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CS Professional · Strategic Management and Corporate Finance · Strategic Analysis and Planning

A Chennai steel fabricator finds that its customers are few and large, can easily switch to imports, and push prices down every year. Which of Porter's forces is the most directly described?

The situation describes the bargaining power of buyers. Customers who are few, large, able to switch easily to imports and able to push prices down hold strong leverage over the firm. It is not supplier power, new entrants or substitutes, which relate to inputs, newcomers and alternative products.

  1. ABargaining power of buyersCorrect
  2. BThreat of new entrants
  3. CBargaining power of suppliers
  4. DThreat of substitutes

Explanation

Few, large customers who can switch to alternatives and force price cuts indicate strong bargaining power of buyers. Supplier power concerns input providers, entrants concern new competitors, and substitutes concern different products meeting the same need.

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