Discussion Questions Dr. Shawky ElGhitany

Discussion Question 1 a small manufacturer developed a new high-speed- packaging system that could be appealing to food-processing firms like Pillsbury and general mills. This new packaging system is far more efficient but must be priced 15% higher than competitors products. Because purchasing managers evaluate the “total cost of ownership” of major purchases, what selling points should the business marketer emphasize to demonstrate the superiority of this new product?

Discussion Question 2 Honda America relines on 400 suppliers in North America to provide more than 60% of the parts and materials for Accord. What strategies could a business marketer follow in becoming new supplier to Honda? What criteria would Honda consider in evaluating suppliers?

Discussion Question 3 Describe the total-cost-of-ownership orientation that a purchasing managers use and illustrate how you could apply it to your next automobile purchase decision.

Discussion Question 4 segmentation is a tool that marketers use to identify target markets. Increasing purchasing managers are using the segmentation approach to determine which suppliers are most critical to the goals of the organization. Explain.

Discussion Question 5 Compare and contrast the two general procurement strategies employed by the federal government: 1) formal advertising and 2) negotiated contract.

Discussion Question 6 Institutional buyers fall somewhere between commercial enterprises and government buyers in terms of their characteristics, orientation, and purchasing process. explain

Discussion Question 7 Explain how decision making process that a university might employ in selecting a new computer would differ from that of a commercial enterprise. Who would be the key participants in the process in each setting?

Discussion Question 8 Fearing red tape and mounds of paperwork, Tom Bronson, president of B&E Electronic, has always avoided the government market. A recent discussion with a colleague however, had rekindled Tom’s interests in this sector. What steps should B&E Electronic take to learn more about this market?

Discussion Question 9 General Electric GE has embraced e-purchasing and has saved more than $500 million per year by conducting online reverse auctions in buying a range of goods including office, computer, and maintenance supplies. What new challenges and opportunities does this auctioning process present for business marketers who serve GE?

Discussion Question 10 0ne purchasing executive observed, online auctioning is an appropriate way to buy some categories of products and services but it’s entirely inappropriate for others. “Agree or disagree? Provide support for your position.

Case Study The rising prices of materials form steel in prosperity, and intense global completion are all causing friction between buyers and suppliers in the auto industry around the world. However, a recent study suggests that purchasing-supplier tensions are particularly acute at the big three automakers: General Motors, Ford, and DaimlerChrysler.

Case study Planning Perspectives, Inc., a Michigan- based automotive consulting firm, annually surveys the top 200 suppliers to the automobile industry and asks them to rate the automakers on 17 criteria related to their ability to develop relationships (for example, assistance they provide to suppliers, their willingness to collaborate in growth opportunities) based on these ratings, an automaker-supplier working relation index score is calculated for the each firm: a score of 500 is very good, zero is very poor.

Case Study The results are quite revealing. The automaker rated the highest were Toyota and Honda with scores of 399 and 384, respectively, in 2004. by contrast, the scores of Daimler-Chrysler, Ford, and GM were all below 200-at 193, 160, and 144, respectively. John Henke president of planning Perspectives, observes that the supply shows that the U.S. automakers’ primary orientation is toward cost reductions and that they generally treat suppliers as adversaries rather than as trusted partners.

Case Studies By contrast, “buyers at Honda and Toyota expect suppliers to be around for life and they do not hammer for price reductions … but rather expect a 2-2-5 percent savings from productivity improvements. The Big three’s constant hammering suggests that they are not selecting the right suppliers or they are using the wrong criteria for selecting suppliers.

Discussion Question 1- What are the short-term and long term benefits or consequences of the purchasing strategies of the Big Three versus their Japanese rivals. 2- In your view, what criteria should Ford or GM use in selecting suppliers, and what steps should they take to strengthen their relationship with their suppliers and with their present and potential and potential customers?