ACCA Strategic Professional · Strategic Business Leader · Competitive forces
Dovane Retail sells branded kitchenware. A new online platform allows customers to compare prices instantly and switch suppliers at no cost. Which change in Porter's five forces most directly results, and what is the implication for Dovane?
Buyer power increases. Instant price comparison and free switching make customers more price-sensitive and able to play suppliers against each other, squeezing margins. Dovane should respond through differentiation, brand strength or loyalty measures that raise customers' reasons to stay.
- AIncreased bargaining power of buyers, pressuring Dovane's prices and marginsCorrect
- BIncreased bargaining power of suppliers, raising input costs
- CReduced threat of substitutes because comparison increases loyalty
- DHigher barriers to entry because platforms require large investment
Explanation
Price transparency and zero switching costs strengthen buyers, who can easily pressure prices. Dovane should differentiate or build loyalty. The other options describe different forces not affected by comparison tools.
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