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Balance of Power: Purchasers vs. Suppliers

In the specific aspect of business known simply as the sale, there are two entities which are primarily involved. The two entities are the purchaser and the supplier. These two partake in the sale wherein its elements circulate things such as currency and commodity (e.g. services and goods).

The purchaser can be defined as the one who avails of something that is offered by a supplier in the quantity in which his amount of currency on hand can correspond to its value. On the other hand, the supplier can be described as someone who caters to or fulfills the demand for a specific or a variety of commodities by the public.

These two entities can simply be described as the buyer in the place of the purchaser and the seller in the place of the supplier. Both are independent in nature but, neither the purchaser nor the supplier can exist without the other. Considering the fact of the independence of each entity regarding a sale, both have their different sets of powers. This balance of power exists to protect and limit the actions of the two sales entities either towards self progress or actions involving the other entity such as a transaction.

The purchaser, or commonly known as the buyer, is someone who sets the demand for a certain commodity or its elasticity in the supply market. The power that is vested upon a purchaser is called “purchasing power”. This power of the purchaser is the ability of a person to afford the commodities that he is willing to have possession of provided that his capacity to pay for the amount of currency that he has allows him to. For example, the purchasing power of a person from the upper middle class is more than the purchasing power of someone from the lower middle class, the middle class and other lower social classes. This power also protects the supplier by limiting the quantity of production of commodities that they have to provide to a certain percent wherein they can still make profit.

The suppliers’ power is a different thing as this is the capacity of the supplier to alter the price of a commodity depending upon high or low is the demand in the supply market. The idea of supply and demand states that if the demand for a certain product is deemed to be higher than the average, then the quantity of supply goes down and if the demand for a certain product is low, then the quantity of supplies goes up. When the demand is high, suppliers need to alter the price and make it a little more than it’s usual in order to protect being out of stock and to earn extra profit from it. If the demand of a product is low, then suppliers need to increase sale by lowering their prices in order to have an oversupply that can affect the process of production. This power also has an advantage to the purchaser because it allows them to take advantage of the decrease in price or to seek cheaper alternative if the prices are high.

The powers of these two sales entities both functions to protect and to give advantage to each other. With the limitations that are posed by these powers, neither of the supplier or the purchaser can experience disadvantages in their field.

January 29, 2013
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BY Bellwether
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