Which of the following is one of the most common ways a company can decrease supplier power in a competitive market?

• A. By increasing the number of suppliers it works with
• B. By limiting information about market prices
• C. By agreeing to exclusive contracts with a single supplier
• D. By reducing its own production scale

Answer: (A)

Verified step by step guidance

1. Understand the concept of supplier power: Supplier power refers to the ability of suppliers to influence the price and terms of supply. High supplier power means suppliers can demand higher prices or limit quality or quantity.
2. Recognize that decreasing supplier power means reducing the influence suppliers have over the company, which can improve the company's bargaining position and reduce costs.
3. Analyze the options: Increasing the number of suppliers a company works with diversifies supply sources, reducing dependence on any single supplier and thus decreasing supplier power.
4. Limiting information about market prices or agreeing to exclusive contracts with a single supplier typically increases supplier power or dependence, which is contrary to decreasing it.
5. Reducing the company's own production scale does not directly affect supplier power; it may even increase dependence on suppliers if production shrinks.