Making relationship-specific investments can _____ bargaining power because they can _____.
A)strengthen; worsen the company's next-best alternative
B)strengthen; strengthen the other party's profit margin
C)weaken; worsen the company's next-best alternative
D)weaken; strengthen the other party's profit margin

Question

Quizplus · Accepted Answer

Making relationship-specific investments often weakens a company's bargaining power because these investments are tailored to a specific relationship, making it harder for the company to switch to alternatives without incurring significant costs. This dependency can worsen the company's next-best alternative, effectively weakening its bargaining position.

Making Relationship-Specific Investments Can _____ Bargaining Power Because They Can