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?