The paper 'Commercial Management' is a great example of a Management case Study. In a commercial environment that is increasingly competitive and sophisticated, the buyer/supplier relationship has evolved into a refined relationship where value creation is highly emphasized. The rise in globalization has not only led to the emergence of new trends in the business world but it is also associated with the rising need for buyers and suppliers to maintain mutual relationships in order to survive in the competitive business world. The buyer/supplier relationship is therefore bound to change significantly in order to accommodate the changes and trends in the market as identified in this paper. Development of the buyer/supplier relationship The buyer/seller relationship has changed significantly and it is apparent that this is bound to change even further as the business world undergoes a rapid transformation.
Among the most important aspect of the buyer/seller relationship is globalization. Globalization has turned the world into one global market, thus giving sellers and suppliers more autonomy (Smith, 2009). The rise in globalization has given buyers a high degree of choice such that suppliers must increasingly exert efforts directed towards ensuring that they provide value to their customers in order to retain them.
This denotes the increase in buyer power as portrayed in Porter’ s Five Forces Analysis (Redmond & Brennan, 2010). Globalization has led to the emergence of trade liberalization, which allows countries to export and import goods with limited restrictions. Accordingly, buyers can easily change their suppliers to enjoy more competitive offers from international suppliers due to the ease in the transfer of goods from abroad. At the same time, supplier power has risen due to increasing demand by customers for high-quality products.
This is because, upon this realization, suppliers have invested in technological developments and effective production methods which make their end products better. Buyers are more likely to approach such suppliers, hence improving their supplier power. Increasing power for each of these parties however is likely to lead to unrewarding outcomes as each party attempts to get the best deals. It is, for this reason, that collaboration between buyers and suppliers have become increasingly common. Buyer/seller relationships The increasing global competition has led to a shift in buyer/seller relationships, such that they are increasingly shifting from transaction-based relationships to partnership kind of relationships.
Buyers and suppliers are now working together to form supply alliances that are beneficial to both the buyers and suppliers (Huntzinger, 2007). The alliances involve working together towards the achievement of a common goal unlike in the past where the buyer was only interested in getting the lowest price while the supplier intended to get the highest price to cover for expenses. Suppliers now even go to the extent of investing in equipment which will be effective in meeting customer needs.
Buyers are also ready to work with suppliers in order to accomplish given objectives. An example is Nokia, which in the year 2000 offered to help in the rebuilding of Phillip’ s plant located in Albuquerque, New Mexico (Anonym, 2008). The plant supplies Nokia’ s semi-conductors. Due to the firm buyer/supplier relationship between Nokia and Philips, Nokia did not just find another supplier but instead worked together with Phillips to revive the plant. This ensured that a steady supply of semiconductors for Nokia was enhanced.
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