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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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