ACCA Strategic Professional · Strategic Business Leader · Competitive forces
Zenith Cloudware sells accounting software to small firms. Customers can switch to rival products at almost no cost, and many comparable products exist at similar prices. Which force in Porter's Five Forces is most clearly high in this case?
Buyer power is high because customers face negligible switching costs and can choose among many similar products. This lets them press for lower prices or better terms. The case describes direct rivals, not different-type products, so substitutes are not the main issue.
- ABargaining power of buyersCorrect
- BThreat of new entrants
- CBargaining power of suppliers
- DThreat of substitutes
Explanation
Low switching costs and many comparable alternatives let customers push down prices and demand better terms, which is the definition of strong buyer power. Substitutes would concern products meeting the same need in a different way, not similar rival software.
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