The purchasing manager has used which type of power?

A purchasing manager is having a negotiation with a supplier to extend the duration of the contract. In order to persuade the supplier to cut the cost by 10%, she promises to shorten the payment period from 45 days to 30 days for each delivery. The supplier’s representative does not agree the offer and clearly states that his proposed price is already lower than the market price.

The purchasing manager has used which type of power?
A . Reward
B . Expertise
C . Coercive
D . Informational

View Answer

Answer: A

Explanation:

In the scenario, to exchange cost cutting, the purchasing manager promises to ‘reward’ supplier shorter payment period. This is an example of reward power, which results from one person’s ability to compensate or reward another for compliance.

The reward does not need to be money, but could be introduction to other buyers in the group, positive references, agreement to trial new product, quicker payment or indeed any other variable that the buyer knows is attractive and valued by the supplier.