NISM Certifications · NISM-Series-XV: Research Analyst · Industry Analysis
Under Porter's five forces framework, which situation would most clearly indicate HIGH bargaining power of suppliers to an industry?
Supplier bargaining power is high when only a few suppliers dominate and their input is critical with no close substitutes, so industry firms cannot easily switch or negotiate prices. Many interchangeable suppliers or low switching costs reduce supplier power.
- AMany alternative suppliers offering identical inputs at low switching cost
- BA few suppliers dominate and the input is critical with no close substitutesCorrect
- CBuyers are large and concentrated
- DNew entrants face low entry barriers
Explanation
Supplier power is high when suppliers are few, inputs are differentiated or critical, and switching costs are high. Option A describes weak supplier power, C relates to buyer power, and D relates to threat of new entrants.
Did you get it right without looking?
One question tells you little. A timed set on Industry Analysis shows your real accuracy, how long you take and where you lose marks.
More Industry Analysis questions
- A research analyst compares two cement companies. Company A has a four-firm concentration ratio for its industry of 80% and Company B's indu…
- Which of the following best describes a cyclical industry, as distinct from a defensive industry?
- Which of the following is typically a feature of the 'maturity' stage of an industry life cycle?
- An analyst observes that an industry has high fixed costs, low product differentiation, and exit barriers that keep unprofitable firms in bu…
- In the industry life cycle framework, which stage is typically characterised by slowing growth in sales, consolidation among competitors, an…
- In industry analysis, which of the following best describes the 'cyclical' nature of an industry such as automobiles or cement?