Taiwanese original design manufacturers (ODMs) are facing declining profit margins as a result of the commoditization of PCs and notebooks, which contribute to most of their revenue. Further, severe competition, substitute products and a concentrated buyer industry increase the pressure on Taiwanese ODMs. In order to mitigate this problem, Taiwanese ODMs use several strategies, e.g. becoming an original brand manufacturer (OBM), such as Acer and Asus, or branching out into more profitable downstream markets, such as Wistron.

This paper uses a case study approach to analyse the current buyer-supplier relationship between Dell and Wistron. The findings suggest that Wistron`s PC and notebook manufacturing business suffers from low bargaining power. Leveraging customer competences by occupying a niche market does not only increase Wistron`s profitability, but can also increase Wistron`s bargaining power in its core business towards its customers.

Taiwanese original design manufacturers (ODMs) are facing declining profit margins as a result of the commoditization of PCs and notebooks, which contribute to most of their revenue. Further, severe competition, substitute products and a concentrated buyer industry increase the pressure on Taiwanese ODMs. In order to mitigate this problem, Taiwanese ODMs use several strategies, e.g. becoming an original brand manufacturer (OBM), such as Acer and Asus, or branching out into more profitable downstream markets, such as Wistron.

This paper uses a case study approach to analyse the current buyer-supplier relationship between Dell and Wistron. The findings suggest that Wistron`s PC and notebook manufacturing business suffers from low bargaining power. Leveraging customer competences by occupying a niche market does not only increase Wistron`s profitability, but can also increase Wistron`s bargaining power in its core business towards its customers.

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