Question

A segment is unattractive if the company's suppliers are able to raise prices or reduce quantity supplied. Which of the following is the best illustration of the threat of suppliers' growing bargaining power? A. Sears unsuccessfully attempted to compete with WaI-Mart and Kmart. B. McDonald's is the largest fast food franchise and is still growing. C. The U.S. Post Office has merged package operations with FedEx. D. Oil companies must purchase a significant amount of their product from OPEC. E. Wal-Mart has almost no competitors in its market space.

Answer 1

D

Step-by-step explanation:

The bargaining strength of suppliers is one of Porters five forces. The higher the bargaining power, the less attractive a segment is as companies would not have less power to negotiate prices for their supplies.

Bargaining power would be lower where there are less number of suppliers. This is the case with oil companies that have to purchase their oil from OPEC. They have no choice but to buy from OPEC. If OPEC increases oil prices, oil companies don't have the option of buying from another supplier