Although the reduction of transport costs is undoubtedly positive for the company's cost structure and therefore for its competitive position in the market, the construction of a coal-fired power plant next to its main coal supplier effectively grants that supplier a monopoly on raw material contracts. A better strategy could perhaps be to locate near multiple abundant sources of coal suppliers where there are few coal-fired power plants currently and where there are expected to be few in the future (due to environmental or geographic constraints, etc. ), or to enter into a long-term joint venture (with strong termination penalties) with the primary coal supplier before building the plant, or to enter into a long-term fixed contract on the price of future coal supply. Separately, the company may seek to hedge against the future price of coal on the open market; but this is subject to significant difficulties as if the company were not part of a larger conglomerate, it may not have the resources to develop the skills needed to compete effectively in this area and, even if it did, it may not be wise to do so Anyway. Another solution could be to acquire the coal supplier. This is subject to a number of key competency issues, as is the hedging strategy, but may be worth pursuing overall if market dynamics lend themselves to such a strategy.