CCgQ6AEwAA#v=onepage&q=bargaining%20power%20of%20suppliers%20and%20rubber%20industry&f=false (Yusuf Choudhry, Douglas W. Liste 2010) However, natural rubber does have high switching costs in some cases and consumers cannot easily switch to alternative product such as synthetic rubber. In addition, there are the reasons for the intense competition in global rubber industries. First of all will be the bulk of the market is with a few large makers of gloves who have...
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