An important force within the Five Forces model is the bargaining power of suppliers. All industries need raw materials as inputs to their process. This includes labor for some, and parts and components for others. This is an essential function that requires strong buyer and seller relationships. If there are fewer suppliers or if they have certain strengths and knowledge, then they may wield significant power over the industry.
In this article, we will look at 1) understanding suppliers, 2) bargaining power of suppliers, 3) effect on target market, 4) example - the diamond industry, and 5) example – the fast food industry. Continue reading