Bargaining Power of Suppliers

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.