IBF Associates manufactures automotive components such as seat belts, seats, mufflers, etc. The company supplies its products to leading car manufacturers in Europe and America. Which of the following statements, if true, would indicate that IBF has high bargaining power?
A) IBF has only four customers and all of them are large companies.
B) IBF's customers do not expect differentiation in products such as seatbelts and mufflers.
C) Automobile companies have signed a five-year contract with IBF.
D) The automobile industry in Europe is characterized by low levels of competition.

Question

Quizplus · Accepted Answer

A long-term contract like a five-year agreement suggests that IBF has secured a stable demand for its products, indicating high bargaining power.

IBF Associates Manufactures Automotive Components Such as Seat Belts, Seats