When a supplier has a monopoly of a particular supplies

Corzhens

Member
This era of globalization affords us of free trade such that cost of imported goods have drastically gone down. But what happens when a supplier has a monopoly of the supplies? A cousin's business is footwear which they import from Chinese factories. When one factory couldn't deliver, he would turn to another. But in the later years, the factories required supply contract so it would be like being a monopoly since the contract is exclusive. And when there was no other way to get a contract from other factories, my cousin and his boss decided to quit the business. It is suicide to have a supplier that has a monopoly of the supplies.
 

djchain

New member
Re: When a supplier has a monopoly of a particular supplies

In the words of Peter Thiel, "Capitalism is all about Monopolies." The ultimate goal of most businesses should be to be a monopoly, i.e. have no competition or be the sole choice for their customers. In that sense, the supplier in question did have monopoly. Monopolies can be a boon or a curse for the consumers. In your brother's case it turned out to be a curse because they suppliers had signed him on exclusively. However, I see it differently. While they couldn't get supplies from another Chinese suppliers, they could have worked with some "middlemen", which is what I have done a couple of times to get the goods delivered.
 

Norm

New member
Re: When a supplier has a monopoly of a particular supplies

It really is a tough situation to be in especially when these changes come at the worst possible time when the business is at a certain stage of the process wherein the decision can't be as easily made. A lot of businesses face this problem I think and some have even been driven to look for suppliers in other countries instead.
 

David_TR

New member
Re: When a supplier has a monopoly of a particular supplies

Now maybe I just don't have the right head for business, but I've never seen monopolies as a good thing. Your lone supplier can suddenly jack up the price, or produce items with a ton of defects, or run out of that particular item, or any number of things. Signing a contract with any one supplier is never a good idea to me if you have other financially feasible options unless it's an item that absolutely only they make.

And even if it IS too expensive to get it elsewhere, it might not be a bad idea just to keep your options open...
 

explorerx7

New member
Re: When a supplier has a monopoly of a particular supplies

Most monopolies usually pose a problem to consumers because they usually seek to exploit this lofty position to gain as much as they can from it. They could be higher than normal prices for the goods and some may offer less than desired services because of the lack of competition. The big question is how couneract the monopoly situation? There is no easy solution to the problem, however, because the distributor would probably be the only entity that is offering the goods or service.
 

Vampa

New member
Re: When a supplier has a monopoly of a particular supplies

If it's something you could probably obtain elsewhere then you should take the risk and try importing the product you sell from another country.

Or if you can, you could try getting into the business of making the products you sell, yourself. Calculate what production of the product would cost and outsource if you'll still make a profit in the end. It's the solution to some of these issues at times.
 

Corzhens

Member
Re: When a supplier has a monopoly of a particular supplies

In the words of Peter Thiel, "Capitalism is all about Monopolies." The ultimate goal of most businesses should be to be a monopoly, i.e. have no competition or be the sole choice for their customers. In that sense, the supplier in question did have monopoly. Monopolies can be a boon or a curse for the consumers. In your brother's case it turned out to be a curse because they suppliers had signed him on exclusively. However, I see it differently. While they couldn't get supplies from another Chinese suppliers, they could have worked with some "middlemen", which is what I have done a couple of times to get the goods delivered.
I agree on the ultimate goal of a business to be a monopoly so they can control not only the price but everything that involves their product. That is why the government is on the lookout for monopolies. There are only 2 phone subscription providers here and it is nearly a monopoly so the government is encouraging other players. But the Sun telecoms was bought by the biggest provider so it is back to 2 providers again.

In a personal business, it is a sorry situation when you only have 1 supplier because you will be a slave to their demands.
 

Norm

New member
Re: When a supplier has a monopoly of a particular supplies

Now maybe I just don't have the right head for business, but I've never seen monopolies as a good thing. Your lone supplier can suddenly jack up the price, or produce items with a ton of defects, or run out of that particular item, or any number of things. Signing a contract with any one supplier is never a good idea to me if you have other financially feasible options unless it's an item that absolutely only they make.

And even if it IS too expensive to get it elsewhere, it might not be a bad idea just to keep your options open...
I agree. I think even when the secondary or backup supplier isn't as good as the main one whether it is in terms of price or performance it's always still good to have at least the option since having none only gives too much leverage to the supplier and in owning a business it really is in the owners' best interest to retain as much leverage as possible.
 
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