ACCA Applied Knowledge · Business and Technology · Competitive factors
A regional bank finds that customers can easily move their accounts to rival banks because the process is free and takes one day. Which of Porter's five forces does this MOST directly strengthen?
The force strengthened is the bargaining power of buyers. When switching costs are negligible, customers can move to rivals easily, forcing the bank to compete harder on price and service. It is not about new entrants or suppliers.
- ABargaining power of buyersCorrect
- BThreat of new entrants
- CBargaining power of suppliers
Explanation
Low switching costs make it easy for customers to move to rivals, which increases buyer power. The threat of entrants concerns new firms entering, and supplier power concerns input providers.
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