Solved: You are the owner of an organisation that produces an

You are the owner of an organisation that produces an industrial product and you have decided to seek alternative suppliers of major raw materials from overseas suppliers to improve product quality and supply reliability. Before you conduct your global search for new suppliers, you need to review your organisational buying process. a) Explain the major stages of the organisational buying decision process appropriate for the raw materials required by your selected organisation, with detailed analysis of each stage. b) Evaluate how environmental and organisational forces influence your organisation’s buying behaviour.

Expert Answer

Major stages are as follows:
1.   Fixations of the need, types and quantity of the raw material
In the very first stage, needs to purchase the product is identified as well as the type and quantity of the raw materials.
2.   Setting up quality specifications, parameters batch & lot sizes and conditions of the raw materials for purchase and procurement
Afterwards, the detailed quality specifications are prepared that could improve the final product. Further, the other related parameters such as look and texture, batch size and also identified.
3.   Identifying the metrics that can be used to measure the improvement desired in the final products
Few metrics are identified that could explain the benefits drawn by the new and improved raw materials.
4.   Prepare a proposal of purchase and gets its approval
A proposal should be put in place for the approval from the top management or the concerned authorities.
5.   Post approval, budgetary allocation of lump sum amount as per the purchase proposal
After the confirmation of the approval, budget for the purchase is allocated.

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These forces bring attention to the:
1.   selection of the suitable supplier and hold of bargaining power
2.   Fixation of quality specifications
3.   Economic policy supporting the purchase / import of raw materials from the overseas supplier
4.   Availability of competition, affecting the price and finally affecting the buying behavior

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