Suppliers can exert bargaining power on firm in an industry by raising prices of raw materials and components. A supplier group is powerful in ht following circumstances.
- When the group is dominated by a few firms and is more concentrated than the industry it sells to.
- When the product is unique or differentiated.
- When it sells products having no substitutes.
- When the industry to which it supplies is not its important customer.
- When there is potential for forward integration by supplier.
When the product it supplies is important for the buying industry.