Competitive bidding makes suppliers reluctant to make investments that tie them closely to their trading partners.

Question

Quizplus · Accepted Answer

Competitive bidding creates an atmosphere where suppliers are more focused on offering the lowest possible price to win the bid, which can discourage them from making investments to strengthen relationships with their trading partners. This is because if they make such investments, it might increase their costs, and they may not win future bids if their prices are higher than their competitors. Hence, competitive bidding can make suppliers reluctant to make investments that tie them closely to their trading partners.

Competitive Bidding Makes Suppliers Reluctant to Make Investments That Tie