Question
Where firms in a focal industry make relationship-specific investments, this can increase supplier or buyer power in the five forces model. It can increase supplier
Where firms in a focal industry make relationship-specific investments, this can increase supplier or buyer power in the five forces model. It can increase supplier power if firms have invested in using a particular supplier's inputs (such that it is more difficult for firms to switch to another supplier). It can raise buyer power if firms have invested in producing an output that is only relevant for a particular buyer (since it is more difficult for firms to switch to another buyer without changing their internal production processes). Which of the following is not an example of a relationship-specific investment?
A bottling company that has bought equipment designed only to make Coca-Cola bottles, which have different designs to other firms | ||
A furniture company that uses the same modular base across a wide range of product designs, so that the manufacturers it contracts with can switch between product lines | ||
An airline that trains and recruits flight crew only to operate one specific type of aircraft |
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