USING PURCHASING STRATEGIES
DEPENDING ON THE SITUATION
IN THE MARKET
The competition in the market includes all the activities
of companies competing against one another in
order to make business contacts with buyers and carry
out transactions. The competition process means presenting
more favourable offer than other companies inthe market. The rivalry may be based on a better price
and terms of payment, or a range and quality of services
or some other conditions. The competition in the market
is the process of rivalling between independent companies
for exchange of goods in the market. Economics
defi nes it as a market structure and the fi nal stage of
competition process. Intensity of competition results
from economic structure of the sector. It also goes beyond
behaviour and response of present competitors.
Intensity of competition depends on fi ve basic competitive
forces presented by Michael E. Porter. When we
think of rivalry among companies in an in-dustry, we
should take into consideration the following factors: (1)
A number of competing companies in the market, (2) A
diversity of competing companies in the market, (3)
Barriers to entry the market, (4) Rate of industry growth,
(5) Fixed costs, (6) Storage costs, (7) Supplier or subcontractor
switching costs, (8) Diversity of products
available in the market, (9) Intermittent overcapacity,
(10) Strategic stakes which the companies in the market.
Strategic attitude to the purchasing process is very
often the result of crisis or a restructuring process in a
company (it is an attempt to increase the company’s
profi tability). Generally when the business is profi table
or at least its situation is stable very few managers care
about purchasing processes and strategies. In many organisations
purchasing and supply de-partments play
only a support role for production and sales departments.
In these kinds of si-tuations the purchasing department’s
task is just reduced to mere purchasing at the
request of seemingly “superior” departments. And its
main responsibility is to reach a better price or prepare
specifi cations and plans. The company’s activity and
creating its purchasing strategies depend not only on its
competitiveness, but also on where the product is in the
product life cycle [2]. It is presented in the Figure 2.
Slow sales growth is typical for the introduction
stage of a newly launched product in the market. This
stage is dominated by a seller. It involves high costs of
promotional and marketing activities of the seller and is
also connected with relatively high costs of the business.
And the price of the product is also set at a relatively
high level. It is usually set by the seller at a higher
level than it should be – it ensures high profi ts for the business selling the product