CAF-7 · Chapter 4 · Question 2 of 15
A cement manufacturer relies entirely on a single coal mining company for its fuel, due to the mine's close proximity and unique coal quality. There are no alternative coal suppliers nearby. According to Porter's Five Forces, this situation creates:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) High bargaining power of suppliers
Explanation
When a supplier is the sole source of a critical input and there are no easy alternatives, the supplier holds immense leverage over the buyer. This results in a high bargaining power of suppliers.
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