Question

In the context of Porter's five forces model, the bargaining power of suppliers (auto dealers) is a ________ force when considering the example of auto dealers setting the price of new cars in which consumers are unable to verify the 'true price' of vehicles. strong weak

Answer 1

Strong.

Step-by-step explanation:

It's a strong force.

A strong suppliers force implies that buyers cannot replace their products for the competition, because incurs in a non-profitable buy for them. In this case, the fact that costumers cannot verify the actual price, gives power to the suppliers. In addition to this, if costumers want to replace products with other suppliers, cost are the same, because of the arrangements between dealers that always (in this cases) is set.

On the other hand, client's power is high if there is to much offer and low demand, but that's not a point in this case. Also, if the cost of replacing a product with another that do the same function and it's cheaper, in this case, clients have strong power. But, this last case doesn't show here either.