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Retail Buying
Notes 10.2.3 Trends in Purchasing
Purchasing in a typical arenas
Purchasing domestically produced products
Using intermediary buying services
A Changing Business Environment
There are several reasons for the emergence of international purchasing as a strategic weapon in
the restructuring of manufacturing operations in U.S. firms. Most of these reasons are related
directly to the efforts of U.S. manufacturing firms to gain, or regain, competitive strength and
market share by improving their strategic posture in response to a changing business
environment. The principal changes in the environment that underlie the move by manufacturing
firms to develop new corporate strategies are summarized in Table 10.1.
Table 10.1: A Changing Business Environment
New Challenges to Corporate America
Intense international competition
Pressure to reduce costs
Need for manufacturing flexibility
Shorter product development cycles
Stringent quality standards
Ever-changing technology
Competition
Intense competition from abroad, pressures stemming from the need to reduce trade deficits
through exports, and the interdependence of global economies have all served to internationalize
the marketplace. Surviving and thriving in today’s global markets require that manufacturing
firms be truly “world class.” There is evidence that the United States no longer enjoys an
unequaled advantage in manufacturing and in manufactured goods. Steel, semiconductor,
automobile, and consumer electronics industries all have fallen victim to international
competition and have seen their market shares erode.
Cost Reduction
Most manufacturing firms are striving to be low cost, high quality producers. For firms selling
in mature markets where there is little or no product differentiation, cost reduction is especially
important. The recent experiences of U.S. industries in steel, consumer products, and automotive
manufacturing underscore the importance of cost and quality as competitive weapons. Cost,
quality, and customer satisfaction have become the foundation on which a successful competitive
strategy is built. It is well known that the Pacific Basin countries enjoy a comparative advantage
in cost.
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