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11 November, 10:47

Pacific Specialty Bikes store gets customized parts for its high-end models from a local manufacturer, Premium Supply. When the manufacturer announced a price increase, the bike store tried to switch to other local manufacturers but learned that they wouldn't be able to meet delivery schedules. As a result, Pacific Bike chose to pay higher prices from Premium Supply. Which of Porter's competitive forces does this demonstrate?

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  1. 11 November, 13:49
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    This situation demonstrates bargaining power of supplier.

    Explanation:

    Porter's Five Forces Framework is a method for analyzing competition of a business. It draws from industrial organization economics to derive five forces that determine the competitive intensity and, therefore, the attractiveness of an industry in terms of its profitability.

    The number and power of a company's competitive rivals, potential new market entrants, suppliers, customers, and substitute products influence a company's profitability. Five Forces analysis can be used to guide business strategy to increase competitive advantage.
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