Bargaining power of suppliers can be termed as the capacity of control and competitive advantage a supplier may have over rivals or competitors. The level of rivalry in this context may be brought about by many factors including; number of competitors in a market, market growth, fixed costs, storage costs or perishable goods, low switching costs for the consumer that encourages easy switching from one product to another, low or minimal product differentiation, strategic stakes, exit barriers, diversity of rivals and industry shakeout caused by high supplier and low demand.
In all this, every supplier seeks to have a competitive advantage over its rivals to ensure stability in the market and profitability. In non-profit organizations, the supplier bargaining power may be deemed as the position of advantage that donors have over others. This may be in terms of expertise, capital, and skills. Bargaining Power of Supplier (POS) of Non-Profit Organization In the case of non-profit organizations, Bright Pink champions and offers education and support to young women who may be at risk of breast and ovarian cancer.
Bright Pink’s suppliers/supporters may be classified as corporate (offering capital), individuals (donors) and/or participating doctors offering knowledge, technical credibility and support to the women in the organization. Though the power of these doctors may be low, they most likely gain more from the relationship that Bright Pink. In most organizations, there may be challenges related to the supply of donations and support that may be needed. One of such challenged is supplier power. In many cases, those individuals who supply organizations, such as Bright Pink, with capital also wield some influence during decision making.
This means that donors would hold Bright Pink to a high standard of conduct, community involvement, and ethics. Participating doctors who supply knowledge, technical credibility, and support to the women in the organization, may have low power but most likely gain more from the relationship than Bright Pink. This is caused by the possibility of Bright Pink finding a multitude of doctors willing to support their cause while the number of organizations seeking doctors to participate on their medical panel may be small in-kind donations from existing members, volunteers, and corporations are another source of support and input.
Differentiation of inputs is a factor in assessing supplier’s power. The higher the level of differentiation and importance in the eyes of the buyer, the more powerful the inputs become. Inputs include one-time donations, recurring donations, cause-related marketing opportunities, pro-bono administrative work, marketing, legal support and in-kind donations. Bright Pink’s growth is contingent upon procuring the right combination of inputs.
Given the fact that there may be threat of substitutes, there is a clear indication of growth in the number of breast/ovarian cancer Non-profit organizations (NPOs) in recent years. Suppliers of inputs may, therefore, continue to exert control in how these inputs are utilized. Bright Pink would, therefore, have a wide range of suppliers of capital and inputs but a seemingly low power or control over how these supplies/inputs are utilized. The degree of rivalry of similar organizations such as Bright Pink may be increasing with the number of breast/ovarian cancer support organizations coming up.
This then means that Bright Pink may be loosing its grip on the number of suppliers/donors it may have. With this threat becoming more and more real, Bright Pink may have to work out strategies to keep its flow of capital and other resources supply that would ensure it continues to fulfill its goals and objectives. Taking Bright Pink as the ‘buyer’ there seems to be a certain level of leverage and power that the organization may have. The number of participating donors such as doctors at Bright Pink’s disposal seems to be fairly good.
This couple with the notion that the doctors may be gaining more from the relationship than Bright Pink means that the organization may have a ‘buyer’ power allowing it to have a selection of the best doctors to integrate into its programmes. Barriers to entry/threat of entry may be one factor to be considered in Bright Pink’s case. With a regulating policy to the number of entrants into the breast/ovarian cancer support field, there may be better services and better and stronger inputs from suppliers/donors. In the case of NPOs, existing organizations would offer better and expanded services and efficiently and effectively.
This would ensure that those who may be considering offering similar services and/or support would have few people in need of these services hence a barrier/threat of entry by those already in the field. Currently Bright Pinks’ support and aid flow is efficient for the current programmes in the organization. As the organization’s brand awareness, membership numbers, and media exposure continue to grow, it will find cause-marketing more appealing to corporate partners. Corporations are under increasing pressure to give to charities, support local organizations, and be socially responsible.
Though this may not be a tangible reason to keep all organizational stakeholders on board, it may be a solid base to attract funding and donations from all suppliers. Programmes that offer a worthy cause may be an effective way to attract and sustain capital and resources from many corporate, individual and participating suppliers. Benefits to the company include increase in brand acceptance by associating with a worthy cause, reaching a niche demographic, differentiation in a crowded market, and perhaps increasing brand loyalty, then the benefits to Bright Pink are obvious.
Members and supporters have an easy way to make a contribution and Bright Pink would be able to reach a wider customer base than they wouldn’t otherwise reach due to a limited advertising budget. Studies show a net positive reaction in consumers towards the contributing company’s image. The congruency between the charity’s mission and the company’s product is a primary determinant in whether each party gleans the benefits from the cause-marketing effort. As the organization gains popularity and acceptability of its programmes, there will be great increase in the benefits from suppliers.
If suppliers are unhappy with the organization’s decisions, they can easy cut funding. In this way, large donors can wield unofficial influence over the organization’s behavior. Corporate donations can be correlated to economic conditions and given that the economy worsened in 2009, Bright Pink may have to be prepared for a decrease in these inputs. A way to offset this threat is to focus on individual/private donations as this tends to be less tied to the economy and these donors identify more with the NPOs they support. Cause-related marketing, which provides benefits to both the supplier and Bright Pink, is another strategy to pursue.
Since Bright Pink suppliers provide monetary donations not specific product, technology, or knowledge, there would be no switching costs to suppliers. However, since corporations and individuals will align themselves with a growing and well known charity, switching support to a lesser known NPO would not be advantageous. Since the decision to support various NPOs is a decision based on emotion, Bright Pinks’ most effective strategy for procuring this support is to continue to focus on success stories of those the organization has helped or is helping.
Differentiating the Bright Pink story, showcasing various members’ reasons for joining the organization, and demonstrating Bright Pink’s impact on its member’s lives are all methods of highlighting this emotional bond. One of Bright Pink’s short-term objectives is to build a stable of partnering companies to provide exposure in the market, increase its membership and become an NPO of choice for corporate sponsorship opportunities. Since most doctors’ expertise is not readily differentiable, their bargaining power is relatively low.
It would be logical to conclude that Bright Pink members may have a propensity to utilize the services of these doctors for their health care needs making the balance of power in the doctor-Bright Pink relationship reside in the organization’s favor. On the other hand, inputs from volunteers, corporations, and community groups are not easily achieved, and Bright Pink has less negotiating power when dealing with these groups. Other than the intangible benefits of helping a respected and growing NPO such as Bright Pink, these suppliers have no economic reason to provide support.
In these cases, it is most likely the appeal of Bright Pink’s mission that drives the decisions for support from these suppliers. The importance of the suppliers cannot be stressed enough. Without their support, Bright Pink will not be able to grow. By focusing on cause related marketing and approaching corporations whose products/services align with Bright Pink’s targeted markets, stronger alliances can be built. This will level the power balance and facilitate a mutually beneficial partnership.
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