Question

Levin and Co. is a group of oil refineries that has been in the news recently. The company had to stop production for over two weeks because their key supplier refused to sell them crude oil at the old prices. Even after rounds of negotiations, the supplier refused to give in to the demands of Levin and Co., and finally, the company had to acquire the raw material from the same supplier because alternative suppliers, though abundant, could not provide the quantities the company demanded at such short notice. This shows the role of ________ in increasing the power one enjoys.A. dependence.B. substitutability.C. alternatives.D. abundance.E. exchange

Answer 1

A) dependence

Step-by-step explanation:

Power and dependency are fundamental issues in supply chain management. When a firm has more potential suppliers, the bargaining power of the firm increases (due to greater competition). But if a firm has a small number of potential suppliers, then the bargaining power of the firm decreases.

In this case, Levin and Co. had no bargaining power over its supplier because it was totally dependent on it, it didn't have any alternative suppliers.