ACCA BT · Chapter 2 · Question 7 of 11
Which of the following is most likely to INCREASE the bargaining power of a company's suppliers?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The company would incur high costs if it switched to a different supplier
Explanation
High switching costs lock the buyer in and strengthen the supplier's position. Many suppliers of an identical product, a buyer that takes a large share of suppliers' output, and a credible threat of backward integration by the buyer all reduce supplier power.
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