Question

john petersen is thinking about starting a firm in the specialty chemical industry. in the industry analysis john has been conducting, one thing he has noticed is that the specialty chemical industry is characterized by the following factors: high supplier concentration, high switching costs for buyers when they switch from one supplier to another, and no attractive substitutes for the products that most of the suppliers provide. these factors concern john, because they tell him that the profitability of the specialty chemical industry is suppressed by the:

Answer 1

The profitability of the specialty chemical industry is suppressed by supplier power.

Step-by-step explanation:

The factors of high supplier concentration, high switching costs for buyers, and no attractive substitutes for products in the specialty chemical industry indicate that the profitability of the industry is suppressed by supplier power. Supplier power refers to the influence that suppliers have over the industry and their ability to control prices or terms of supply. In this case, the high concentration of suppliers, along with the difficulty of switching to alternative suppliers and the absence of attractive substitutes, gives suppliers more bargaining power, which can limit the profitability of firms in the industry.