Logistic Company

The Answers

1. Why purchasing is important in a logistic company?

• Because it helps company by improving business cost-effectiveness as well as increasing the value of a company constantly.

1. How can the bargaining and negotiation with suppliers help a logistic company achieve competitive condition?

• The bargaining and negotiation allow the supplier to adapt to requirements and conditions of the company. The company may require more favorable offers than other companies in the market to gain more competitive condition. The requirements may be a better price and terms of payment, or a range and quality of services or some other conditions. As the company makes the bargaining power bigger they can achieve better and more competitive conditions of the cooperation and they will increase profitability.

1. When does a logistic company create bargaining and negotiating power?

• When there are many independent suppliers in the market.
• When suppliers offer products of the same technical parameters price and quality.
• When they buy a large amount of goods in comparison with the size of supply.
• When they strive for backward vertical integration.

1. How does a logistic company dominate negotiations concerning conditions of cooperation with the suppliers

• When a logistic company can dominate negotiations concerning conditions of cooperation with the suppliers it also means the logistic company’s bargaining power is stronger. This bargaining power indicates how much the supplier is dependent on the logistic company. They can dominate negotiations concerning conditions of cooperation with the suppliers by buying a large amount of goods in comparison with the size of supply and striving for backward vertical integration.

1. What is happening when suppliers offering products of the same technical parameters, price and quality?

• It lets the logistics company changes suppliers constantly because it might be a difficulty to induce the company’s attention to product which is offered by other suppliers in the same technical parameters, price and quality, hence the suppliers must search for other way of drawing the logistics company interest.