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We Word: Bargaining Power Of Buyer

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Bargaining power of buyers

Since We Word's buyers have many alternatives available for office space, and the options will only continue to expand, bargaining power of buyers is high. More companies similar to WeWork can easily be created because of the ease of duplicating its business model. Aside from the competition that will arise from mimicking their business model, it is possible that in the future years other forms of office space will become popular. According to Rivera (2017), demand has been increasing for mixed-use properties where retail, residential and commercial space reside within a single development has been and this trend is expected continue through 2022. As competition arises Wework will have to compete in terms of the …show more content…

Many factors come into play, yet the biggest reason why suppliers would increase cost of leases is the increase of buyers in the industry. New possible buyers in this industry would be growing companies, startups that are ready to expand and similar WeWork companies. Rivera (2017) includes how the improving economy influences on the increase of business developing and on the ability for business to expand. He states, “ The number of businesses is expected to rise in 2017, representing a potential opportunity for the industry… Drop in unemployment will require companies to lease more office space to accommodate new workers, further bolstering growth.” (Rivera, 2017) Since there will be with more business with large profits, there will also be service long-term contracts which will be attractive for the leasing companies. WeWork will also no longer be their preference since other business will also be getting properties for long term. It is obvious that with the growth of business the supply will become limited which will cause issues. Rivera (2017) states, “In metropolitan areas, where land is scarce, rental rates tend to be higher because of limited capacity to meet demand. Furthermore, premium properties generally command higher incomes.Over the past five years, occupancy rates have mainly improved in the office and retail sectors, boosting demand for industry services. ” (Rivera, 2017) With limited options for wework they will have to deal with the suppliers ability to control the cost of a crucial component of the

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