Defining Business Need Flashcards
Name 3 Types of purchase
Straight re-buy
Modified re-buy
New Purchase
One way to identify business needs is to use RAQSCI. What does RAQSCI stand for and why is the order important?
Regulatory Availability Quality Service Requirements Cost Innovation
The order is crucial as it focuses attention of potential trade-offs that may have to be made.
Implications of business needs on the type of purchase:
- Level of effort required
- The problem solving skills needed
- The degree of risk to the organisation
- The current level of experience of buying he product/service
- The number of tasks involved in the process
- The amount of information required
Problem solving is about…
Finding ways to correct situations (closed problems) or unblock the blockages (open-ended problems)
Preparing a business case for a new purchase or a modified re-buy includes
- Executive summary
- Long-term strategy considerations
- Business requirements
- Price and cost analysis
- Market analysis
- Supply analysis
- Technical developments
- Vulnerability analysis
- Sourcing objectives
Business cases are prepared for a number of reasons such as:
- A contract is coming to an end and the product or service needs to be procured again
- Cost reductions need to be made and this requires changes to the way the organisation operates
- An alternative product or service has been found that potentially delivers a number of benefits
Elements that appeal to senior management
- Return on investment
- Time to market
- Customer satisfaction
- Improving productivity
- Managing Risk
Types of market data
- Desk research (Secondary)
- Field research (Primary)
- RFI
- Quantitative/Qualitative
What is one of the best methods of market research?
Talking to customers and monitoring their buying habits and how they behave.
Direct costs are…
Costs that are directly associated with the production of a good or service.
Indirect costs are…
The general running costs of the organisation - these costs cannot be attributed to specific products or services (overheads)
Fixed costs are…
Business costs that remain the same irrespective of the volume of activity of a business
Variable costs are…
A cost that varies with the level of the output of an organisation
Semi-variable costs are…
A cost that is made up of both a fixed cost and a variable cost
Three ways to estimate costs and budgets
- Break-even analysis
- Purchase cost analysis
- Purchase price analysis
