When a supermarket is negotiating with a supplier as a buyer, it has a natural advantage to provide consistency of large order sizes and also has options to select one from many suppliers of the same product (Christopher and Peck, 2012). For example, a milk processor as a supplier is negotiating a deal with a supermarket, it has a natural disadvantage because it deals in perishable products and it may have to agree to the powerful stance of the supermarket. The supermarket agrees to buy bulk milk containers at a discounted price and raises its profit margin by keeping a large margin for itself.
In this situation, the supplier has more power. For example, Rolls Royce as a supplier is negotiating with airline customers as buyers. The power rests with the supplier. This is because of the premium services it offers and the rarity of quality offered which will be charged more than other companies. The customer or the buyer is compelled to pay more without any choice.
In this case, power is interdependently held by the two entities. When this is the case, power is used ethically in its subtlest terms. For example, when a football club is negotiating with sponsors, there is an interdependency of the power position because each one needs their equivalent interests be fulfilled. The football team needs good sponsors and the sponsors need a good team. Thus, power is interdependently spread between the two entities. And there is less chance to misuse their position or possessions.
In this case, power is independent because the future is more uncertain and therefore the exertion of power could be very ambiguous. For example, a 3D printer retailer as a supplier when ascertains and assess the market demand, it may be both certain or uncertain, and this ambiguity leads consumers to get a good bargain. Consumers may have several options of purchasing a 3D printer. Hence, one company may not be able to exercise its power on consumers. This is a perfect situation where power is most probably dismantled and ignored in its usage to the utmost extreme.
Hence, they tend to have equal possession of power. Power independence occurs when there is massive uncertainty of future on both sides. Power is also increased by innovative means of business. This is what it makes dangerous for the future. Since all energies become focused on power accumulation, less attention is paid to product and service improvement, thus destroying consumer trust. Trust is the best remedy instead of power. Betrayal of trust and dominant use of power can abruptly destroy a long term relationship. Hence, it is always wise to use trust as a tool rather than power to enhance one’s business.