Strategic Management: Formulation and Implementation

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.

Purchasing Strategies

A business unit's purchasing strategy will differ depending upon which generic strategy it adopts.

Firms that use either the niche-low-cost strategy or the low-cost strategy emphasize purchasing at the lowest costs possible.

Companies that use the generic strategy of niche-differentiation or differentiation emphasize the procurement of high-quality inputs, even if they cost more than alternative offerings.

When management pursues a niche-low-cost/differentiation or low-cost differentiation generic strategy, emphasis is placed on buying high-quality inputs at low costs.

Using multiple strategies requires a mixture of purchasing plans.