What happens when supplier bargaining power is high?

Prepare for the CIPS Defining Business Need (L4M2) Test with multiple choice questions and insightful explanations. Enhance your understanding and ensure success!

When supplier bargaining power is high, prices of products or services tend to be high. This dynamic occurs because suppliers who have significant bargaining power can dictate terms to buyers, leading to less competitive pricing. In situations where suppliers are few, have unique offerings, or are crucial to the buyer's operations, they can leverage their position to increase prices. As a result, buyers may face higher costs for goods and services, which can impact their overall profitability and market competitiveness. High supplier power often limits the negotiation capabilities of buyers, making it difficult for them to seek lower prices or better terms in their procurement processes.

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