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  • Supplier Power: Introduction To Strategic Management Week 2

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    Supplier power refers to the bargaining power that suppliers have over firms in an industry. Supplier power will increase if there is a high level of supplier concentration relative to the industry, suppliers provide highly differentiated inputs, inputs have a strong impact on firm's costs or differentiation, switching costs are low for suppliers but high for firms, there are no substitute inputs available, the importance of volume to suppliers is low, the cost of inputs is low relative to total industry purchases, supplier inputs are important to firms in terms of price and quality, and the threat of forward integration by suppliers is high relative to the threat of backward integration by firms.

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    Supplier power refers to the bargaining power that suppliers have over firms in an industry. Supplier power will increase if there is a high level of supplier concentration relative to the industry, suppliers provide highly differentiated inputs, inputs have a strong impact on firm's costs or differentiation, switching costs are low for suppliers but high for firms, there are no substitute inputs available, the importance of volume to suppliers is low, the cost of inputs is low relative to total industry purchases, supplier inputs are important to firms in terms of price and quality, and the threat of forward integration by suppliers is high relative to the threat of backward integration by firms.

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    © All Rights Reserved
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    10 views2 pages

    Supplier Power: Introduction To Strategic Management Week 2

    Uploaded by

    mzai2003
    Supplier power refers to the bargaining power that suppliers have over firms in an industry. Supplier power will increase if there is a high level of supplier concentration relative to the industry, suppliers provide highly differentiated inputs, inputs have a strong impact on firm's costs or differentiation, switching costs are low for suppliers but high for firms, there are no substitute inputs available, the importance of volume to suppliers is low, the cost of inputs is low relative to total industry purchases, supplier inputs are important to firms in terms of price and quality, and the threat of forward integration by suppliers is high relative to the threat of backward integration by firms.

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    © All Rights Reserved
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    of 2

    Introduction to Strategic Management

    Week 2

    Supplier Power

    © All Rights Reserved, Indian Institute of Management Bangalore


    Introduction to Strategic Management
    Bargaining Week 2

    power of Will increase if...


    Suppliers
    High supplier concentration relative to industry

    Highly differentiated inputs

    Strong impact of inputs on cost/differentiation

    Low switching costs for suppliers but high for industry firms

    Absence of substitute inputs

    Importance of volume to supplier low

    Cost relative to total purchases in the industry: low

    Supplier input important (price/quality) to Industry

    High threat of forward integration by suppliers relative to threat of backward


    integration by industry

    © All Rights Reserved, Indian Institute of Management Bangalore

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