While industry forces have been favorable for a long time in the U.S.automotive industry,recent dynamics have lowered the profit potential of competing in this industry and thus reduced its attractiveness.The continued success of Tesla Motors in the industry will depend on other firm and industry factors.Which of the following represents one such factor that directly affects Tesla Motors?
A) Since suppliers of its key sources are few, the bargaining power of suppliers is high.
B) Since individual buyers do not have many choices, their bargaining power is low.
C) There is a lack of balance in demand and supply, demand far exceeds capacity within the industry.
D) There is a noticeable absence of complementary products and services for the industry.

Question

Quizplus · Accepted Answer

As mentioned in Chapter Case 3, an external industry force that Tesla Motors must address is the bargaining power of suppliers. Lithium-ion battery packs are key components for Tesla's electric engines. They are supplied by only a few technology firms such as Panasonic in Japan. Given that these sources are few, the bargaining power of suppliers in the electric car segment is quite high, further limiting the industry's profit potential.

While Industry Forces Have Been Favorable for a Long Time