AQA ECONOMICS GCSE UNIT 12: Impact of Market Dominance on Suppliers

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Dominant Firms Abusing Suppliers

Listing Fees (Charging to be on a list of suppliers) Suppliers have less money which means they have less to put into production 

Threat of De Listing Suppliers are forced to accept the terms and conditions or they won't recieve the same opportunities

Slotting Fees (To gain shelf space) Means that larger suppliers can afford to but more self space

Returning Unsold Goods Suppliers would have to absorb the costs which will decrease their profit margin

Late Payments Suppliers are not paid for the goods that have already been sold and creates uncertainty over how much they are paid

Below Cost Selling (Unscheduled promotions) Profits become under pressure and may result in a distorted view of product value by consumers who would demand constantly low prices

Promotion of Own Brands Increases competiton and the suppliers will lose profit as consumers by the alternative 'own brand' products

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The Impact on Consumers

PRESSURE TO KEEP PRICES LOW May raise prices and reduce choice. Also quality and product innovation may drop as suppliers cut costs to continue making profit

ADDITIONAL COSTS ON SUPPLIERS (Such as listing fees) Higher long term prices

RISK OF STOCKING NEW PRODUCTS Fewer new products, with risks of a smaller range of products and lower quality

DE-LISTING Own brand products replace branded goods and loss of choice; future innovation and quality

MISTAKES PASSED BACK TO SUPPLIERS Reduced funds available for investment 

COMPETITORS' COST RAISED Reduced product availability to other retailers and less store choice

LOSS OF IMAGE PROTECTION Lower rate of product development

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