Influences on purchasing activities
Factors influencing purchasing <ul><li>P – political </li></ul><ul><li>E - economic </li></ul><ul><li>S - social </li></ul...
Think about each of these in relation to IBM’s purchasing activities……. ! <ul><li>Political </li></ul><ul><li>The nature a...
Discuss <ul><li>To what extent do the PESTEL factors influence the purchasing activities of </li></ul><ul><ul><li>IBM (Tra...
Porter’s five forces model
The Threat of Entry: Barriers to Entry Scale and experience Access to supply and distribution channels Expected retaliatio...
Why Are Substitutes a Threat? <ul><li>Substitutes   can reduce demand for a particular class of products as customers swit...
The Power of Buyers 2- Are buyers concentrated? What are the costs of switching? Does backward vertical integration exist?
The Power of Suppliers 2- Are suppliers concentrated? What are the costs of switching? Does forward vertical integration e...
Degree of Competitive Rivalry <ul><li>Competitor balance </li></ul><ul><li>Industry growth rate </li></ul><ul><li>High fix...
Discuss <ul><li>To what extent do the 5-competitive forces  influence the purchasing activities of </li></ul><ul><ul><li>I...
Problems when buying from overseas <ul><li>Cultural </li></ul><ul><li>Political and ethical </li></ul><ul><li>Communicatio...
Culture <ul><li>Pace of negotiation </li></ul><ul><li>Relationships </li></ul><ul><li>Language </li></ul><ul><li>Time orie...
Communication <ul><li>Time zone </li></ul><ul><li>Muslim’s weekend – Friday instead of Saturday and Sunday </li></ul><ul><...
Foreign exchange risks <ul><li>Transaction exposure </li></ul><ul><ul><li>Risk in an adverse exchange rate </li></ul></ul>
Legal difficulties <ul><li>What law shall govern the transaction? </li></ul><ul><li>Who will be the arbitrator? </li></ul>...
Discuss  <ul><li>Assess the influences of purchasing activities of IBM (transnational) and Keytronics (national).  </li></...
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205influencing factorsoverseas

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  • Here are some of the factors that should be considered under each of the headings. The categories may overlap and the lists of relevant factors are by no means exhaustive! Your assignment will require that you conduct an environmental analysis (internal and external) in relation to a chosen firm. All of these and more should be considered and analysed. We will spend the next weeks looking at each of them in more detail.
  • 205influencing factorsoverseas

    1. 1. Influences on purchasing activities
    2. 2. Factors influencing purchasing <ul><li>P – political </li></ul><ul><li>E - economic </li></ul><ul><li>S - social </li></ul><ul><li>T - technology </li></ul><ul><li>E - environmental </li></ul><ul><li>L – legal </li></ul>
    3. 3. Think about each of these in relation to IBM’s purchasing activities……. ! <ul><li>Political </li></ul><ul><li>The nature and stability of the government in power </li></ul><ul><li>Attitudes to taxation </li></ul><ul><li>Attitudes to social welfare </li></ul><ul><li>Attitudes to foreign trade and trading blocs </li></ul><ul><li>Technological </li></ul><ul><li>Spending on research by government and industry </li></ul><ul><li>Innovative developments </li></ul><ul><li>Rate of technology transfer </li></ul><ul><li>Economic </li></ul><ul><li>National economic trends, including: </li></ul><ul><li>Wage rates </li></ul><ul><li>GNP </li></ul><ul><li>Interest rates </li></ul><ul><li>Inflation </li></ul><ul><li>Unemployment </li></ul><ul><li>International economic trends </li></ul><ul><li>Business cycles (national and foreign) </li></ul><ul><li>Legal </li></ul><ul><li>Financial regulation </li></ul><ul><li>Product safety legislation </li></ul><ul><li>Health and Safety </li></ul><ul><li>Employment law </li></ul><ul><li>Socio-cultural </li></ul><ul><li>Demographics </li></ul><ul><li>Religious beliefs </li></ul><ul><li>Income distribution </li></ul><ul><li>Lifestyle </li></ul><ul><li>Attitudes to work and leisure </li></ul><ul><li>Attitudes to education and consumerism </li></ul><ul><li>Eco-environmental </li></ul><ul><li>Legislation on environmental factors </li></ul><ul><li>Changing attitudes to the environment </li></ul><ul><li>Energy consumption </li></ul><ul><li>Waste disposal </li></ul>
    4. 4. Discuss <ul><li>To what extent do the PESTEL factors influence the purchasing activities of </li></ul><ul><ul><li>IBM (Transnational), and </li></ul></ul><ul><ul><li>Keytronics (National)? </li></ul></ul>
    5. 5. Porter’s five forces model
    6. 6. The Threat of Entry: Barriers to Entry Scale and experience Access to supply and distribution channels Expected retaliation Legislation or government action Differentiation
    7. 7. Why Are Substitutes a Threat? <ul><li>Substitutes can reduce demand for a particular class of products as customers switch to alternatives. </li></ul><ul><li>Price/performance ratio </li></ul><ul><li>Extra-industry effects </li></ul><ul><li>E.g. </li></ul><ul><li>Typewriters and word processors </li></ul><ul><li>Vinyl records – CDs – MP3s </li></ul><ul><li>Carpets and laminate flooring </li></ul>2-
    8. 8. The Power of Buyers 2- Are buyers concentrated? What are the costs of switching? Does backward vertical integration exist?
    9. 9. The Power of Suppliers 2- Are suppliers concentrated? What are the costs of switching? Does forward vertical integration exist?
    10. 10. Degree of Competitive Rivalry <ul><li>Competitor balance </li></ul><ul><li>Industry growth rate </li></ul><ul><li>High fixed costs </li></ul><ul><li>High exit barriers </li></ul><ul><li>Low differentiation </li></ul><ul><li>Determined by factors such as the number and size of competitors </li></ul>2-
    11. 11. Discuss <ul><li>To what extent do the 5-competitive forces influence the purchasing activities of </li></ul><ul><ul><li>IBM (Transnational), and </li></ul></ul><ul><ul><li>Keytronics (National)? </li></ul></ul>
    12. 12. Problems when buying from overseas <ul><li>Cultural </li></ul><ul><li>Political and ethical </li></ul><ul><li>Communication </li></ul><ul><li>Quality </li></ul><ul><li>Foreign exchange risk </li></ul><ul><li>Legal difficulties </li></ul>
    13. 13. Culture <ul><li>Pace of negotiation </li></ul><ul><li>Relationships </li></ul><ul><li>Language </li></ul><ul><li>Time orientation </li></ul><ul><li>Information sharing and decision making </li></ul>
    14. 14. Communication <ul><li>Time zone </li></ul><ul><li>Muslim’s weekend – Friday instead of Saturday and Sunday </li></ul><ul><li>Are there Internet, email, fax, mobile telecommunication? </li></ul>
    15. 15. Foreign exchange risks <ul><li>Transaction exposure </li></ul><ul><ul><li>Risk in an adverse exchange rate </li></ul></ul>
    16. 16. Legal difficulties <ul><li>What law shall govern the transaction? </li></ul><ul><li>Who will be the arbitrator? </li></ul><ul><li>Terms and conditions applicable to cancellation, deliveries and delays </li></ul><ul><li>Protection of buyer against infringements of patents </li></ul><ul><li>Protection of the buyer against product liability </li></ul><ul><li>More (Pg 520) </li></ul>
    17. 17. Discuss <ul><li>Assess the influences of purchasing activities of IBM (transnational) and Keytronics (national). </li></ul><ul><ul><li>Consider the important factors that affect purchasing activities at: </li></ul></ul><ul><ul><ul><li>Transnational level and national level </li></ul></ul></ul><ul><ul><ul><li>Consider differences in culture, distance, logistic, exchange risks and etc </li></ul></ul></ul><ul><li>Note: </li></ul><ul><li>Transnational – buying from overseas </li></ul><ul><li>National – buying within the country </li></ul>

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