491 Project

491 Project - Management 491 Suppliers BARGAINING POWER OF...

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Management 491 Suppliers BARGAINING POWER OF SUPPLIERS Under Porter’s five forces model , there are a few threats company managers are dealing with the bargaining power of suppliers in the bottled and canned soft drink industry . When prices are increased and product quality is reduced, this gives suppliers the ability to exert power over firms in an industry. If an industry cannot counterfeit the price increases from suppliers, then the profitability of the company is going to be reduced due to the supplier’s actions. A supplier is most powerful when it is dominated by a few large companies and is more concentrated than the industry which it sells. Coke and Pepsi largely dominate this industry giving suppliers a larger bargaining power. Other factors giving suppliers more power are when there are no substitute products available to the industry companies, when supplier goods are very vital to the buyers in the industry, and when the effectiveness of the supplier’s products has created high switching costs for the industry firms. One thing is that this industry only concentrates on a few inputs in producing their
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491 Project - Management 491 Suppliers BARGAINING POWER OF...

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