Suppliers in an industry are most powerful when
A) there are few substitutes for the product suppliers sell.
B) switching costs are low.
C) companies in the industry can threaten to enter the suppliers' industry.
D) substitute products are readily available.
E) all of these choices

Question

Quizplus · Accepted Answer

When there are few substitutes for the product suppliers sell, they are able to charge higher prices and have more bargaining power. This is because customers have limited options and are willing to pay more to obtain the product. The other options do not necessarily give suppliers more power. Switching costs being low or substitute products being readily available can actually make suppliers less powerful, as customers can easily switch to another supplier or product. The ability of companies in the industry to enter the suppliers' industry may provide some leverage, but this is not always the case and is limited to specific situations.

Suppliers in an Industry Are Most Powerful When