Podcast
Questions and Answers
What impact does a lower cost to establish new businesses have on competitive pressure?
What impact does a lower cost to establish new businesses have on competitive pressure?
- Has no impact on competitive pressure
- Makes market entry more selective
- Increases competitive pressure (correct)
- Decreases competitive pressure
How does unused capacity within an industry typically affect competition?
How does unused capacity within an industry typically affect competition?
- Higher levels of unused capacity foster greater competition (correct)
- Less unused capacity leads to increased competition
- Higher levels of unused capacity reduce competitive intensity
- Unused capacity has no effect on competition
What role do market forces play in procurement negotiations?
What role do market forces play in procurement negotiations?
- They refer to various factors influencing buying and selling (correct)
- They include only political influences
- They do not influence negotiation strategies
- They only represent economic factors
What is a critical step in preparing for negotiation in procurement?
What is a critical step in preparing for negotiation in procurement?
Which factor increases the likelihood of competition among products or services?
Which factor increases the likelihood of competition among products or services?
In what way does an understanding of negotiation circumstances benefit a procurement team?
In what way does an understanding of negotiation circumstances benefit a procurement team?
What is the focus when preparing to review a supplier's proposal?
What is the focus when preparing to review a supplier's proposal?
What is a potential consequence of effective branding strategies in procurement?
What is a potential consequence of effective branding strategies in procurement?
What is a key factor that can limit competition in procurement negotiations?
What is a key factor that can limit competition in procurement negotiations?
How does higher competition in the market typically impact pricing?
How does higher competition in the market typically impact pricing?
Which of the following is a typical objective of suppliers during negotiations?
Which of the following is a typical objective of suppliers during negotiations?
What aspect is crucial when assessing the competitive environment in procurement?
What aspect is crucial when assessing the competitive environment in procurement?
What constitutes a typical economic outlook for a segment of the economy?
What constitutes a typical economic outlook for a segment of the economy?
When formulating procurement strategies, which internal factor should be primarily assessed?
When formulating procurement strategies, which internal factor should be primarily assessed?
What is the relationship between competition and the willingness of suppliers to provide additional services?
What is the relationship between competition and the willingness of suppliers to provide additional services?
Which of the following factors is NOT typically considered when evaluating market conditions?
Which of the following factors is NOT typically considered when evaluating market conditions?
What primary factors must infrastructure purchasing requirements align with?
What primary factors must infrastructure purchasing requirements align with?
Which of the following best describes effectivity targets in purchasing?
Which of the following best describes effectivity targets in purchasing?
What role does monitoring external factors play in procurement?
What role does monitoring external factors play in procurement?
Which of the following is an example of a strategic target in purchasing?
Which of the following is an example of a strategic target in purchasing?
How are purchasing targets primarily categorized?
How are purchasing targets primarily categorized?
Which element is NOT typically considered a part of risk management in procurement?
Which element is NOT typically considered a part of risk management in procurement?
What is a key outcome of defining purchasing strategies?
What is a key outcome of defining purchasing strategies?
Which factor is linked to external influences affecting procurement?
Which factor is linked to external influences affecting procurement?
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Study Notes
Competitive Pressure Factors
- Lower establishment costs for new businesses increase competitive pressure in markets.
- Higher unused capacity within an industry can enhance competition levels.
- Dominant brands with effective branding strategies reduce competitive intensity by increasing desirability.
Market Dynamics
- Easily substitutable products or services lead to heightened competition across industries.
- Market forces encompass economic, physical, and political factors influencing buying and selling.
Negotiation Preparation
- A thorough understanding of the negotiation climate aids in effective planning.
- Selecting and orienting a cross-functional team ensures alignment towards common objectives.
- Detailed review of the supplier’s proposal is crucial to identify needs and potential gaps.
Market Conditions
- Market conditions include supply availability relative to demand and the number of available suppliers.
- Key considerations include market share distributions, profitability, and economic outlook for the segment.
- The relationship with suppliers can significantly affect negotiation dynamics and strategy formulation.
Competitive Environment
- Limited supplier qualifications or intellectual property rights can hinder competitive bidding.
- Overall competition in markets can lower prices and heighten suppliers' willingness to offer additional services.
Competition Evaluation
- Assess the number of qualified suppliers; higher numbers foster greater competition.
- Increased procurement volumes can attract competition for business in favorable markets.
- Analyze entry barriers for products or services alongside internal purchasing requirements.
Purchaser’s Strategic Objectives
- Monitoring external factors informs the impact of the corporate environment on company goals.
- Defining purchasing targets includes assessing efficiency and effectiveness split into strategic and operational goals.
- Targets aim for safety, growth, and optimization in costs, quality, and supply chain effectiveness.
Codes of Conduct
- Codes of conduct should reflect fundamental purchasing activity designs.
- Guiding principles may include commitments to fair treatment of suppliers and adherence to social, ecological, and ethical standards.
- Encouraging compliance to combat corruption is vital within supplier relationships.
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