According to the Five Forces framework, how do suppliers with market power impact a company's profitability?
A)Suppliers with market power can charge higher prices on inputs the company needs to purchase, reducing the company's profits.
B)Suppliers with market power can charge higher prices on output the company needs to sell, raising the company's profits.
C)Suppliers with market power charge lower prices on inputs the company needs to purchase, raising the company's profits.
D)Suppliers with market power charge lower prices on output the company needs to sell, reducing the company's profits.

Question

Quizplus · Accepted Answer

Suppliers with market power can demand higher prices for inputs, which would reduce the profitability of the company purchasing those inputs. Higher input costs would lead to lower profit margins, unless the company is able to pass on the increased costs to its customers by raising prices for its products or services.

According to the Five Forces Framework, How Do Suppliers with Market