BACHELOR OF BUSINESS ADMINISTRATION

BUSINESS ADMINISTRATION

STRATEGIC MANAGEMENT

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Which of these situations is likely to cause high bargaining power of suppliers?
A
Many customers with low brand loyalty
B
A few large suppliers dominate the market supply
C
Many alternative sources of supply
D
Resource inputs are not essential to product quality
Explanation: 

Detailed explanation-1: -If suppliers are concentrated compared to buyers – there are few suppliers and many buyers – supplier bargaining power is high. Conversely, if buyer switching costs – the cost of switching from one supplier’s product to another supplier’s product – are high, the bargaining power of suppliers is high.

Detailed explanation-2: -If buyers are more concentrated than sellers – if there are few buyers and many sellers – then buyer power is high. Whereas, if switching costs – the cost of switching from one seller’s product to another seller’s product – are low, the bargain power of buyers is high.

Detailed explanation-3: -The number of suppliers relative to buyers: There are a significant amount of suppliers relative to buyers (companies). Therefore, supplier power is low.

Detailed explanation-4: -Bargaining power of suppliers meaning can be understood by observing how suppliers can put pressure on organizations by raising their prices, lowering their quality or reducing the availability of their products.

Detailed explanation-5: -For example, if a firm needs steel to produce their product, and there is only one seller of steel in the market, then the steel company has a strong supplier power.

There is 1 question to complete.