An industry that manufactures and sells a commodity-like product will face increased competition primarily because of greater: A) bargaining power of suppliers. B) bargaining power of buyers. C) threat of new entrants. D) threat of substitute products. what would you choose between B and D…
A. Manufacturing a product from limited resources (ie gold/silver).
i think it should be D
I think it is C! Commodity-like product does not mean it is like coal or gold or zince etc. It means the product is a standardized product with no differentiating features. Therefore the company is operating in perfect competition and faces greater competition from the threat of new entrants (low barriers to entry).
I go with B. Whats the answer?
Answer is D. I chose B as commodity => not specialized products… Buyers have more bargaining power as they can switch to other producers… Actually both B and D look correct.
I agree sumit_kansal. So the answer is B and D?
Per Schweser Answer is D.
Commodity like product like means that they are very similar product, so close substitute of that product will be greater threat. so, thats why ans D
Buyers have bargaining power for commodity-like products, true. But assume number of buyers is constant and no product differentiation, one should be more concerned about the existing (or upcoming) substitutes which can eat up your market share.
why not C guys?
No indication of information for C. Wheat is a commodity with few threats for new entrants. Answer should be B. Schwesser seems off on this one!
I would also say it is B.