L13, Buyer-supplier relationships

Question 1

communicate the importance of buyer supplier relationships for business

Answer 1

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Question 2

What different elements are impacting buyer-supplier relationships and their impact?

Answer 2

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Question 3

where do business relationships come in?

Answer 3

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Question 4

Why is it important to have relationships with others?

Answer 4

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Question 5

Who do companies have relationship with?

Answer 5

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Question 6

Describe collaboration?

Answer 6

Collaboration is a mutually beneficial and well-defined relationship that involves people from different organizations, agencies, sectors or the community joining together to achieve a common goal.

That goal could not be achieved as efficiently by any one person, organization or sector. The result is a highly shared endeavor in which members eventually commit themselves as much to the common goal as to the interests of their respective organizations

Question 7

What different levels of relationship are there?

Answer 7

1. connection
2. coordination
3. cooperation
4. collaboration

Question 8

why do organizations enter relations?

Answer 8

1. lack of all necessary resources
2. focus on core competences
   —> outcource
   —> exchange relations

Question 9

what are the consequences of inter-organisational relationships?

Answer 9

1. loss of control over flows
2. exposed to uncertainty
3. dependence
4. loss of power
5. different levels of power in the network
6. need to regain control or mitigate

Question 10

what are the different uncertainties and risks that the buyer and supplier firm experience from entering a relationship?

Answer 10

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Question 11

does the risk differ if the relationship is at a different level?

Answer 11

?

Question 12

what are the trends for industries with regards to relations?

Answer 12

In many industries, buyers increasingly need to
—> rely on their suppliers
—> search for sources of supply outsidentheir traditional supplier base

Industries are exposed to new levels of supply risks

Need for:
— leap of faith (trust)
— intensive qualification

Question 13

Describe the cross-functional approach and a complex web of interactions

Answer 13

Its important to have a both formal and informal relations

1. internal function hierarchy
2. cross-function
3. each function to supplier
4. higher management level

Question 14

what is meant by parallel channels with suppliers?

Answer 14

sometimes communications can go from several different channels e.g. both from R&D and purchasing, which can complicate things.

Its therefor important to align information and governance
—> internal (within function and across)
—> exteral, between supplier’s, buyer’s and the inter-organization structure

Question 15

what might happen if uneven distribution of power in the network?

Answer 15

— creation of underdogs

— Important to map who has the power to influence the network

— All organization strive to maximize their power through reformulating these dependencies

— Goal to create balanced distribution of power in the network

Question 16

who drives the negotiations in the relationship?

Answer 16

1. Supplier dominance?
2. Independence?
3. High independence?
4. buyer dominance?

Question 17

where does power come from?

Answer 17

1. substitutability
2. Interconnections
3. Demand share
4. Information symmetry
5. Reputation
6. Regulations

Question 18

Describe the different power positions!

Answer 18

1. Independence
   —> low or equal power from both for both seller and buyer
2. Firm Dominance
   —> high power in the buyer company and low power for the supplier
3. supplier Dominance
   —> high supplier power and low power from the buying company
4. Interdependence
   —> equally high power from both the buying company and the supplier

Question 19

How can you deal with a lower power position?

Answer 19

1. accept the situation and be weak
   —> few suppliers with high prices for product X. Gather funds and buy
2. Accept the situation and safeguard
   —> few suppliers with high prices for product X. Have a detailed and strict contract so terms are set for a longer time
3. Try to change the situation
   —> Few suppliers with high prices for product x. insource, or invest in developing small suppliers e.g. a local one.

Increasing volumes + growing number of suppliers = reducing prices

Question 20

What different types of buyer-supplier trust are there?

Answer 20

1. Contractual trust
   —> the assumption that the other party will follow the agreement
2. Competence trust
   —> the assumption that the parent’s abilities will help carry out the agreement
3. goodwill trust
   —> the assumption that the partner har the intention to perform according to the agreements

Question 21

Describe the different levels of inter-organizational trust

Answer 21

1. inter-personal
   —> between individuals
2. Organizational
   —> between individuals and an organization
3. inter-organizational
   —> between organization
4. Inre-organizational network-level
   —> between one and many companies