Asked by Myrick Kelly on May 29, 2024
Verified
Supplier power tends to be higher when
A) Suppliers are concentrated
B) There are high costs to switching between suppliers
C) Both A&B
D) None of the above
Suppliers Concentrated
A market condition where a small number of suppliers provide a large portion of a particular product or service, which can lead to less competition and higher prices.
Switching Costs
Economic barriers that prevent or discourage consumers from changing products or service providers.
Supplier Power
Refers to the ability of providers of goods or services to influence the price and terms under which those goods or services are sold.
- Recognize the significance of supplier and buyer influence on the strategic decisions made by a corporation.
Verified Answer
ZK
Zybrea KnightJun 01, 2024
Final Answer :
C
Explanation :
When suppliers are concentrated, they have more power over the companies that rely on them, as there are fewer alternative sources of supply available. Similarly, if there are high costs to switching between suppliers, then companies are less likely to switch, meaning suppliers have more power to set prices and terms. Therefore, both A and B contribute to higher supplier power.
Learning Objectives
- Recognize the significance of supplier and buyer influence on the strategic decisions made by a corporation.