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With the XYZ company, they would not have a major problem as their purchases would consist of raw materials which they themselves would convert into end products.
The second factor of discussion is the buyer power. This gives an indication of how easy it would be for the buyer to force the prices down. This is driven by the number, and importance of each buyer to your business. Also, the cost of them switching to another firm also comes into play. Exceptional quality and after-sale service is important in XYZ, as it is a manufacturing firm. Should their product or service be regarded as inferior, buyers would not hesitate to go to other firms to purchase their goods...
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