Strategic partnering when the supply base is limited: a case study

This study considers a supply‐demand situation where a product has only a handful of supply firms and a large number of purchasing firms and compares the attitudes toward partnering of firms which are already in partnering relationships with those that are not. Noting that only 27 per cent of the buyers are currently in any alliance relationships, and most are not planning to be in one, the study reveals that buyers expressed a lukewarm, and sometimes negative, attitude toward the formation of alliances. There are no attitudinal differences between firms in alliance relationships, compared with those without, in five of seven questions on alliance and in the relative importance given 14 of 15 purchasing criteria. With most suppliers willing to provide the buyers with the same benefits, irrespective of whether they are in alliance relationships, it appears that the limitations imposed by the small supply base tend to exert competitive pressures on the suppliers, discouraging buyers from forming partnership relationships.