Question

Jaguar produced so few cars that it couldn't get volume discounts from components suppliers. Jaguar managers sometimes could not even determine the "fair" price for a particular part. In terms of Porter's competitive forces framework, Jaguar's strategic disadvantage stemmed from low:

A) buyer power.
B) supplier power.
C) threat of new entrants.
D) threat of substitute products.
E) access to distribution channels.

Answer 1

Jaguar's disadvantage in Porter's competitive forces framework was due to low buyer power, which was a result of producing cars in low volumes and not obtaining volume discounts, affecting their ability to benefit from comparative advantage and economies of scale.

Step-by-step explanation:

Jaguar's strategic disadvantage, according to Porter's competitive forces framework, stemmed from low buyer power. When producing in low volumes, Jaguar could not get volume discounts from suppliers and sometimes could not even determine the "fair" price for parts. This situation contrasts with economies that benefit from economies of scale in international trade, where large producers can supply an entire country and still engage in competition due to dynamic comparative advantage. Slicing up the value chain and engaging in international trade can provide consumer variety and drive innovation and quality improvements due to competitive pressure from firms around the world. In Jaguar's case, the low volume inhibited their ability to benefit from comparative advantage and exposed them to higher supply costs.