If a supplier perceives that a firm will switch to another supplier in response to changes in exchange rates,trade barriers,or general political circumstances,that supplier might not be willing to make specialized investments in plant and equipment that would ultimately benefit the firm.This example demonstrates:

Question

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Maintaining strategic flexibility has its downside.If a supplier perceives the firm will change suppliers in response to changes in exchange rates,trade barriers,or general political circumstances,that supplier might not be willing to make investments in specialized plants and equipment that would ultimately benefit the firm.

If a Supplier Perceives That a Firm Will Switch to Another