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Unformatted text preview: seller’s output
Purchase represents a significant fraction of buyer’s costs or purchases
Purchase standard or undifferentiated product
Easy for buyer to switch to alternative products
Buyer earns low profits
Buyer could backward integrate Bargaining Power of Suppliers
• Powerful suppliers can force higher costs on to
• Supplier power is “HIGH” if:
– Few suppliers
No substitutes for input
substitutes for input
Suppliers have differentiated product
Costly to switch suppliers
The supplier’s product is an important input to buyers’ business
Supplier could manufacture product (forward integrate) Threat of Substitutes
• The competitive pressure provide...
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This note was uploaded on 08/16/2011 for the course MGMT 110 taught by Professor Zhang during the Spring '11 term at UC Irvine.
- Spring '11