vi Collaborative In collaborative exchanges much trust and commitment lead to

Vi collaborative in collaborative exchanges much

This preview shows page 115 - 117 out of 191 pages.

(vi) Collaborative - In collaborative exchanges, much trust and commitment lead to true partnership. (vii) Mutually adaptive - Buyers and sellers make many relationship ă specific adaptations, but without necessarily achieving strong trust and cooperation. (viii) Customer is King - In this close, cooperative relationship, the sellers adapts to meet the customerÊs needs without expecting much adaptation or change in exchange. 6.5.2 Business Relationships: Risks and Opportunism Vertical coordination can facilitate stronger customer-seller ties but at the same time may increase the risk to the customer and supplierÊs specific investments. Specific investments are those expenditures tailored to a particular company and value chain partner. Specific investments also entail considerable risk to both customer and supplier. When buyers cannot easily monitor supplier performance, the supplier might shirk or cheat and not deliver the expected value. Opportunism is „some form of cheating or undersupply relative to an implicit or explicit contract‰. A more passive form of opportunism might be a refusal or unwillingness to adapt to
Image of page 115
TOPIC 6 ANALYSING BUSINESS MARKETS 88 changing circumstances. Opportunism is a concern because firms must devote resources to control and monitoring. INSTITUTIONAL AND GOVERNMENT MARKETS The institutional market consists of schools, hospitals, nursing homes, prisons, and other institutions that must provide goods and services to people in their care. Buyers for government organisations tend to require a great deal of paperwork from their vendors and to favour open bidding and domestic companies. Suppliers must be prepared to adapt their offers to the special needs and procedures found in institutional and government markets. For example, school management who plan to buy laptops for school teachers need to obtain at least three quotations from the suppliers and will make decision on purchases subject to the lowest price that can be offered to them with promising after sales service. Organisational buying is the decision-making process by which formal organisations establish the need for purchased products and services, then identify, evaluate, and choose among alternative brands and suppliers. The business market consists of all the organisations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to others. Compared to consumer markets, business markets generally have fewer and larger buyers, a closer customer-supplier relationship, and more geographically concentrated buyers. Demand in the business market is 6.6 SELF-CHECK 6.2 (a) Buyer-supplier relationships differ according to four factors. Identify these factors.
Image of page 116
Image of page 117

You've reached the end of your free preview.

Want to read all 191 pages?

  • Spring '16
  • AbdulrahmanAlshargabi
  • Marketing, 21st century

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes