Switching Costs, the Number of Buyers, and If the Items

question 88

Multiple Choice

Switching costs, the number of buyers, and if the items represent a relatively small portion of the cost of finished products are key considerations regarding the ________.

• A)threat of new entrants to the industry
• B)rivalry among companies competing in the industry
• C)bargaining power of suppliers
• D)bargaining power of buyers

---

Definitions:

Incremental Free Cash Flows

The additional cash flow a project generates for a company, calculated after accounting for the project's direct costs.

Conglomerate Mergers

Mergers between firms that operate in unrelated business activities, aiming for diversification and risk reduction.

Golden Parachutes

Large financial benefits or compensation packages given to top executives if the company is taken over by another firm, and they are terminated as a result of the merger or takeover.

Leveraged Buyouts (LBOs)

A financial transaction in which a company is acquired using a significant amount of borrowed money to meet the cost of acquisition, often using the assets of the company being acquired as collateral.