Bargaining power of the buyers remains moderate, and there is less chances in increase or decrease in bargaining power, the factors affecting bargaining power are:
- Chemicals are the major inputs in the company.
- Switching cost of the suppliers are more, because of long term agreements.
- The chemical products are not highly differentiated.
- The chemical industries have more end users.
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Threat for substitute remains weak, and in long run varies with the demand, the major factors affecting the substitutes are:
- The buyers need the same type of chemicals for their usage.
- Changing chemical composition involves more R&D costs.
- Substitutes for the chemicals are rare.
The industrial rivals in the chemical industry is high, and have more tendency to increase, reasons beyond the high rivals are:
- High competition in gaining market share.
- Majority of the players are globally influenced
- Economics of scale is high, so more competition in pricing strategy
- Fixed costs are high, maintenance and existing cost are high.
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