Question

In assessing buyer bargaining power in an industry, what factors determine whether it poses a strong or weak source of competitive pressure on industry members?

Answer 1

The factors that determine buyer bargaining power include market power, product similarity, barriers to entry, and competition.

Step-by-step explanation:

The factors that determine whether buyer bargaining power poses a strong or weak source of competitive pressure on industry members include:

1. Market Power: How much market power does each firm in the industry possess? If buyers have a large number of alternative suppliers to choose from, they have more bargaining power.
2. Product Similarity: How similar is each firm's product to the products of other firms in the industry? If the products are highly differentiated, buyers may have less power.
3. Barriers to Entry: How difficult is it for new firms to enter the industry? If barriers to entry are low, buyers have more power as they can switch to new entrants.
4. Competition: Do firms compete on the basis of price, advertising, or other product differences? If firms compete fiercely on price or offer unique products, buyers may have less bargaining power.