Question

when buyer can integrate backward, then what happens? group of answer choices buyer bargaining power decreases buyer bargaining power increases supplier bargaining power decreases supplier bargaining power increases

Answer 1

Backward integration increases the buyer's bargaining power and decreases the supplier's bargaining power, leading to a potential shift in market dynamics. The correct answers are option B and C.

Step-by-step explanation:

When a buyer can integrate backward, they essentially begin producing the goods or services that they were previously purchasing from suppliers. This gives them more control over the production process and reduces their dependency on suppliers, thereby affecting bargaining powers in the market.

As a result of backward integration, the buyer's bargaining power increases because they are not as reliant on the suppliers' prices and terms. Conversely, the supplier's bargaining power decreases because their customer base shrinks; their buyers are now self-sufficient and may no longer require the suppliers' services or products to the same extent. The ability of buyers to integrate backward can also lead to increased market competition as they can set the price for their own production, potentially disrupting existing market dynamics.