For a semiconductor manufacturer, only a few makers can supply the manufacturing equipment it needs, so the equipment makers have the upper hand in negotiating prices and delivery times. Among the competitive forces of five forces analysis, which does this situation correspond to?

Answer: A. Bargaining power of suppliers

Five forces analysis, proposed by Michael Porter, examines the five competitive forces that determine an industry's profitability: rivalry among existing competitors, the threat of new entrants, the threat of substitutes, the bargaining power of suppliers and the bargaining power of buyers. When there are few companies supplying parts, materials or equipment and alternatives are hard to source, suppliers have strong bargaining power, purchase costs rise and the company's profit is squeezed. Conversely, when the customers buying the products are concentrated in a few large companies, buyers have strong bargaining power.

• A. Correct. The supplying side has few companies and a strong position.
• B. This is the power of the customers buying the products to demand price cuts and the like. In this situation the equipment makers are the suppliers.
• C. This is the threat that new companies entering the industry make competition fiercer.