Question

The CPU manufacturing industry has long been dominated by two large computer chip manufacturers, Intel and AMD. Recently, the demand for CPUs is low, and Intel and AMD aggressively compete for orders from computer makers such as Dell and HP. What effect will these conditions have on the CPU manufacturing industry? Select one:

a. It will make the industry less attractive because of decreased power against buyers.
b. It will make the industry more attractive because of decreased power of buyers.
c. It will make the industry more attractive because of increased power of buyers.
d. It will make the industry less attractive because of increased power against buyers.

Answer 1

The correct option is A,it will make the industry less attractive because of decreased power against buyers.

Step-by-step explanation:

The number of suppliers in the industry has increased hence buyers bargaining power has increased since they have more to choose from,as a result the manufacturers' power against the buyers has reduced since they can no longer dictate the terms of purchase such price and specifications.

It goes to show that any manufacturer that wants to keep its head above waters must succumb to wishes of the buyers.

From the foregoing, it is safe to say that the industry is less attractive to new entrant sellers as there has been a decreased power against the buyers.