CA Inter P6 · Chapter 11 · Question 5 of 11
Large retail chains buying standardised packaged rice from many small millers are likely to have high bargaining power mainly because:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) They buy large volumes of an undifferentiated product and can switch between millers at little cost
Explanation
Buyer power is high when buyers are concentrated or buy large volumes, the product is standard, switching costs are low and buyers can threaten backward integration. Many small millers selling an undifferentiated product to a few large chains fits this pattern.
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