BUSINESS ADMINISTRATION
STRATEGIC MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Low
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High
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Price sensitive buyers do not affectsuppliers’ prices
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Detailed explanation-1: -The higher the bargaining leverage and the more sensitive a buyer is towards a product’s price, the more power that buyer has, potentially resulting in lower prices, higher churn rates, and higher buyer surplus industrywide.
Detailed explanation-2: -Switching costs: If there are not many alternative suppliers available, the cost of switching is high. Therefore, buyer power would be low.
Detailed explanation-3: -For example, low buyer concentration, high switching costs, no threat of backward integration, less price sensitivity, uneducated consumers, consumers that purchase specialized products, and the absence of substitute products all indicate that buyer power is low.
Detailed explanation-4: -The bargaining power of buyers comprises one of Porter’s five forces that determine the intensity of an industry. The other forces include barriers to entry, industry rivalry, the threat of substitutes and the bargaining power of suppliers.