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The bargaining power of suppliers varies by industry and includes but is not limited to:
- Supplier switching costs relative tofirmswitching costs- A firm may switch their costs to a supplier's competitor partially or the firm cuts its orders from the supplier. The supplier could switch it's costs by using degraded materials or even raise price per unit.
- Degree of differentiation and costs of inputs - Threatening to change the materials in their products to lower variable costs -- perhaps lowering the quality of the product
- Presence of substitute inputs- The availability and presence of substitute materials to use can affect the end product if the supplier is squeezed by buyers
- Strength of distribution channel- Their ability and efficiency of distribution of their products.
- Supplier concentration tofirmconcentration ratio- Does the supplier care about your B2B relationship? If not, their motivation to do business may cause stalls in negotiations and production.
- Employee solidarity (e.g.labor unions)- Although unfortunate at times for the supplier, labor union strikes may be a bargaining chip for the supplier in delaying orders and making sales. If their worker's are not unionized, there may be no threat of strikes and is a plus for a buyer to consider going with this supplier.
- Supplier competition- Only few suppliers with similar standards of quality in their products. This is an advantage for the supplier because they can just say "Where are you going to go?" in times of conflict between firm and supplier.
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