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S E45: Business Strategy - How to boost profitability

Think Like An Economist

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The Fourth Force in the Five Forces Framework

Your bargaining power is just your ability to negotiate a good deal, right? That's right. Our next best alternative might be to sell to some one else, or to make a different product, or to cut back on production. And it's your next best alternative that determines your bargaining power, because if you don't get a good enough deal, that's what you'll do. People who have a really good back up plan also have the most bargaining power to get a good deal out of their first plan. This ipplies whichever side of the bargaining table you run.

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