How does a merger involving significant customers typically impact the supplier's pricing strategy?

A merger involving significant customers can create pressure on the supplier's margins primarily due to the increased bargaining power that the newly merged entity may possess. When two large companies combine, they typically have greater market influence and may negotiate more favorable terms with their suppliers. This situation often leads to suppliers facing demands for lower prices or improved terms, as the merged customer now has the potential to purchase in larger volumes or shift their business to alternative suppliers if negotiations do not meet their expectations.

Furthermore, if the merged company decides to prioritize cost efficiency, they may exert pressure on suppliers to lower prices, thereby affecting the suppliers' profitability. The dynamics of supply and demand can also shift, particularly if the merger alters the competitive landscape, leading to suppliers having to compete more aggressively, which might further constrain their margins.

In contrast, the other options do not fully capture the effects of such mergers on suppliers' pricing strategies. For instance, while increased pricing expectations and stable supplier margins might occur in some contexts, they do not reflect the typical outcome of such mergers, where margins tend to be pressured instead. Therefore, understanding the relationship between significant customer mergers and supplier pricing strategies is essential for grasping the broader implications on market dynamics and supplier relationships.