What is bargaining power of suppliers?

Bargaining power of suppliers is one of the five forces in Porter’s industry analysis framework that determines the attractiveness and profitability of an industry. It refers to the ability of suppliers to influence the price, quality, or availability of their products or services to their buyers.

What are some examples of bargaining power?

In terms of aircrafts for example, only two major suppliers exist: Boeing and Airbus. Boeing and Airbus therefore have substantial bargaining power on the prices they charge. The bargaining power of buyers is also described as the market of outputs.

What causes high bargaining power of suppliers?

High bargaining power of suppliers results from fewer competing industry suppliers, product or service differentiation, a lack of product or service substitutions for the buyer, and high switching costs. Low supplier bargaining power from competitive rivalry or lower demand relative to supply results in higher buyer power.