In what situation do industry members typically strengthen their bargaining position with suppliers?

Industry members typically strengthen their bargaining position with suppliers when they purchase in large volumes. This is because buying in bulk allows firms to leverage economies of scale, which can lead to lower prices per unit and better terms from suppliers. Suppliers are often more willing to negotiate favorable terms for buyers who commit to higher quantities, as they can secure a more substantial revenue stream with fewer transactions.

In addition, when companies order large volumes, they create a significant impact on the supplier's business. This relationship often leads to increased loyalty and the possibility of exclusive agreements, which further enhances the buyer’s negotiating power. The larger the volume that a company commits to, the more that supplier may be inclined to accommodate their requests regarding price, delivery, and other contractual terms.

Conversely, situations where a company represents a small portion of a supplier's sales do not empower the buyer significantly, as their business is not critical to the supplier's overall revenue. Having many options for procurement (such as multiple suppliers) can also enhance bargaining power, but it is ultimately the volume of purchases that tends to create a more compelling argument during negotiations. Lastly, when suppliers are few and well-established, they often hold more power, which can diminish the buyer's leverage.