The Bargaining Leverage of Suppliers Is Greater When

question 22

Multiple Choice

The bargaining leverage of suppliers is greater when

• A) there are no good substitutes for the items being furnished by the suppliers and the number of suppliers is relatively small.
• B) industry members incur low costs in switching their purchases from one supplier to another.
• C) industry members purchase in large quantities and thus are important customers of the suppliers.
• D) there is extensive seller-supplier collaboration.
• E) the supplier industry is composed of a large number of relatively small suppliers.

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Definitions:

Substitutability

The degree to which one product or service can be replaced by another to satisfy the same need or want.

Comparative Advantage

Comparative advantage refers to the ability of an entity to produce a good or service at a lower opportunity cost compared to others.

Production

The process of creating goods or services by combining various resources like labor, materials, and technology.

Feasible Terms

Conditions or criteria that can be realistically achieved or met in a particular context or agreement.