Customer Concentration
| When one company becomes the main buyer of goods, then they have a lot of pricing power. Diversified customer base allows a company to spread the risk between different buyers, some of which may have better pricing power over a certain customer. Better pricing power is good for the buyer, but bad for the supplier, who usually loses control of the price and thus profit margins on any products they sell.
Usually a national government acts as a major buyer of some goods and services, because they have such a large ability to buy. - (edit / improve) |
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