The Global Player: How to become 'the logistics company for the world'

Textprobe: Chapter 3.1.2, Buyer Power: The aim of the customers is to receive the product for a very low price with very high quality and functionality. Different types of constraints, along with customer satisfaction, determine the customer's choice of a particular supplier. Based on the switching barriers for customers there are several points of differentiation. Switching barriers describe any impediment to a customer's changing of suppliers. Low switching barriers Low switching barriers put he customer in a strong negotiating position. Since switching to another competitor is not attended with major difficulties customers can always threaten to take this very step. High switching barriers If a customer is forced to incur high costs or efforts when switching from one supplier to another, he can hardly threaten to make this move. Only if other suppliers lower these costs for the purpose of acquiring customers or enticing them away, the assuagement would be compensated. But such support will be hardly granted, if it would serve only as argumentation basis for the improvement of an existing relation. Even if there are only few customers in a market DHL can face difficulties. Such situations can also be cost by legal regulations. It is particularly clever to channel the costumer's power for the own company business interest. The transportation companies are in a hard competition to provide delivery services for large firms and enterprises. They're in a race to reach every ware- and storehouse. Today, with the booming of e-commerce costumer could order a product online and allow delivering in every part of the world. Most of these companies do not provide their costumers the flexibility to choose their transport provider independently. Instead they have a contract with a diversified Transport firm, which provide the dispatch. Moreover, the change to another transport provider is not expensive, so and this puts these provider in a very strong bargaining position. The costumers are likely to choose the company with the most favorable price or least price. However by advertising and brand-name-image many people will choose certain companies and many people are attached to certain companies. Moreover, companies have adopted the programmed 'open an account' to lock their costumers. Such accounts will give more advantages and profits to their loyal costumers. And because most distribution centre's and warehouses cooperate with a certain transportation companies, the individual costumer has little bargaining power. 3.1.3 Supplier Power: The suppliers are in a bipartite position. On one side, the suppliers can influence by their pricing the business of the looked companies. Even in case of a fix price, there is always a leeway in the creation of the product quality. The fluctuating prices of the fuel influence strongly the profitability of the transportation business and these prices are determined by the economic and political problems which put the oil suppliers in a strong bargaining position. But the transportation companies combat this problem by requiring fuel surcharges from costumers in case of high fuel prices. However, that could result in straining the relationship with the costumer. Suppliers of packaging material, such as boxes, are not in position to have high bargaining power. Because of the rivalry of the vehicle manufacture industry, a truck supplier will not be in a strong bargaining position. However, operators of transport vehicles with limited capacity, like trains, have some bargaining power. Service suppliers, particularly truck and aircraft maintenance and airport services, have a strong bargaining position and this is involved partly because of the high switching costs. Moreover, the transportation companies are committed to deliver in time. Some companies offer a full restitution of the shipping costs if the delivery is not in time. The transportation companies can invest in developing technology, which automates the package sorting process, to reduce the bargaining power of service providers. These systems are price and time efficient and it is a big advantage that they are run by the company itself. With the entry of these companies into the e-business industry, other suppliers appear in the sector namely the providers of information technology services. These suppliers have no considerable bargaining position because of relatively easy switching costs and because the companies are in the direction to have their own IT department and software.