The bargaining leverage of suppliers is greater when
A) there are no good substitutes for the items being furnished by the suppliers and the number of suppliers is relatively small.
B) industry members incur low costs in switching their purchases from one supplier to another.
C) industry members purchase in large quantities and thus are important customers of the suppliers.
D) there is extensive seller-supplier collaboration.
E) the supplier industry is composed of a large number of relatively small suppliers.

Question

Quizplus · Accepted Answer

When there are no good substitutes for the items being furnished by the suppliers and the number of suppliers is relatively small, the suppliers have greater bargaining leverage because industry members have no other option but to buy from them. This gives the suppliers more power to negotiate favorable terms and price.

The Bargaining Leverage of Suppliers Is Greater When