The bargaining leverage of suppliers is greater when
A)only a small number of suppliers exist and when it is difficult for industry members to switch to attractive substitutes.
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)it makes good economic sense for industry members to vertically integrate backward.
E)the supplier industry is composed of a large number of relatively small suppliers.

Question

Quizplus · Accepted Answer

The bargaining leverage of suppliers is greater when only a small number of suppliers exist and when it is difficult for industry members to switch to attractive substitutes because this gives the suppliers more power to negotiate higher prices and better terms.

The Bargaining Leverage of Suppliers Is Greater When