Question

The ABC Company is one of many companies that owns and operates mines that produce raw material used for air filtration in enclosed environments. Its only customers are two large companies that produce air-filtration systems. According to Porter’s Five Forces Framework, which of the following is the greatest competitive threat to its continued profitability? * 1 point __a. The bargaining power of buyers __b. The possibility of new entrants __c. Identifying new markets __d. The power of complements

Answer 1

Based on the information provided, the greatest competitive threat to ABC Company's continued profitability according to Porter's Five Forces Framework is the bargaining power of buyers.

Porter's Five Forces analysis considers:

- Bargaining power of suppliers

- Bargaining power of buyers

- Threat of new entrants

- Threat of substitute products

- Rivalry among existing competitors

In this case, ABC Company has only two major customers buying its raw materials. This means the buyers likely have strong bargaining power and can negotiate prices down, squeezing ABC's profit margins.

The threat of new entrants or substitute products seems low since ABC produces a specialized raw material. And with no mention of major rivals, competitive rivalry is likely weak.

While identifying new markets could be an opportunity, it does not represent a major threat to ABC's current profit levels based on the information given.

In conclusion, the strongest force threatening ABC's profits is the bargaining power of its two major buyers. This bargaining power represents the greatest competitive threat to continued profitability.