4.8 - Choosing Suppliers

Question 1

Price

Answer 1

• The price should be low enough to allow the Business make a profit and compete with its competitors.

Question 2

Quality

Answer 2

• The customer’s will expect that the product or service that they purchase meets a set standard. Or sales and net profit will also be lost. The Business also doesn’t want bad reviews.

Question 3

Reliability

Answer 3

• The business needs its supplies to arrive when needed or sales will be lost. A cafe without coffee beans can’t sell coffee.

Question 4

Proximity

Answer 4

• If a supplier is near the business then it can reduce the time and cost to get the items. This also reduces the time to et supplies when needed in hurry.

Question 5

Advantages of CSR Suppliers

Answer 5

• Customers with the same values will purchase from the business as they know that it has ethical suppliers. (Free Trade / No Child Labour)
• The Business will have a better corporate reputation.
• If it uses renewable energy like Solar, it can reduce its operating costs and increase profits.
• Investors with the same values are more likely to invest in the business so more funds are available to expand.

Question 6

Disadvantages of CSR Suppliers

Answer 6

• Cost can be higher to purchase ethical suppliers that make it harder to compete and if installing ethical power, like Solar panels, it needs a larger cost outlay.
• As the supply of ethical supplies is smaller, it means that if disrupted then replacing items can be hard to find, making it difficult for the business to supply to customers.
• It can take extra time to find ethical suppliers and the business may need to spend time to help them become more ethical.