Question

Under which conditions, according to the Porter five-forces model, can a supplier group gain power?

a. When there is low differentiation by the supplier
b. When there is a lack of importance of the buyer to the supplier group
c. When there is not a dominance by a few suppliers
d. When the supplier group does not pose a threat of forward integration

Answer 1

b. When there is a lack of importance of the buyer to the supplier group

Step-by-step explanation:

According to Porter there are five forces that can cause rivalry in a production industry. These are supplier power, threat of new entrants, buyer power, threat of substitutes, and degree of rivalry.

Supplier power is when suppliers are able to benefit from the producers by increasing prices of inputs and gaining some industry profit. Since suppliers supply input and labour to the producer they have a greater control of there is lack of importance of the buyer to the supplier group.

This means that the supplier group has more control on price and quality it supplies to the buyer with buyer having little choice but to buy.

If however buyer is more important to the supplier it means they can control price and quality of inputs