A small town has a thriving restaurant scene, with over a 150 dining establishments.

Question: A small town has a thriving restaurant scene, with over a 150 dining establishments. Seeking to reduce costs, several restaurants join together to negotiate for table linen supplies and laundering. How might that impact firms in the table linen industry?

  • Firms have decreased bargaining power, because the service they provide is cyclical (more around the holidays and during festivals and sporting events) rather than steady.
  • Firms have increased bargaining power, since there are so many of them.
  • Firms have decreased bargaining power, since they are negotiating with a larger block of buyers and competing against each other.
  • Firms have increased bargaining power relative to the restaurants since they control valuable and necessary services.

Answers: Firms have increased bargaining power relative to the restaurants since they control valuable and necessary services.

Conclusion of A small town has a thriving restaurant scene, with over a 150 dining establishments. Seeking to reduce costs, several restaurants join together to negotiate for table linen supplies and laundering. How might that impact firms in the table linen industry?

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