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Essay Details:
Essay text:
Porter feels that purchasers of large volumes contribute significantly to the bottom line of businesses. For example, FedEx gained a lion's share of the catalog business because of their ability to offer these buyers lower prices than UPS.
A buyer group is powerful if it faces few switching costs. This competitive force definitely constrains FedEx. Buyers that decide to leave the FedEx brand could do so knowing that the costs would be negligible. The buyer's employees would not need retraining to fill in packing slips, and the buyer requires no new equipment. For example, when UPS entered the overnight delivery market in 1982 at half the price of FedEx many buyers left the company with little concern for switching costs...
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