CIPS L4M2 Defining Business Need · Free Practice Question Medium
Question 8
In a marketplace, buyer power is strong when… Select TWO
- A buyers are more concentrated than sellers
- B sellers are more concentrated than buyers
- C threat of backwards integration is low
- D switching costs are low
- E buyers purchase in small volumes
Reveal correct answers
Correct answers: A, D
Explanation
Buyer power is strong when buyers are more concentrated than sellers, and when there is low switching costs.
This question (as well as the reverse - when is supplier power strong) comes up a bit in the exam. In a marketplace with a concentration of buyers, their power is strong- sellers are competing to sell to these guys. Low switching costs also makes buyer power strong- as they can change suppliers very easily and can use this as a threat in negotiations.
The other options are when supplier power is strong.
P.90
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