When do suppliers hold significant power in a market?

Suppliers hold significant power in a market primarily when there is a small number of suppliers with few alternatives available for buyers. In this scenario, the suppliers can dictate terms more easily because the options available to buyers are limited. This situation often leads to higher bargaining power for suppliers, allowing them to set prices and influence the terms of trade.

When buyers have fewer alternatives, they have less leverage in negotiations. If a buyer wishes to procure specific goods or services that are only offered by a limited number of suppliers, they may find themselves at the mercy of those suppliers' pricing, delivery schedules, and other conditions. This imbalance can lead to a situation where suppliers can exert considerable influence over the market.

In contrast, having many suppliers available, as mentioned in one of the other options, typically diminishes any single supplier's power because buyers can easily switch between different suppliers, thus fostering competition. Similarly, if products can be easily substituted, the buyer's ability to find alternatives reduces a supplier's strength. When a supplier is reliant on the buyer, it also tends to weaken the supplier's negotiating position, contrary to the scenario where suppliers hold significant power.