Agile Business Analysis Practice Exam 2025 – All-in-One Resource to Excel in Your Certification!

In Porter’s Five Forces Analysis, an increase in prices due to a reduction in service availability exemplifies supplier power. This concept refers to the influence that suppliers have on the price and availability of goods and services in the market. When service availability decreases, it often leads to a situation where suppliers can charge higher prices because there are fewer alternatives available for buyers.

In this context, if suppliers are able to limit service availability—perhaps by reducing production capacity or controlling distribution channels—they can exert more control over pricing. Buyers may find themselves with fewer choices, making them more reliant on a limited number of suppliers who can dictate terms. This dynamic illustrates the power of the suppliers in the market, as they capitalize on the scarcity of services, ultimately forcing prices upward.

Recognizing supplier power is crucial for businesses to navigate competitive landscapes and to strategize accordingly when negotiating with suppliers or considering alternative sourcing options.