How can a firm exert greater control over its suppliers?

A firm can exert greater control over its suppliers by having fewer suppliers. This concept is rooted in the principles of supply chain management and relational contracting. When a firm reduces the number of suppliers it works with, it can develop deeper, more meaningful relationships with those remaining suppliers. This allows for better communication, collaboration, and alignment of goals.

Having fewer suppliers often leads to more significant investment in the relationship; the firm is more likely to establish long-term commitments and negotiate favorable terms and conditions. With fewer suppliers, the firm can also exercise greater influence over the supplier's operations, compliance, and quality standards, which enhances control over the supply chain.

In contrast, having more suppliers can dilute the firm's bargaining power and spread its attention and resources thinly, making it difficult to cultivate deeper partnerships or enforce control effectively. The other options, while they may have their own advantages in specific contexts, do not inherently provide the same level of control over suppliers as consolidating the supplier base does.