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Dear professor,
hope you are having good weekends.
the part of answer sheet for supplier power is that
” the supplier group’s products are largely undifferentiated and switching costs between suppliers appears to be reasonably low. Finally, it seems unlikely that the supplier group poses a credible threat of forward integration into light bulb manufacture and this will be a factor which reduces supplier bargaining power”
I understand undifferentiated and low switching costs lead to the decline of supplier power, but does this indicate that the supplier is not going to do forward integration?
is there any repercussion between these?
Regard
your studentI haven’t seen the question, But reading the answer suggests that the supplier might decide to embark on forward integration. This usually means that the supplier will then ‘supply itself’ in the next manufacturing stage. I would have expected that to increase supplier bargaining power because integration provides another use for the components rather than simply relying on existing customers.
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