Strategic Management: Formulation and Implementation

Negotiating With Vendors

Purchasing negotiations should be tough-minded and include careful explanation of strategic considerations facing the company; the present and future market conditions must be carefully assessed.

Approval levels should be established for vendor price reductions and cost containment. Terms and conditions of sale are worth fighting over. The additional time referents the value of forgone interests on the size of the transaction for this period. Negotiation should not be threatening.

The final agreement should include mutual benefit and understanding.

Buying Imported Supplies

Foreign source often offer potentially lower costs. Therefore, buying foreign products is currently in style as an approach to solving company product cost problems. In buying foreign goods, trips must be made to identify, qualify, and negotiate with foreign suppliers.

The purchasing department might need to add expertise in foreign purchasing, if this is lacking. However, the used of domestic sources has also many advantages that include much less transit time, lower coordination costs, no currency risks, and easy of communication.

Frequently, some mix of domestic and foreign suppliers will turn out to be the optimum.