BUSINESS ADMINISTRATION
STRATEGIC MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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There are few buyers
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The products are standard or undifferentiated
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The buyer faces low switching costs
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The buyer earns high profits:
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Detailed explanation-1: -According to Porter, Rivalry among competing firms is usually the most powerful of the five competitive forces.
Detailed explanation-2: -The following conditions indicate that a buyer group is powerful: The buyer group is concentrated or purchases large volumes relative to the seller’s sales. Products purchased from the industry represent a significant percentage of the buyer’s costs or purchases.
Detailed explanation-3: -What is Buyer Power? Buyers have the power to influence price and the quantity of products sold. Powerful buyers can bargain on volume or switching costs or they can find substitute products. Price sensitivity also impacts the buyer/seller relationship.
Detailed explanation-4: -The following conditions indicate that a supplier group is powerful: It is dominated by a small number of companies and is more concentrated than the industry to which it sells. It is not required to contend with substitute products for sale in the industry. The industry is not one of the supplier’s important customers.