How suppliers sometimes overestimate their power in a supply chain

The New York Times (November 21,2012) describes the role, in 1861, of Southern US cotton growers who supplied cotton to British mills and imported household furniture, thus serving as a source of supply and demand. In April 1861, when the US Civil war started, confederate President Jefferson Davis blocked cotton supply to Britain, expecting the British textile and other manufacturing to be impacted significantly and draw Britain into supporting the South. But a mild winter, a slight price increase for cotton, shifts to imports from India and Egypt, and decreased working hours for employees was the way the British textile supply chain adjusted. Did the South overestimate its cotton supplier power falsely or was the global supply chain’s adjustment a novel business capability? How should suppliers include the possible contingent actions by buyers while assessing their bargaining power and the impact of walking away ?

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About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues and tagged , , , , , , . Bookmark the permalink.

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