ACCA Applied Knowledge · Business and Technology · Competitive factors
In Porter's Five Forces model, which of the following would most directly increase the bargaining power of buyers in an industry?
Standardised products available from many suppliers increase buyer power, because customers can switch easily and negotiate lower prices. High switching costs, many small dispersed buyers and strong brand loyalty all weaken buyer power, so they would not increase it.
- AHigh costs for customers of switching to a rival supplier
- BA large number of small, dispersed customers
- CStandardised products that are available from many suppliersCorrect
- DStrong brand loyalty towards the industry's products
Explanation
Buyer power rises when products are undifferentiated and many alternative suppliers exist, because buyers can easily play suppliers against one another. High switching costs, dispersed small customers and brand loyalty all reduce buyer power.
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