Question

Suppose you are a sales representative for Advanced Micro Devices (AMD) in Japan. You are trying to convince Toshiba to buy your company's superfast Opteron microprocessor for its new laptop computer. Toshiba's representative seems interested, but finally does not place an order. Confidentially, the representative tells you that he is afraid that Intel will withhold shipments of its Pentium 4 if he does business with AMD. Thinking about Intel's role in this scenario, which of the following elements of the five forces model is evident here?

A) barriers to entry
B) bargaining power of suppliers
C) bargaining power of buyers
D) threat of substitute products
E) threat of new entrants

Answer 1

The element of the five forces model evident in this scenario is the bargaining power of buyers. The Toshiba representative is concerned that Intel will withhold shipments of its Pentium 4 if they do business with AMD.

Step-by-step explanation:

In this scenario, the element of the five forces model that is evident is the bargaining power of buyers.

The Toshiba representative is concerned that Intel, their supplier, will withhold shipments of its Pentium 4 if they do business with AMD. By expressing this fear, the representative is demonstrating his bargaining power as a buyer, as he believes that Intel has enough influence to control the supply of their product and exert pressure on Toshiba.

This situation highlights how the bargaining power of buyers can impact a company's decision-making process and its relationships with suppliers.