With regard to the threat of suppliers, product differentiation
A) reduces the threat of suppliers because a firm with a highly differentiated product can pass increased costs on to customers.
B) increases the threat of suppliers because a firm with a highly differentiated product is unable to pass increased costs on to customers.
C) has no impact on the threat of suppliers.
D) can either increase or reduce the threat of suppliers.

Question

Quizplus · Accepted Answer

Product differentiation can reduce the threat of suppliers by allowing firms to pass on increased costs to customers without losing them to competitors selling similar products. This gives the firm more bargaining power and reduces the supplier's power over them.

With Regard to the Threat of Suppliers, Product Differentiation