In which type of relationship do both buyer and supplier operate independently?

In the context of buyer-supplier relationships, the arm's-length relationship is characterized by both parties operating independently without deep collaboration or mutual dependency. In such instances, the buyer and supplier conduct business transactions based primarily on price and terms, with minimal integration or long-term commitment. This approach allows both parties to maintain autonomy, providing flexibility in their dealings.

In arm's-length relationships, the focus is often on ensuring that each party meets their immediate needs without a significant investment in the other’s operations or long-term strategy. These relationships are typical in situations where buyers prefer to engage multiple suppliers for the same goods or services, seeking competitive advantages rather than developing close ties.

In contrast, a collaborative relationship or interdependent relationship would involve both parties working closely together, sharing risks and resources, which is not the case in an arm's-length setting. Similarly, a mutual partnership suggests a deeper connection that fosters joint goals and investments, which contradicts the independent nature inherent in an arm's-length relationship.