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Assignment No:1

NAME: S.M Saad Raza

SID:36718

Submitted to: Ather Qadeer


BALANCING THE POWER OF BUYER
AND SUPPLIER
In the specific aspect of business known simply as the sale, there are two
entities which are primarily involved. The two entities are the buyer and the
supplier. These two partake in the sale where in its elements circulate things
such as currency and commodity (e.g. services and goods).
The buyer 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 buyer 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 buyer 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 where
in 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.