Companies as Consumers

This entry focuses on companies as buyers involving purchasing and related activities impacting on the supply side of firms. Purchasing and other activities influencing the supply side of companies are important in two respects. First, purchasing involves the operations necessary to supply a firm with its input in terms of materials, products, equipment, services, and so on. Efficiency and effectiveness in these processes are critical to the performance of the buying firm. Second, knowledge about the buying processes of a company is important to its suppliers. Such information supports ambitions of selling firms to influence potential buyers. Thus, the understanding of organizational buying behavior is a significant issue in the marketing literature. In this entry, attention is directed to the perspective of buying firms.

What corporations buy is used in various ways. Some acquisitions are aimed at direct utilization or further processing in the operations of the company, for example, oil, pulp, steel plates, and such. Other items appear as identifiable parts of the buying company's offerings to its customers. Some of these, such as the engine of a car or the processor of a computer, may be particularly significant to the functioning of the end product. These purchases are made on a continuous basis, which is also the case for items that are used in the manufacturing operations of the company, such as hand tools and fastenings. Other purchases are conducted on an irregular and less frequent basis, for example, large machinery and buildings. The variety in the nature of what is purchased calls for diversity in purchasing arrangements and supply strategies. In this discussion of corporations as buyers, the following issues are examined: the role of purchasing in the company, purchasing efficiency and the role of suppliers, frameworks for analysis of purchasing issues, and strategies for purchasing.