What Determines the Bargaining Power of Suppliers?
Several factors influence the bargaining power of suppliers:
Supplier Concentration: If there are few suppliers for a particular input, they can exert more control over prices. Availability of Substitutes: If alternative sources of supply are readily available, the bargaining power of any single supplier diminishes. Switching Costs: High switching costs for businesses make them more dependent on existing suppliers, thereby increasing the suppliers' power. Importance of Volume: Suppliers may offer better terms to businesses that purchase in large volumes.