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Unit 10: Purchasing in the Domestic and Foreign Marketplace

Self Assessment Notes

Fill in the blanks:
1. When you have a new vendor in sight, the number of variables being much higher,
documentation work takes a .................... time.

2. Knowing your .................... is one of the best tools, weapons, instruments – no matter how
you want to call it – to control the situation and always have the benefit in discussions,
negotiations, day to day purchasing activity.
3. “Knowing” the supplier takes a lot of .................... and .................... at the beginning.
4. It takes time to dig into the information, to learn all you can about their production
capabilities, their partners (basically your competition), their competition; their reputation
in the market and the .................... of their sales people and management.

5. .................... might differ from the sales forecasted in the merchandise budget plan.
10.2 Purchasing in the Foreign Market Place

Internationalization of the marketplace, global competition, and changes in the business
environment have contributed to the increase in international purchasing. U.S. firms, recognizing
these trends, are entering the international arena in increasing numbers. Simply stated, domestic
suppliers alone cannot meet all the competitive needs of a multinational corporation. As a
result, international sourcing has emerged as a critical component of corporate strategy, aimed
at reducing costs, raising product quality, increasing manufacturing flexibility, and improving
designs. The strategic importance of international purchasing, describes procedural and
managerial issues of concern in international procurement, and delineates the significant
differences between buying from foreign and domestic sources. The importance of the linkage
between the purchasing function and the other functions within a firm is becoming more evident
with each passing year.

Notes Firms are becoming acutely aware that purchasing decisions impact many cross-
functional decisions, such as capacity requirements and equipment needs (make-versus-
buy decisions), product cost(*) and quality performance, (source selection and qualification
decisions), delivery reliability (mode and carrier decisions), and product innovation
(supplier partnering decisions). This awareness has been generated by the strategic
emphasis placed on product quality, cost competitiveness, and the just-in-time approach
to manufacturing and delivery.
U.S. firms, recognizing these trends, are entering the arena of international purchasing in
increasing numbers. Simply stated, domestic suppliers cannot meet all the competitive needs of
a multinational corporation. As a result, international sourcing has emerged as a critical
component of corporate strategy, aimed at reducing costs, increasing product quality, increasing
manufacturing flexibility, and improving product designs.

10.2.1 US Fashion Markets

 New York City

 Los Angeles
 San Francisco

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